The government in Germany is expected to reduce feed-in tariffs for PV systems effective on April 1, 2012, with current rates to decrease 20% and 25% for small- and medium-scale roof-mounted PV systems, and 30% for large-scale ground-mounted systems. In addition, subsidies will be based on 90% of the total power generated by the PV system, according to industry sources.
Although the new incentive program does not have caps, it is possible that FITs will be cut by EUR0.0015 (US$0.002) each month until the rate reaches zero.
As many as 800 solar firms in Germany have voiced their dissatisfaction about the planned cuts, commenting that they will "drive the industry to its grave".
Industry sources noted that Germany already made a 15% incentive cut in January 2012. The possible planned cuts in April will threaten the internal rate of return (IRR) in Germany. Using the current price of solar products, the IRR for small-size solar PV systems is around 12% when 20% of the project is paid by customers and 80% by bank loan. After the cuts, the IRR will drop to 7%.
The possible incentive cuts could cause the the market to freeze after April 1 meaning the future of Germany's market is quite pessimistic, said industry sources.
Germany may cut ground-mount solar PV system FIT by 30%
Photo: Digitimes file photo
Article translated by Jackie Chang
