The collapse of Sun Biofuels has left hundreds of Tanzanians landless, jobless, and in despair for the future
Damian Carrington in Tanzania
The Observer, Sunday 30 October 2011
"People feel this is like the return of colonialism," says Athumani Mkambala, chairman of Mhaga village in rural Tanzania. "Colonialism in the form of investment."
A quarter of the village's land in Kisarawe district was acquired by a British biofuels company in 2008, with the promise of financial compensation, 700 jobs, water wells, improved schools, health clinics and roads. But the company has gone bust, leaving villagers not just jobless but landless as well. The same story is playing out across Africa, as foreign investors buy up land but leave some of the poorest people on Earth worse off when their plans fail.
The tale of London-based Sun Biofuels's misadventure in Kisarawe links the broken hopes of the villagers to offshore tax havens and mysterious new owners, tracked down by the Observer, and ultimately to petrol pumps in the UK and across Europe. The final link results from the mandatory blending of biofuels into European petrol and diesel. The aim is to reduce carbon emissions, but many say biofuels actually increase pollution. The G20 meeting next week will discuss the issue, following a stark report it received in June from the World Bank, World Trade Organisation, UN and others calling for biofuels subsidies to be abandoned.
"The situation in Kisarawe is heartbreaking, but the real tragedy is that it is far from unique. Communities across Africa and beyond are losing their land as a result of the massive biofuel targets set by our government," said Josie Cohen at development group ActionAid, which works in Kisarawe. "Like it or not, everyone who drives a car or catches a bus is involved in this problem, as all UK petrol and diesel is mixed with biofuels."
It was the promise of this lucrative export market that led Sun Biofuels to Africa to plant jatropha, the seeds of which can be processed into biodiesel. Mkambala's first contact with the company was in 2006 through the former Kisarawe MP, Athumani Janguo. "People trusted him. We thought all our problems would be solved," Mkambala told the Observer. He says no compensation has been paid for the land, on which villagers used to hunt animals, gather firewood, wild mushrooms and honey.
Mhaga has no electricity, and water has to be carried each day from a well several kilometres away, back to the small mud or concrete-block houses in which 1,000 people live. "Water is everything," says local activist Halima Ali, sitting with three of her children on the earth floor of their home. "Because they promised there would be water available, everyone was happy." There would be more time for farming and more time for her children to go to school, she says. But the company drilled only a 6in-wide hole in the village, despite having sunk a 100m well on the plantation. "We thought something very good had come to the village, to lift our standard of life, but now we are only crying," she says.
Sun Biofuels was the first company to come to the area and about 50 people in Mhaga rushed to take jobs at its plantation, some queueing for days for the £42-a-month salary. Saidi Abasi was one, but he was soon unhappy. He asked his employer why a promised pay rise failed to materialise. "The reply was 'if you want to work, work. If you don't, get out'," he says.
Abasi's job was spraying pesticides, but he claims he was initially given no protective equipment. "During spraying, we became like drunk people," he says. When his contract was terminated after Sun Biofuels went into administration, he says he was not paid the full severance pay due for his 18 months of service.
Mhaga's crowded school teaches 257 children and was promised new classrooms, books and materials, says teacher Rhamadani Lwinde, but all that appeared were a few portable blackboards. In addition to the village land, the company also took 670 hectares of Lwinde's family land, he says. He was offered 13m Tanzanian shillings (£4,835), which he says was not a good price, "but we were advised to accept it by the district authorities. If we had problems we would sort it out later, they said." In the end he says he was paid for just 85 hectares.
In the nearby village of Mtamba, villagers tell the same stories of broken promises and unpaid compensation. Tabu Koba says he was one of 11 people to lose land and one of nine who received no money at all. "We are very angry," he says. "My children have now left school but have nowhere to farm."
