February 29, 2012 / 3:41 PM / 6 years ago

UPDATE 1-Merkel cabinet endorses steep solar power cuts

* Cabinet endorses cuts in subsidies from March 9

* Feed-in tariffs are to be cut by up to 30 percent

* Sector shares fall (Adds details, shares)

BERLIN, Feb 29 (Reuters) - German Chancellor Angela Merkel’s cabinet endorsed plans on Wednesday to cut state-mandated incentives for photovoltaic electricity in the world’s largest market for solar power by up to 30 percent on March 9, coalition sources told Reuters.

Despite complaints from members of parliament in the centre-right coalition and especially from the Christian Social Union (CSU), the cabinet backed the proposed cuts by Economy Minister Philipp Roesler and Environment Minister Norbert Roettgen.

The government wants to reduce the expansion of solar power after Germany added a record 7,500 megawatts in capacity in 2011 to bring its total to 25,000 megawatts, nearly as much as the rest of the world combined.

So-called feed-in tariffs helped Germany’s solar industry to blossom over the past decade, leading to a myriad of listings and creating about 150,000 jobs.

Shares in German solar companies SolarWorld, Q-Cells and SMA Solar were down 1.9-5.2 percent, while the OekoDAX, which comprises the countries’ biggest renewable stocks, was down 1.8 percent.

“The problem is that the fast changes mean the market becomes less reliable,” said Hans-Christoph Thomale, lawyer at German law firm FPS Rechtsanwaelte & Notare, who is specialised in energy issues.

There were protests against the cuts set to take place in Berlin and elsewhere. The opposition Social Democrats (SPD) and Greens criticised the cuts as did some deputies in Merkel’s Christian Democrats (CDU) and their sister party in Bavaria, the CSU. Bavaria has strongly benefited from the solar boom.

“We’re not going to let this happen,” one CDU member of parliament told Reuters. Conservative MPs were especially critical of the plan to move the cuts forward to March 9 from an original schedule of April 1.

The measure will now head to the lower house of parliament.

The government wants to add between 2,500 and 3,500 MW capacity per year and that is why it is cutting the incentives so aggressively after a 15 percent drop on Jan. 1 and after capacity was expanded by over 7,000 in both 2010 and 2011.

The incentives would fall from 25.42 cents to 19.5 cents per kilowatt hour (kWh) for small plants up to 10 kilowatt (KW), to 16.5 cents for plants up to 1,000 KW and to 13.5 cents for plants of up to 10 MW. After that there will be further monthly cuts of 0.15 cents per kWh. (Reporting by Erik Kirschbaum; Additional reporting by Christoph Steitz in Frankfurt; Editing by James Jukwey and Hans-Juergen Peters)

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