Speaking in Brussels yesterday (8 July), European Energy Commissioner Günther Oettinger said the EU would need a harmonised feed-in tariff to boost investment in solar power and other renewable energies. His comments came as the parliament in his native Germany was voting to approve cuts to the national feed-in tariff.
The commissioner praised the German Renewable Energy Sources Act (EEG) for guaranteeing "a fair price" for renewable energy, urging Europe to adopt something similar.
"I think we need a European EEG," the German suggested.
The ground-breaking regulation, adopted a decade ago, made Germany the world's biggest solar market despite its northern location and paved the way for similar schemes to be applied elsewhere across Europe.
To integrate solar power from the Mediterranean region into the European market, infrastructure will have to be built between Morocco, Spain and France, as well as Tunisia, Italy and Germany, capable of reaching as far as Central European markets, Oettinger said.
"Maybe we need a Europe-wide guarantee and a Europe-wide price to get enough investment," he said.
Feed-in tariffs (FiTs) oblige grid operators to buy renewable electricity at a favourable price in order to give emerging technologies such as solar and wind a fair chance of competing with fossil fuels. Over time, the tariffs are reduced as technological development brings production costs down.
The European Commission has periodically examined the option of harmonising national support schemes for renewables with the aim of removing barriers to production across national borders.
But its latest report in 2008 concluded that harmonisation at this point could disrupt the market by abolishing well-established national support schemes.
Tariff cuts all over Europe
Many EU states have embarked on additional cuts in incentives for solar power in the wake of a steady decline in the price of solar panels. But the moves have cast doubt on the future of the industry, which was built on preferential tariffs, and solar companies have warned of job losses.
Germany's lower house of parliament yesterday (8 July) approved a reduction of the country's feed-in tariff of up to 16% while giving the industry an extra three months to adjust with a 13% cut. The cuts came on top of regular tariff adjustments approved on an annual basis.
The German tariff cuts are the result of a compromise reached on Monday between the upper and lower houses of parliament. The original proposal to immediately cut support for roof-top solar installations by 16% hit a brick wall in the upper house, which is to vote on the agreement today.
Chancellor Angela Merkel's coalition government had pressed for deeper cuts, insisting that support must be brought into line with drops in solar prices of as much as 40%. Moreover, consumer organisations have been campaigning for reductions, pointing to rising electricity prices.
Earlier this month, the cash-strapped Spanish government also announced cuts to premium tariffs for wind power and reduced the number of hours that wind and solar thermal power are eligible for premiums. But while the reductions were modest, the industry expressed fear that the photovoltaic solar sector would bear the brunt of upcoming subsidy cuts.
Elsewhere, the Czech Republic approved cuts to its generous feed-in tariffs in March, while Italy has also announced cuts to subsidy regimes for renewables.
With around half of the world's solar market, Germany is a clear leader in photovoltaic solar technology, but other European countries like Spain, Italy and France have attempted to challenge this in recent years (EURACTIV 24/07/09).
Among the most successful examples of government promotion of solar power are beneficial feed-in tariffs to electricity from renewable sources, which were first adopted in Germany and then followed by others.
They aim to help technologies that are not yet commercially viable to reach grid parity, the point at which they cost the same as fossil fuels (see EURACTIV LinksDossier on 'Supporting renewable energies: The 'transition' schemes).