Germany Plans Reduction in Solar Power Incentives

Many countries in the world currently offer incentives towards production of green energy, and the said incentives are gradually increasing. Germany, which has registered a strong growth in the sector and meets nearly 15% of electricity demand with green energy, is now planning to reduce incentives given to solar power.

The move proposes modification in the Renewable Energy Act (EEG), and will add reductions to the state-mandated fees that utilities pay for photovoltaic power. The government, however, is cautious and intends to avoid any steep cut which could possibly hamper the fast growing industry. Moreover, since Germany’s aim is to increase clean energy to meet 30% of the demand by 2020, it is unlikely that the incentives will be drastically lowered.

Germany’s photovoltaic industry has created nearly 80,000 jobs since the EEG was introduced in 2000, so the issue could have political implications as well. Germany though, can learn from a similar reduction Spain carried out in 2008, where steep cuts hit the sector and increased prices.

Source: Reuters | Image

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