Sun Biofuels and two related companies went into administration in August, but their shares in a Tanzanian subsidiary – Sun Biofuels Tanzania, which did not go bust – were sold. The insolvency company directed the Observer to Christopher Egerton-Warburton and a company called Thirty Degrees East, based in the tax haven of Mauritius. Egerton-Warburton is a former Goldman Sachs banker and now a partner at the London-based merchant bank Lion's Head Global Partners. "We are part of a consortium that purchased the shares of Sun Biofuels Tanzania," he said. "Given that we are currently in the process of raising additional funds, I am not at liberty to discuss publicly or off the record about our long-term plans."
Egerton-Warburton said a site visit was not possible, but when the Observer went to the plantation it was able to interview farm manager Ambilikile Mwenisongole, who has worked there for four years and lives on site. He confirmed that fewer than 50 of the 700 workers remained and that the plantation was not operating due to the change of ownership. Mwenisongole said the progress on the water wells and other social services were "not on target because of the transition", but he denied that workers lacked tools or protective equipment and rejected claims that access to an ancestral graveyard had been blocked. He blamed the complaints on rumours spread by "lazy" villagers.
It was not possible for the villagers to get their land back, Mwenisongole said. "It is now owned by the government. The government was meant to compensate the land owners." In Tanzania, large land deals are done through the district government, which acquires the land and then leases it to companies. District officials have told villagers that Sun Biofuels did not pay all the money due, but refused to see the Observer.
Mwenisongole named Kenyan Alan Mayers as the new chief executive of Sun Biofuels Tanzania. Mayers said he could not comment on the previous owners' failure to provide wells and classrooms, but added: "We are looking into the matter and our community relations officer is in constant contact with the villages." Villagers say that there has been just one recent meeting.
Mayers said all compensation for land and all due severance pay had been paid, and that he was unaware of claims by ex-workers that national insurance payments were missing. He added: "We are focused on a positive, collaborative relationship with local people."
Yet Kisarawe MP Selemani Saidi Jafo said: "I am the MP and I am not yet informed there is a new owner. What is the secret behind it? I need investors to come to my district, especially to help bring employment for many people. I prefer a win-win project, but this is not a win-win." Why Sun Biofuels went bust is unknown, as attempts to contact the previous owners were unsuccessful. Whatever the reason, the company is far from alone. A large jatropha plantation created by a Dutch firm called Bioshape in the southern Tanzanian district of Kilwa has also gone bankrupt, leaving locals complaining of missing land payments. Also in Tanzania, a large ethanol biofuel project set up by Swedish company Sekab went bust. In both cases, the land has not been returned to its owners.
Further afield, in Ghana, a Norwegian-backed jatropha project has collapsed, while in Mozambique a UK-linked company called Procana, behind a huge ethanol project, has folded in acrimony. The Observer's investigations and those of journalist Stefano Valentino have identified at least 30 abandoned biofuels projects in 15 African countries.
The thirst for biofuels to meet the UK and EU's rising targets has led British companies to lead the charge into Africa. Half the 3.2m hectares of biofuel land identified is linked to 11 British companies, the biggest proportion of any country. ActionAid's estimate suggests that up to 6m hectares has been acquired. But with landowners frequently illiterate and unaware of their rights, the potential for exploitation is high.
In Kisarawe, the villagers do not know if the promises will ever be kept. They feel deeply betrayed and are increasingly angry as time passes without answers. "If we have not got our rights by December, we will slash the jatropha plants," says Mkambala. "That will be the clearest sign that we do not need this company here."
THE ENERGY DEBATE
What are biofuels?
Biofuels are petrol and diesel substitutes produced from plants. Their great attraction is that they can be used by existing cars and lorries and, because the plants absorb carbon dioxide when they grow, burning them does not fuel global warming - in theory.
What's the problem?
Many studies have now shown that existing biofuels, such as petrol substitutes produced from corn or diesel replacements from soya or palm oil, are actually worse for the environment than petrol, once you have factored in all the fertilisers, processing and transport. Furthermore, converting food into fuels has been widely linked to the rising food prices which have driven millions around the world into hunger.
Is the UK involved?
Yes. British fuel suppliers are already required to blend a few per cent of biofuel into all petrol and diesel, rising to 5% by 2013-14. This is despite 70% of these biofuels failing to meet the government's own green standards. The EU also has a target of 10% of all fuel being derived from plants by 2020. This is driving the demand for biofuels, with UK companies ahead in acquiring millions of hectares of land in Africa.
