NEW YORK (TheStreet) -- "Shocking" developments out of Germany in relation to its support of the solar industry: sources in the German government tell Reuters on Friday that the country's economic ministry doesn't think the plan recently unveiled by the country's environmental ministry to cut solar feed-in tariffs by as much as 15% in July goes far enough. Reuters reports on Friday that the economic ministry in Germany wants feed-in tariff cuts of up to 25%, citing unnamed sources.
For any investor who lived through solar 2010 and the political debate in Germany, in 2011 the solar noise is playing out just as it played out last year. First, a plan to reduce subsidies is introduced, then competing political interests say the plan doesn't go far enough, and as it all plays out in the press, a period of typical uncertainty for solar stocks is part of the resulting confusion.
Reuters quotes an unnamed source in the economics ministry of Germany as saying that the ministry, "wants to have solar power production switched off when the grid is overloaded on sunny days," and would also like to see a greater July 1, 2011 reduction in incentives.
Also this week, an independent commission put together by German Chancellor Angela Merkel's government released a huge environment review document that argues in favor of an annual cap on solar installations in Germany. On top of this, some members of the CDU/CSU parliamentary coalition have been grumbling to the press about the deal hashed out between the solar industry and the environmental ministry, too.The prevailing view on the Street is that the feed-in tariff cuts will go through as planned by the government in its draft document, with a high-end cut of 15% in July if normalized annual installations are on pace to exceed 7.5 gigawatts. Several analysts consulted by the Street, even those on the bearish side of the solar outlook, don't expect the talk about an annual cap to figure in 2011, but to be back on the political radar in Germany for 2012. Yet for any investor familiar with Germany and its debate on solar support, a good rule of thumb is that all bets are off until the vote is taken in parliament and the legislation signed on the dotted line. Solar stocks were down across the board on Friday, though it was a losing day for the markets, with U.S. GDP data for the fourth quarter failing to live up to expectations, political unrest in Egypt providing the latest television image panic point for the markets, Ford earnings disappointing investors, and general negativity running throughout trading action after what had been a week that started with a high level of bullishness.
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