Germany's clean-energy supporters sound alarm over subsidy cuts

Germany's clean-energy lobbies say government plans to reduce support for the industry will stall any energy transformation and proposed three alternative measures to stabilise power prices.

The subsidy cuts announced this month, which aim to limit rising electricity costs for consumers, would greatly reduce investment in the industry, the country's largest trade groups said in a joint statement led by the BEE renewable-energy federation. The alternative measures would prevent further price increases while allowing continued growth, they said. German ministers, who aim to more than triple the share of renewables in the energy mix by 2050, agreed on a plan to limit power-price increases for consumers caused by subsidies for renewable energy.

The surcharge consumers pay for renewable energy will soar about 47 per cent this year, according to the four main grid operators.

"The message for developers and investors will lie in the precedent these measures would establish as a fall in investment confidence may be a high price to pay," says Anna Czajkowska, a policy analyst at Bloomberg in London.

"The proposal will now go through the consultation process, where the proposed alternatives will surely be explored." The government proposals will limit the surcharge consumers pay through a one-time cut in feed-in tariffs, or above-market rates paid for clean energy, for all existing projects during one year and phase-out tariffs for new projects, among other measures.

From August, new projects with more than 150 kilowatts will not be eligible for the tariffs and only get a premium above market prices after six months.

As an alternative, the lobby groups propose to change the renewable-energy bill so consumers can benefit from reductions in wholesale power prices stemming from clean energy. Solar and wind energy reduced German wholesale power prices about 17 per cent last year, they said.

In addition, the government should share the increasing revenue it earns from taxes to electricity generators with consumers and allow fewer companies to be exempt from paying the clean energy surcharge, according to the groups.

* with Bloomberg News