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German minister plans prompt cut to renewable energy tariffs

Germany’s economy minister wants to cut the support price paid for electricity from solar and wind power generators by about a third by 2015, according to a draft proposal for one of the most challenging economic reforms facing Chancellor Angela Merkel’s new government.

Under the draft proposal the feed-in tariffs paid to renewable power generators will be cut to an average across all technologies of 12 cents per kiloWatthour (cent/kWh) by 2015 from 17 cents/kWh currently.

And Economy Minister Sigmar Gabriel, who also leads the Social Democrats (SPD), wants the reduction to start taking effect for some new projects from as early as next week, according to the draft seen by Reuters on Saturday.

“The old rates of support (under the old renewable energy law (EEG)) are applicable for wind energy plants that start operating by Dec 31, 2014 and that were authorised … by Jan. 22, 2014,” said the draft outline prepared for a cabinet meeting this week.

The economy ministry, has been merged under Merkel’s right-left coalition with the energy portfolio and is run by Gabriel.

Europe’s biggest economy is in the throes of shifting away from nuclear and fossil fuel-powered generation to so-called renewable sources, but the move has sent electricity costs for consumers soaring.

When striking a coalition deal late last year, Merkel’s conservatives and Gabriel’s SPD agreed to limit the growth of renewables and reform the discounts and subsidies afforded to industry for solar and wind power.

According to the draft, the capacity build-up of onshore wind plants and solar plants shall be reduced to 2,500 megawatts per year, while offshore wind parks will be expanded by 6,500 megawatts up to 2020. Bioenergy generation capacity will be increased by 100 megawatts a year.

The subsidies are largely borne by households, whose bills have almost doubled to an average of 300 euros ($410) per megawatt-hour (MWh) of energy over the past decade to become some of the highest in Europe.

German industry fears, however, that paying more for power will make it less competitive. Germany has pledged to have shut down all of its nuclear power plants by 2022. The move was accelerated by Merkel after the Fukushima nuclear disaster in 2011.

For a Factbox on the reforms as outlined in the coalition deal, click on (Reporting by Annika Breidthardt and Markus Wacket; Editing by Greg Mahlich)