Governments Slash Solar Subsidies After Steep Market Growth

Government subsidies that helped fuel Europe’s most successful solar markets continue to be slashed, raising concerns that the region’s burgeoning renewable sector will be unable to compete with China and the U.S., according to a report on Greenwire.

Germany, the world’s largest market for solar power, will cut the price paid for electricity from roof-mounted panels by 16 percent and electricity from larger solar power stations by 15 percent.

Analysts say the government simply underestimated how quickly the renewable sector would grow. From 2000 to 2008, the production of photovoltaic energy in Germany rose from 32 million kilowatt hours to 4.4 billion kilowatt hours. Government subsidies in Germany now cost nearly €1.5 billion annually.

“Things were too liberal in Germany,” said James Britland, a renewable energy analyst.  “The government realized it was costing them too much money. The volume rise was too big as installations were way higher than expected.”

Spain, meanwhile, which has already cut subsidies by 29 percent, is considering another 40 percent reduction. France cut its solar subsidies by 29 percent earlier this year, and Italy is considering reducing its subsidies gradually between 2011 and 2013.

Article appearing courtesy Yale Environment 360.

photo: Pink Dispatcher

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