German FIT Reduction Deal Reached

The mediation committee assigned to reach an agreement on cutting the rate of the German feed-in tariff has decided to make the cuts in two phases.

It was announced on Monday evening that the mediation committee has settled the dispute on the funding of photovoltaic between the German Parliament and Federal States. The reductions will be to the same amount as originally planned. The only difference being that they will now be introduced on a step by step basis. Thereby, the reductions which will be backdated to July 1, 2010 are as follows:

  • 13% for rooftop systems
  • 12% for open-space systems
  • 8% for surfaces designated for land use change

All three tariffs are to be decreased again by three percentage points from October 1, 2010. The German Bundestag and Bundesrat are expected to agree to the compromise on Friday. The intention to cut all subsidies for farmland as of July 1, 2010 has not been revised and will be enforced as originally planned.

According to the German Federal Network Agency, approximately 714 megawatts (MW) of solar was in Q1 2010. This is a ten-fold increase in comparison to 2009 and the result of changes in market dynamics.

“Market development in 2010 has been determined by external factors which have both artificially accelerated the market and slowed it down. It has yet to be seen if market volume can actually be calculated on the months where these external factors had the biggest impact” said Markus Hoehner, CEO of EuPD Research.

Even with the reduction to the FIT, the market is not expected to collapse as 2010 draws to a close.

“Some installers are now taking a short break after working non-stop for the last 9 months. However, by August demand will increase again. In the second half of the year, the market will be mainly driven by small systems,” Hoehner said.

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