Is there any hope for biofuels?
So-called second-generation biofuels, which produce fuels from plant waste such as stalks or wood chips, would avoid the competition with food but are only at the research stage. Even further away, and perhaps even more promising, is producing fuels from algae grown in ponds or tubes. But the volumes of fuel currently used are so vast that, even with some environmentally friendly biofuels, we will need more efficient and more electric vehicles as well as better public transport if we are to tackle climate change.
Damian Carrington
Sunday, 30 October 2011
Hydropower turbine brings renewable energy to river Thames
Mapledurham Estate is now home to the biggest Archimedes screw in the UK
Fiona Harvey, environment correspondent
guardian.co.uk, Tuesday 25 October 2011 10.54 BST
The first hydropowered turbine to be built on the river Thames in recent times will be unveiled on Tuesday, taking over at the last working watermill still located on the river.
Mapledurham Estate on the banks of the Thames in Oxfordshire is now home to the biggest Archimedes screw in the UK – an update of millennia-old technology that will allow electricity to be generated from 280 Olympic swmming pools of river water washing through the turbine every day.
Several other hydropower plants have been proposed for the Thames, including one for the Queen at Windsor, but none are yet operational.
The 900-year-old estate – whose watermill was mentioned in the Domesday Book – supplies milk to Marks & Spencer, which has helped to finance the renewable energy project, providing the retailer with about 500,000kWh of renewable electricity each year, or enough to power one of its average stores.
John Eyston, owner of the estate, said the deployment of the hydropower technology was a long-held dream. He said: "It's been our long-standing ambition to generate renewable electricity from the last working watermill on the Thames. We're delighted that the hydropowered turbine is now up and running, providing a sustainable additional income for the future from this historic site."
Converting old watermills to produce electricity can be tricky, in part because of the need to gain planning permission and to build in protection for fish. At Mapledurham, the system has been designed so that fish can swim safely through the machinery, which is 3.5m in diameter, and it should not break down if hit by flooding or debris. Work on the turbine was begun in April and finished within six months.
Under its "plan A" project to be more environmentally sustainable, M&S is encouraging small suppliers, including farmers, to build renewable energy generation by guaranteeing to buy the electricity under a five year fixed price contract. This steady income stream helps the supplier to raise the finance needed for the upfront cost, and many of the schemes are also eligible for government subsidies under the renewable obligation or feed-in tariff schemes.
The watermill at Mapledurham Estate, which has been a favourite subject of British artists down the years, will be open to viewing by the public at certain times.
Fiona Harvey, environment correspondent
guardian.co.uk, Tuesday 25 October 2011 10.54 BST
The first hydropowered turbine to be built on the river Thames in recent times will be unveiled on Tuesday, taking over at the last working watermill still located on the river.
Mapledurham Estate on the banks of the Thames in Oxfordshire is now home to the biggest Archimedes screw in the UK – an update of millennia-old technology that will allow electricity to be generated from 280 Olympic swmming pools of river water washing through the turbine every day.
Several other hydropower plants have been proposed for the Thames, including one for the Queen at Windsor, but none are yet operational.
The 900-year-old estate – whose watermill was mentioned in the Domesday Book – supplies milk to Marks & Spencer, which has helped to finance the renewable energy project, providing the retailer with about 500,000kWh of renewable electricity each year, or enough to power one of its average stores.
John Eyston, owner of the estate, said the deployment of the hydropower technology was a long-held dream. He said: "It's been our long-standing ambition to generate renewable electricity from the last working watermill on the Thames. We're delighted that the hydropowered turbine is now up and running, providing a sustainable additional income for the future from this historic site."
Converting old watermills to produce electricity can be tricky, in part because of the need to gain planning permission and to build in protection for fish. At Mapledurham, the system has been designed so that fish can swim safely through the machinery, which is 3.5m in diameter, and it should not break down if hit by flooding or debris. Work on the turbine was begun in April and finished within six months.
