German economy min plans subsidy for solar manufacturing - report

German Economy Minister Robert Habeck is planning to introduce a new subsidy aimed at bolstering the establishment of solar equipment manufacturing capacity nationwide, amidst fierce competition from low-cost Chinese manufacturers.

Habeck plans to initiate a pilot tender for a subsidy dedicated to domestically produced solar panels, looking to empower local manufacturers in the face of competition from Chinese mass producers, as he explained in an interview.

In a conversation with the German newspaper group RND, Habeck emphasised that solar equipment manufactured in Germany meets requirements that others do not. For example, these products often do not contain toxins or have a high degree of efficiency and anyone who makes such a difference and contributes to resilience should be duly rewarded, the minister said.

Originally, the economy ministry planned to support the development of new production capacity for solar equipment with EUR 1.3 billion (USD 1.41bn) but these funds had to be cut during the recent discussions on a budget compromise. In June, the ministry invited companies in the German solar manufacturing industry to express interest in an investment cost (CAPEX) subsidy for their projects. The aim was to support projects aimed at building up a total production capacity of around 10 GW per year along the value chain.

The plan to cut the funding programme was criticised by solar industry association BSW which described it as a major setback for the expansion of solar factories in Germany. In response to the lost funds, BSW is advocating for the implementation of a time-limited and focused funding pool dedicated to solar systems manufactured in Europe as part of the so-called Solar Package I which is currently under discussion.

If this does not happen, hundreds of thousands of new solar systems will be installed every year, but only a fraction of them will be produced in Europe which would be to the detriment of Germany as a business location and future tax revenues, according to BSW's managing director Carsten Koernig.

In the interview with RND, Habeck stressed that the government still has the firm goal of realising the projects planned under the failed funding programme. "We have strong and innovative companies and great interest from others who want to invest here,” Habeck said.

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