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Europe Braces for a Summer of Hot Solar Debate

As several debt-addled European Union nations continue to push forward with austerity measures, recent developments show that the political pendulum may be shifting away from drastic spending cuts. If nothing else, those cuts aren't coming easily and the fallout could have drastic implications for renewable energy generation across much of the region.

What started as a sweeping rebuke of President Nicolas Sarkozy’s conservative agenda in France has the potential to reshape Germany, considered the economic driver of the European Union and a tenuously stable power in the region.

On Friday, Germany’s upper house voted to postpone acceptance of the planned cuts to the Feed-in tariff in what is being seen as a blow to Chancellor Angela Merkel’s push to slash solar subsidies. Germany remains the world leader in installed photovoltaic capacity, and in fact, finished 2011 with a higher than expected 7.5 gigawatts (GW) installed. But the falling price of PV panels and the growing call for cuts across the board led to a greater than expected reduction in the FiT that had fueled much of that growth. The issue now goes to a mediation committee that will try to craft a compromise that can pass federal and state voting.

This is all happening amid a slippery political landscape in which difficult cuts are having a hard time gaining traction. In Germany in particular, weekend voting indicated that Merkel’s conservative party is losing sway to Social Democrats in much the same way that Sarkozy — a close ally of Merkel’s — lost his grip on the French presidency.

Meanwhile, Italy could see a delay in its own subsidy cut that’s part of the pending Fifth Conto Energia, which could be implemented as early as July. According to Vishal Shah of Deutsche Bank Equity Research, the country could see a installation rush until the end of September if subsidy cuts are pushed out to the fall. If that’s the case, the lure of the rooftop market below 1 megawatt and the continued fall of panel prices could add between 1.5 and 2 GW in a three-month period. That’s about what analysts have been projecting for the entire year and it would represent a boon to a hot Italian market that was expected to cool significantly in 2012. Italy became the biggest PV market last year with more than 9 GW of new capacity. The European Photovoltaic Industry Association, meanwhile, is forecasting up to 6 GW of new installations and is predicting a run on installations ahead of a new policy.

And in Greece, officials across the political spectrum remain in gridlock over the acceptance of austerity measures that have been in many ways shaped under Merkel’s EU leadership. The tumultuous political situation is coming to a head and at stake is the country’s very place in the European Union. The country has recently billed the 10-GW Helios solar project as a economic life raft that with the right transmission could feed much of Europe’s energy needs. But if Greece votes itself out of the EU, it’s difficult to image the country securing the international investment needed to create a solar power.

Last summer marked a reshaping of Japan’s economic backbone following a devastating earthquake, tsunami, nuclear crisis and sweltering power shortages. The political tensions promise to be just as hot this summer across much of Europe. 

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