Solar power cut

The German government has voted to slash the subsidy tariffs that electricity companies have to pay for solar power.

The decision means power firms, which had been forced to buy the power at prices above the market rate, will have their own bills slashed in a move aimed at lowering costs for consumers.

Members of Chancellor Angela Merkel's cabinet agreed to lower the tariffs on the energy produced from rooftop solar power panels by 16 percent.

Companies will have to pay 15 percent less for electricity produced by panels on larger power stations on open land.

Coalition agrees on plans

The cabinet met on Wednesday to give its approval to the plans, which had already been agreed upon by the ruling Christian Democrat and Free Democrat coalition.

The price reductions, from July 1, follow previous cuts and still await parliamentary approval. The move should mean that utilities pay 0.33 euros (0.45 dollars) per kilowatt-hour.

Until this year, utilities have been forced by law to pay 0.39 euros per kilowatt hour for solar power exported to the national grid. The market price is only about 5 cents, with firms allowed to pass on the cost of the difference to customers.

Solar installations on farmland will only be subsidized in exceptional circumstances after farm lobbies campaigned for a change in law to stop large tracts of land being bought by speculators.

rc/AP/dpa/AFP
Editor: Rob Turner