Under its "plan A" project to be more environmentally sustainable, M&S is encouraging small suppliers, including farmers, to build renewable energy generation by guaranteeing to buy the electricity under a five year fixed price contract. This steady income stream helps the supplier to raise the finance needed for the upfront cost, and many of the schemes are also eligible for government subsidies under the renewable obligation or feed-in tariff schemes.
The watermill at Mapledurham Estate, which has been a favourite subject of British artists down the years, will be open to viewing by the public at certain times.
Solar subsidies to be cut by more than half
Government documents prematurely published online reveal feed-in tariff cut will double the payback period for householders
Adam Vaughan and Fiona Harvey
guardian.co.uk, Friday 28 October 2011 09.51 BST
Solar subsidies will be dramatically cut by more than half, according to government documents that were prematurely published online and quickly taken down.
The cut will almost double the payback period for householders, the document revealed, meaning someone installing £10-12,000 solar panels will only be in credit after 18 years rather than the current 10. The rate will be reduced from 43.3p per kilowatt hour of solar electricity to just 21p, the document revealed, cutting returns from around 7% to 4%.
Although the solar industry said it could bear the cuts, many companies said the reductions would hurt the poorest consumers hardest. Lower income households are more likely to rely on free deals whereby the installer takes the subsidy but the household gets free power – often enough to rescue people from fuel poverty.
While the PDF on the Energy Saving Trust website noted that "these proposals are currently under consultation and are not final", the figure is in line with earlier speculation that the rate will be cut by over half. It also said consumers considering solar should assume the 21p figure is what they will get if they install after 8 December.
Howard Johns, MD of Southern Solar, who spotted the document, tweeted: "It seems that EST know exactly what the outcome of the Fit review already – so much for consultation." Toby Ferenczi, chief technology officer at solar company Engensa, wrote: "This isn't acceptable and will result in massive job losses – don't be fooled."
The official announcement on the slashing of the feed-in tariff rate paid to householders looks set for Monday, with energy secretary Chris Huhne slated to make a statement in parliament, echoing tweets from the climate change minister, Greg Barker.
A Department of Energy and Climate Change (Decc) spokesman said: "We'll be publishing a full consultation on changes to the solar PV tariff changes in parliament on Monday. The Energy Saving Trust inadvertently published a draft of documentation on its website that was neither final nor accurate." However, the figures are line with those disclosed by the Guardian.
The spokesman added that if government took no action now, by 2014-15, Fit payments for solar would be cost consumers £980m annually, adding £26 to electricity bills by 2020. Average electricity bills are estimated to be £512 by 2020.
The government has argued that as the cost of solar power has come down, the subsidies should also be reduced as at present solar companies are absorbing some of the extra profits. Although the payback period has been reduced, the financial return at about 4% a year still beats most bank offerings and other financial investments available to individuals.
Prof Stephen Frankel, who chairs the Wadebridge Renewable Energy Network in Cornwall, which wants to install solar panels for free to local homes, warned the cuts would endanger the project.
"The Fit underpins these installations, and the benefits then flow not to outside speculators but are retained in the area and contribute to our community fund. This fund is available for local projects, as decided democratically by local people. We are now told that the Fit is to be curtailed drastically. If that is true, our efforts to act upon government advice and encouragement will have been for naught."
Daniel Green, of the solar installer HomeSun, said people without the money to invest £10,000 or more upfront in roof panels would be hardest hit, as suppliers would no longer find it worth their while to install solar panels for them.
HomeSun is one of a range of companies fitting solar panels to homes and community buildings for free: the roof-owner gains free energy, and the subsidies are kept by the installer. Proponents of these schemes argue that it helps to rescue people from fuel poverty.
Green said: "In the residential sector, providers of free solar panels are around 50% of installations and they will disappear at anything less than 28p per kWh. This means the less well-off will not be able to benefit from solar."
The news comes a day after the government signalled support for the 25,000 jobs in the fast-growing solar industry. Barker said the government wanted growth in solar panel installations to continue.
"We are determined not just to drive down carbon emissions but to build a successful, thriving, prosperous low-carbon economy," he told a solar power conference in Birmingham.
