Solar stocks drop as Germany proposes subsidy cut
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FRANKFURT (MarketWatch) — Shares of German solar companies declined on Wednesday, as the government in Berlin proposed a 15% cut in the subsidies it provides.
Germany’s environment minister, Norbert Roettgen, proposed on Wednesday a 15% reduction in feed-in tariffs for solar power, according to media reports. The cut will go into effect in April for roof installations and in July for open-field sites.
It’s been widely expected that the center-right government of Chancellor Angela Merkel will implement some cuts to the solar feed-in tariffs.
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News of the proposed cut put German solar stocks under heavy selling pressure.
SMA Solar Technology AG /quotes/comstock/11e!fs92 (DE:S92 84.78, -0.12, -0.14%) fell 6.4% in recent trading on Xetra. Phoenix Solar AG /quotes/comstock/11e!fps4 (DE:PS4 33.03, -0.32, -0.94%) declined 6.7%.
Shares of Q-Cells SE /quotes/comstock/11e!fqce (DE:QCE 10.21, +0.08, +0.79%) fell 3.9% and those of SolarWorld AG /quotes/comstock/11e!fswv (DE:SWV 12.52, -0.13, -1.03%) dropped 5.5%.
It also affected solar plays outside of Europe. According to Goldman Sachs estimates, Germany may account for 35% of world solar module demand in 2010 — more than the U.S. and China combined.
In London trading, shares of PV Crystalox Solar /quotes/comstock/23s!e:pvcs (UK:PVCS 53.84, -1.26, -2.29%) fell 3.6%.
Shares of Tempe, Ariz.,-based first Solar Inc. /quotes/comstock/15*!fslr/quotes/nls/fslr (FSLR 117.49, +4.19, +3.70%) dropped 3.7% in U.S. trading.
Government support has driven growth in Germany’s renewable energy industry over the last 10 years.
A key law, the Renewable Energy Sources Act, or EEG by its German abbreviation, came into force in 2000, obliging grid operators to give priority to electricity from renewable sources and to pay fixed feed-in tariffs for that electricity.
Polya Lesova is reporter for MarketWatch, based in Frankfurt.