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Germany plans cap for renewable energy subsidies

Chancellor Angela Merkel’s government said it will cap subsidies for renewable energy once installations pass a fixed threshold, Germany’s biggest effort yet to limit costs for consumers from scrapping nuclear power.

The nation will end payments for wind and biomass plants once capacity reaches a certain threshold, extending to more technologies the limits planned for solar energy, said Environment Minister Peter Altmaier. Lawmakers will debate the measures next year when they consider a new clean energy law.

“The energy switch is the biggest economic project of the post-World War II era,” Altmaier, the minister responsible for the legislation, told reporters in Berlin today. Germany, he said, will “fundamentally” reform the system to make renewables compete at market prices “as quickly as possible.”

The proposals mark the most sweeping changes to Germany’s support mechanisms for renewables since the country adopted feed-in tariffs in 2004. Those rules guarantee above-market prices for clean energy and have been emulated around the world, helping make Germany the world’s biggest market for solar and triggering booms in every nation that tried them.

Capacity Levels

The reforms build on a target announced in June to cap payments for solar power once capacity reaches 52 gigawatts, compared with about 30 gigawatts now. In all, Germany gets about a quarter of its electricity from a renewable generation complex that has reached about 70 gigawatts. That includes about 30 gigawatts for wind, 5.5 gigawatts for biomass and 4.4 gigawatts for hydroelectric plants.

Merkel also is boosting Germany’s target for the portion of power supplies that come from renewables to 40 percent by 2020. The previous ambition was for 35 percent, a level Altmaier said is certain to be surpassed. The nation plans to shut all of its nuclear reactors by 2022, tapping renewables as well as more efficient gas and coal plants to fill the gap.
Strain on Consumers

Ministers are concerned that an uncontrolled renewable expansion strains power networks as it may leave consumers without energy when the wind doesn’t blow or the sun doesn’t shine. The economic crisis, which is hurting developers by hampering access to financing, has prompted Spain, France, Italy and the U.K. to curb incentives for the industry.

A new law would have to provide tools so that the expansion is “constant and predictable,” Altmaier said.

It should allow for the expansion of all clean-energy technologies, enable greater coordination where renewable generators and power lines are built, and include incentives for energy storage, Altmaier said. Politicians also need to help people with power prices that rise as a result of the energy overhaul, he said.

“We knew from the start that the energy switch can’t be realized for free,” Altmaier said. “However, I want to prevent costs that can be prevented.”

The minister said he will seek to draft the bill after consultations that are due to start next month and last through May. He didn’t say if the final decision on the law would be made before or after the national election due in September 2013.