"I'm personally committed to ensuring that your industry can prosper in the longer term, sustaining green jobs at a critical time for our economy, jobs that people can build a career on [and] that can help drive the recovery."
Johns told the Guardian that the cuts would be a "disaster". "If they go ahead with this, the tariff is way too low, and all the social housing and free solar schemes – which make the feed-in tariffs exciting in terms of fuel poverty – will be destroyed." He added that this was the third government review into solar subsidies this year, saying: "We've invested business in PV [solar photovoltaic panels] and had it sliced up three times in a year. They [the government] have no credibility on this any more."
"You can't do U-turns like this without having to answer for it – it puts the spotlight firmly on the coaliton's green credentials," he said.
Seb Berry, head of public affairs at the UK's largest solar company, Solarcentury, said they would campaign against the proposals:
"Today's leak from the EST confirming the government's intention to more than halve the domestic tariff from 8 December to 21p makes a mockery of the feed-in tariff consultation process established by the Energy Act. The minister tried to reassure the industry yesterday that he supported this sector and valued our investment, jobs, innovation and rapid growth. Today those reassurances ring hollow."
Juliet Davenport, CEO of utility Good Energy, said: "Clearly we'll have to wait until Decc comes out with the final details on Monday, but if these rumours are true they are very concerning. Feed-in tariffs have been successful at the end of the day because they give households control over their energy supply, insulating themselves from price hikes and reducing their carbon footprint."
But the consultancy PwC argued that the deep fast cuts proposed by the government were better than the risk of a bubble which would lead to over capacity in the short-term, followed by cuts later, which would mean sharper job losses. "A deep and fast cut in Fits will be required to protect the UK solar industry from stalling or creating a market bubble before any rate changes take effect," the consultancy said in a report on Friday.
On Thursday, Germany, the world's biggest solar-panel market, said it will also cut subsidies for solar photovoltaic power. Rates will be reduced 15% from January 2012, the Bundesnetzagentur, the federal grid regulator, announced. Power from panels will earn €17.94to €24.43 a kilowatt-hour, depending on size and location.
Deep cuts to the popular feed-in-tariff have been overseen in recent years, with the German government arguing that economies of scale and improvements in technology are resulting in rapid reductions in the cost of the sector, meaning the industry no longer needs such a high-level state aid. Since Germany's Renewable Energy Sources Act (EEG) was introduced 11 years ago, providers are guaranteed fixed prices for the electricity they feed into the grid. Like the UK scheme, it is paid for by consumers, adding €3,59 a kilowatt hour on energy bills or, according to calculations by The Rheinish-Westphalian Institute for Economic Research (RWI)€ 85,4bn for the solar built between 2000 and 2010 and ensuing payments.
The Bundesnetzagentur revises the tariff regularly. A 9% reduction every year is given by law, but it can be higher depending on actual new installations. "During the past 12 months an additional new capacity of approximately 5.200 megawatts has been registered. This figure results in a 15% lower remuneration compared to the actual Fit for systems connected to the grid beginning January 1 2012," said Matthias Kurth, president of the federal grit regulator. The rate could have been cut by as much as 24% (the annual cut's ceiling) if a larger amount of solar, 7,500MW, had been added.
In 2010, Germany added a record 7.400 megawatts of solar power, and small green energy firms have become sizeable within just a few years. The renewable industry supports 380,000 jobs in total, 108,000 within the photovoltaic industry alone. "Germany is the global market leader in the renewable energy sector," the German environment minister, Norbert Röttgen, said .
However, German solar cell manufacturers can hardly keep up, now that prices are collapsing and Chinese suppliers are flooding market. "The prices were falling down more rapidly than German manufactures expected. but they will prevail in the long time because of the better quality," Daniel Kluge from the German Renewable Energy Federation said.
Probably, there will be a run in the next weeks, as a lot of home owners will cover their roofs with solar-modules before the 15 percent reduction at the beginning of January.
Adam Vaughan and Fiona Harvey
guardian.co.uk, Friday 28 October 2011 09.51 BST
Solar subsidies will be dramatically cut by more than half, according to government documents that were prematurely published online and quickly taken down.
