Official new German PV rates announced

German Environmental Minister Röttgen has announced the proposals he will make to the German Parliament:

• a 15 percent reduction for roof systems starting on April 1
• a 15 percent reduction for field systems starting on July 1, but that reduction will increase to 25 percent if arrays are to be installed on "valuable farmland"
• rates will automatically decrease by an additional 2.5 percent (over the automatic annual reduction of around nine percent) if more than 3.5 gigawatts is newly installed within one year and by 5 percent if more than 4.5 gigawatts is installed
• in return, the automatic reduction will itself decrease by 2.5 percent if the market does not install 2.5 megawatts, with that decrease rising to 5 percent if the market falls short of 2.0 megawatts.

Overall, the government has a target of three gigawatts of newly installed capacity per annum. The new figures do not take effect until approved by the German parliament, though that is expected to take place in February.

It is too early to say exactly how the changes will affect the German market and German manufacturers in particular. Solarworld's CEO has already said the changes will only affect small companies, not his, while Hans-Josef Fell -- the Green politician who co-authored (along with the SPD's Hermann Scheer) the original law that provided feed-in tariffs for photovoltaics -- has come out saying that Chinese firms will benefit the most. The German CEO of Masdar PV agrees that foreign manufacturers will now manage to drive some small German manufacturers out of the market.

Unsurprisingly, Photon Magazine welcomes the reductions (they also called for rates to be lowered further a few years ago), though Photon believes that one-off reductions should not be linked to the market volume in any particular country because the market is global. It should be noted, however, that the point of having one-off reductions based on volume is to keep the burden on domestic consumers in check, not take account of a global market.

From an American perspective (my perspective), the debate over here has been quite professional, and the proposals certainly fall short of throwing the baby out with the bathwater, which is what would happen in the US. No stop and go policies over here, and other countries will first have to get up to one gigawatt -- a third of the German target.

Perhaps the most bizarre statement came from Christian Democrat Michael Fuchs, who said, "The greater the rate reductions, the faster the market will grow." ("Je stärker die Förderung für die Anlagen sinkt, umso stärker wächst auch der Markt.") So if we pay nothing for PV power, everyone will want to spend money installing PV arrays?