by Susanne von Aichberger, Analyst

Once again, the PV industry is waiting anxiously to see how much demand can be absorbed by European countries during the second half of the year, with pending policy revisions in Germany commanding center stage.

The uncertainty in the world’s largest market was prolonged last week when an arbitration committee postponed an eagerly awaited decision on the latest amendment of the German Renewable Energy Act (EEG). Back in May, the committee arbitrating between the Federal Parliament (Bundestag) and the Federal Council (Bundesrat, which represents the 16 German Federal States) had been charged with revising a draft law which proposed drastic cut-backs to PV funding in Germany. The draft had passed through the Bundestag on March 29th.

Now an “unofficial” committee is seeking find a compromise to the outstanding points that are being debated between the government and its opposition. This is likely to be the final opportunity for the law to pass through the Bundesrat ahead of the summer break (with the final meeting set for 6 July 2012).

Among the points originally rejected by the Bundesrat is the “Market Integration Model.” This proposes to restrict FIT payments to 80% or 90% of produced electricity that is subsequently fed into the grid (depending on system size). Other debated issues in the draft are the exclusion of new PV systems above 10 MW from FIT funding and the structure of size classes.

Regarding the latter point, the newly-appointed Minister for the Environment, Peter Altmeier, is reported to have agreed to implement an additional size category of 10-40 kW, with higher FIT than in the class for the larger size categories. Originally, the new EEG was envisaged to have only three size categories, with the highest tariffs being paid for systems of of up to 10 kW, and the other classes comprising installations between 10 kW and 1 MW, and between 1 MW and 10 MW.

Until the new act is in place, the EEG that became effective on January 1st remains in effect. However, it is possible that tariff cuts approved on April 1st could be retroactively enforced by the parliament. Retroactive changes that would impact the funding conditions beyond the cuts in the draft that passed the Bundestag on March 29th are unlikely though. Instead, the retroactive funding reductions effective from April 1st could even be softened. Therefore, legal advisors are recommending that the PV investment community for the moment assume the FIT rates and transition phases that passed through the Bundestag in March.

PV operators that had systems connected to the grid after 31 March 2012 will for the time being receive preliminary payments with FIT that were valid in Q1’12. Should the final tariffs levels starting at April 1st turn out to be lower than the previous FIT (as it is expected), the difference between the FIT would have to be paid back by the PV operator.