May 30, 2008 / 9:24 AM / 10 years ago

UPDATE 3-German solar cuts less than feared, stocks rally

(Adds details)

By Markus Wacket and Peter Dinkloh

BERLIN/FRANKFURT, May 30 (Reuters) - Germany’s ruling parties have reached a deal to reduce support for the solar energy sector in coming years by far less than the booming industry had feared.

Shares in German solar power companies rallied, topping the leader board of Frankfurt's technology index .TECDAX after the deal came in lower than the 30 percent decrease in 2009 some German conservatives had pushed for.

German law requires utilities to pay solar energy producers higher prices for solar power they put into the grid than power from traditional sources. The government says the industry can live with less support and wants to redirect help to other types of renewable energy.

Under the agreement, which coalition partners reached after eight hours of talks late on Thursday, support would decline by 8 percent in each of the next two years and by 9 percent in 2011, Social Democrat Hermann Scheer told Reuters.

The cuts affect support for rooftop solar panels, which supply the lion’s share of Germany’s solar-produced energy.

The decline in support for bigger installations on open fields was slightly bigger, coalition sources said, bringing the overall cut for all installations to an average 10 percent next year and 7 and 8 percent in the following years.

The chief executive of solar cell maker SolarWorld SWVG.DE told Reuters the cuts were bearable.

“The sector can live with that,” Chief Executive Frank Asbeck said, adding that in 2015, power produced using solar cells would be competitive with electricity generated from fossil fuels.

WestLB raised Solarworld to “buy” from “hold” and its shares gained 9.93 percent by 1345 GMT. Solar cell maker Q-Cells QCEG.DE was up 7.07 percent, Phoenix Solar PS4G.DE improved 8.26 percent, and Ersol ES6G.DE rose 7.96 percent.

“Positive for all solar companies,” Cheuvreux said in a note. “The cuts as from 2009 will not be as drastic as the proposed cut of up to 30 percent that was proclaimed by the (conservative) CDU/CSU faction,” Equinet said.

The rooftop photovoltaic industry has boomed in Germany in recent years. More than half the world’s photovoltaic energy is produced here, much of it from the 300,000 systems on rooftops in Europe’s largest economy.

A 2000 renewable energy law sparked the boom and the law has since been copied in more than a dozen EU countries.

In their talks on Thursday, coalition partners also agreed to raise the support for wind energy and biomass installations, participants at the meeting said. Further details were to be discussed on Monday and the draft law could be debated in parliament next week. (Editing by Will Waterman)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below