Solar Tariffs: Outlook for 2010
The solar industry remains largely dependent on subsidies -- known in the industry as "feed-in tariffs" -- from national governments. A look at data recently put together by Navigant Consulting, of Chicago, can help investors understand the tariff situation, and what it means for solar companies, heading into 2010.
By far the biggest and most important of the tariff regimes -- sometimes derogatorily described by sector analysts as "solar welfare" -- is in Germany. With significant reductions expected in the rates paid by the German government to solar providers per unit of electricity by the second half of 2010, other European nations, as well as Ontario, Canada, are expected to pick up the slack.
The chart above shows that tariffs certainly look good on paper; they provide solar companies with a sweetheart deal to spur the growth of alternative-energy generation.
But, last year, Spain capped its feed-in tariff system. Now, with politically motivated reductions expected from Germany at a level above and beyond original plans for gradual reductions, there has been speculation that countries instituting tariff regimes for the first time might not offer the plumb deals solar companies have grown accustomed to.
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