The dark clouds of controversy looming over the German feed-in tariff have finally cleared with a compromise between the Bundestrat and Bundestag. Chancellor Merkel’s government has announced that it wants to maintain a solar “growth corridor” of 2,500-3,000MW per year, with installations capped at 52GW. A class system for medium-sized roof-top installations will also be introduced. All funding will be back-dated to the original date of April 1, 2012.

FiTs for PV roof systems of between 10-40kW will be lowered to €0.185 per kWh for 90% of the energy generated. This rate will be valid until January 2014. Funding for solar power plants of 10MW remains unchanged.

EuPD Research states that the “investment segment 10-40kWp in 2011 made more than 1.8 GW, amounting to a quarter of the market. A similar growth pattern can also be expected for this class size in 2012, which already shows an installed capacity of 600MWp in the first four months.”

Jefferies, global securities and investment banking group, states: "Returns are low, however, cheap KfW financing will continue to make the market attractive for levered returns in a low rate environment. Pricing is unlikely to improve and will potentially continue to decline. We continue to favour unit plays in the solar space such as inverters over module producers given the expectations for a protracted low price environment."

The Federal Government has also guaranteed to support a research and development programme for storage solutions with €50 million to be made available from January 1, 2013.

Following last year’s nuclear disaster in Japan, Germany started decommissioning its nuclear reactors, looking to increase its renewable energy usage to 80% by 2050 and added a record 7.5GW of solar energy capacity in 2011.

At the beginning of this year the government had agreed to introduce a digression to the FiT after calls from the Economy Minister Philipp Roesler to overhaul the subsidy system. In March, thousands from the German solar industry marched in protest to the cuts leading to further proposals of reductions to rise to 28% from 24%.

Newly-elected Environment Minister Peter Altmaier said, "This has been a good day for the energy industry in Germany. For us, it is important that renewable energy sources become competitive and I am optimistic that solar power will be able to obtain this in a few years without the need for further subsidies. At the same time, we will increase funding for research to ensure that the German solar industry has a fair chance on an international platform."