Germany slashes FiT Rates

The German government has announced the most severe cuts in solar subsidies (20-29 per cent) since 2004. The move comes after the country witnessed a massive expansion in solar power production capacity in 2011 and the associated costs for consumers, who had to pay above-market rates for renewable energy. The government now hopes to contain new capacity to between 2.5-3.5 GW this year and next year, down from 7.5 GW in 2011. From 2014, it is targeting a yearly reduction of 400 MW and from 2017 between 900 MW and 1,900 MW. Germany is not alone in its efforts to contain costs for supporting the solar power industry: France, Italy, Spain and the United Kingdom are also reducing their subsidies to align with falling solar panel prices and control the explosive growth. In Germany, solar prices plunged more than 45 per cent last year, largely due to rising Chinese competition.

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