A blockade of several Federal States against the bill for solar subsidy cuts has appeared in recent weeks. Federal and state governments will now have to negotiate in a mediation process to find a compromise. This could take up to months and may lead to a stalemate.

At its 896th plenary session dedicated to the German Federal Council, it was decided on May 11 to call upon the Mediation Committee regarding the proposed reduction in solar subsidies. The federal and state governments have now been forced to find a compromise regarding the change in the feed-in tariffs in the Renewable Energies Act (EEG). If they do not achieve this, the Federal Council could lodge an appeal against the bill. This could, in turn, override the Parliament with an absolute majority, as the Federal Council on the EEG is not subject to approval. Now, it could take months until the law come into effect. However, decreases of the feed-in tariffs should come into effect retrospectively for plants that had been connected to the grid after April 1.

Strong Protests against Planned Solar Cuts in Advance

Shortly after the agreement from Germany’s Economics Minister Philipp Rosler (FDP) and the Federal Environment Minister Norbert Rottgen (CDU), there was strong criticism of the planned cuts from the industry and representatives of the opposition, but also of the CDU were critical towards the cuts and consider many companies and jobs to be at risk in the solar industry. At times, there were demonstrations with more than 10,000 people in Berlin protesting against the project. The plan, depending on system size could result in cuts of up to 30%.

Arguments against the planned cuts are also coming from SPD and Green governed federal states in the Federal Council as well as from Eastern states governed by the CDU. This can only mean defeat for Minister Rosler and Rottgen seeing as the resistance is coming not only from the opposition side, but also from his own ranks.

In the mediation process, the possibility to negotiate controversial issues exists. According to the industry members, a multitude of the existing points must be checked again. That includes issues such as, installation corridors, level and scales of remuneration rates and the model of market integration. Also it’s estimated that the promotion of solar storage systems and the retroactive cuts of the promotion to April will need to be discussed again.

Decisions about Solar Cuts before Long Stalemate

The Mediation Committee is usually called if, among other things, a bill in the Parliament does not experience the consent of the Federal Council. It consists of members of the Parliament and Federal Council, who jointly develop solutions and alternatives for the bill. The Mediation Committee does not, however, have the right to abolish the law but can bring settlement proposals or recommendations forward. Compromises have to be brought the Parliament and Federal Council for consent. Overall, the members of the Mediation Committee meet three times when trying to resolve different opinions of the Parliament and Federal Council. If they are, however, unsuccessful, the procedure comes to futile end.

Before a final decision can be made, many months could pass. The industry, its employees and investors now face a long wait while the process takes its course and become problematic for the stricken German solar industry.

Originally Planned Cuts

The Federal Minister of Economics Rosler and Environment Minister Rottgen intended to cut the feed-in tariffs for solar power to keep the cost of the EEG surcharge on electricity consumers stable. The new rates adopted on March 23 are as follows:

-Systems up to 10 kW: 20.2% reduction to 19.5 cents/kWh

-Systems from 10 to 1,000 kW: between 25 and 29% reduction to 16.5 cents/kWh

-Systems larger than 1,000 kW: circa 26% reduction to 13.5 cents/kWh

-Systems over 10,000 kW: Future subsidies will be dropped entirely

-New small systems will only be remunerated for 85% of the electricity produced, middle-sized and large systems will receive remuneration for 90%.

-The bonus for own consumption will be dropped.

-From May onwards, there will be a monthly cut (degression) of 0.15 cents/kWh for all new systems.

-From 2014 a continual decrease of the yearly installation corridor by 400 MW, and from 2017 the installation corridor will lie between 900 and 1,900 MW.

Further Information: EuPD Research (www.eupd-research.com)