Germany's coalition government has ended an internal dispute that had threatened to eliminate as many as 20,000 jobs in the country's solar industry.
The government has now lifted a cap on its support for the smaller solar installations that dominate the country's market.
Under Germany's current system, solar systems smaller than 750 kilowatts receive energiewende feed-in tariffs, known as EEG payments. But the payments were on course to end for new projects when the country's cumulative solar capacity hit 52 gigawatts, which is expected this summer. That would have forced new systems to sell their excess power on the open market, making many uneconomic.
The problem appeared to be solved last autumn when Chancellor Angela Merkel said the solar cap would be lifted as part of the 2030 climate package. But nearly eight months later there had been no progress, spooking the industry.
The solar cap had gotten wrapped up in a dispute over wind turbines. Merkel's own party, the Christian Democrats, insisted that its support for lifting the solar cap come in exchange for the imposition of a rule blocking the construction of wind turbines closer than 1,000 meters to a home.
In contrast, the fellow governing party in Merkel's coalition, the Social Democrats, wanted to make things easier for wind developers.
In the end, the two ruling German parties found a compromise: the decision on turbine distances will be left to individual regions, and the solar cap will be lifted.
“Today's agreement on the coalition fractions is an excellent result for the energy transition and climate protection. And it is also a strong stimulus for the economy and employment, especially in these difficult times," said the country's economy minister Peter Altmaier.
EuPD Research, a market researcher, had said the German solar market could see an 83 percent reduction in residential installations in 2021 if the cap were left in place.
In 2019, more than 80 percent of the 4 gigawatts of solar installed in Germany were systems under 750 kilowatts, according to SolarPower Europe.
“We very much welcome the latest decision to finally abandon the solar cap," said Alexander Schütt, managing director of the distribution business at BayWa r.e. "It’s great news for the German solar installers and of course the energy transition. It’s now crucial to put the agreement immediately into national legislation to avoid any further delays."
Germany's wind sector has faced numerous policy battles in recent years, but there has been recent progress.
Last week as part of an energy-based coronavirus response, German parliament passed a range of measures designed to tackle an out-of-control backlog in onshore wind permitting. A number of “digital alternatives” will be allowed to replace a series of negotiations and meetings that had been required to take place online.
Additionally, last week Germany lifted its 2030 offshore wind target from 15 gigawatts to 20 gigawatts.
Onshore wind farms have become increasingly controversial in parts of Germany, which is the size of the U.S. state of Montana but has more than 50 gigawatts of installed wind farms.