The cut will almost double the payback period for householders, the document revealed, meaning someone installing £10-12,000 solar panels will only be in credit after 18 years rather than the current 10. The rate will be reduced from 43.3p per kilowatt hour of solar electricity to just 21p, the document revealed, cutting returns from around 7% to 4%.
Although the solar industry said it could bear the cuts, many companies said the reductions would hurt the poorest consumers hardest. Lower income households are more likely to rely on free deals whereby the installer takes the subsidy but the household gets free power – often enough to rescue people from fuel poverty.
While the PDF on the Energy Saving Trust website noted that "these proposals are currently under consultation and are not final", the figure is in line with earlier speculation that the rate will be cut by over half. It also said consumers considering solar should assume the 21p figure is what they will get if they install after 8 December.
Howard Johns, MD of Southern Solar, who spotted the document, tweeted: "It seems that EST know exactly what the outcome of the Fit review already – so much for consultation." Toby Ferenczi, chief technology officer at solar company Engensa, wrote: "This isn't acceptable and will result in massive job losses – don't be fooled."
The official announcement on the slashing of the feed-in tariff rate paid to householders looks set for Monday, with energy secretary Chris Huhne slated to make a statement in parliament, echoing tweets from the climate change minister, Greg Barker.
A Department of Energy and Climate Change (Decc) spokesman said: "We'll be publishing a full consultation on changes to the solar PV tariff changes in parliament on Monday. The Energy Saving Trust inadvertently published a draft of documentation on its website that was neither final nor accurate." However, the figures are line with those disclosed by the Guardian.
The spokesman added that if government took no action now, by 2014-15, Fit payments for solar would be cost consumers £980m annually, adding £26 to electricity bills by 2020. Average electricity bills are estimated to be £512 by 2020.
The government has argued that as the cost of solar power has come down, the subsidies should also be reduced as at present solar companies are absorbing some of the extra profits. Although the payback period has been reduced, the financial return at about 4% a year still beats most bank offerings and other financial investments available to individuals.
Prof Stephen Frankel, who chairs the Wadebridge Renewable Energy Network in Cornwall, which wants to install solar panels for free to local homes, warned the cuts would endanger the project.
"The Fit underpins these installations, and the benefits then flow not to outside speculators but are retained in the area and contribute to our community fund. This fund is available for local projects, as decided democratically by local people. We are now told that the Fit is to be curtailed drastically. If that is true, our efforts to act upon government advice and encouragement will have been for naught."
Daniel Green, of the solar installer HomeSun, said people without the money to invest £10,000 or more upfront in roof panels would be hardest hit, as suppliers would no longer find it worth their while to install solar panels for them.
HomeSun is one of a range of companies fitting solar panels to homes and community buildings for free: the roof-owner gains free energy, and the subsidies are kept by the installer. Proponents of these schemes argue that it helps to rescue people from fuel poverty.
Green said: "In the residential sector, providers of free solar panels are around 50% of installations and they will disappear at anything less than 28p per kWh. This means the less well-off will not be able to benefit from solar."
The news comes a day after the government signalled support for the 25,000 jobs in the fast-growing solar industry. Barker said the government wanted growth in solar panel installations to continue.
"We are determined not just to drive down carbon emissions but to build a successful, thriving, prosperous low-carbon economy," he told a solar power conference in Birmingham.
"I'm personally committed to ensuring that your industry can prosper in the longer term, sustaining green jobs at a critical time for our economy, jobs that people can build a career on [and] that can help drive the recovery."
Johns told the Guardian that the cuts would be a "disaster". "If they go ahead with this, the tariff is way too low, and all the social housing and free solar schemes – which make the feed-in tariffs exciting in terms of fuel poverty – will be destroyed." He added that this was the third government review into solar subsidies this year, saying: "We've invested business in PV [solar photovoltaic panels] and had it sliced up three times in a year. They [the government] have no credibility on this any more."
"You can't do U-turns like this without having to answer for it – it puts the spotlight firmly on the coaliton's green credentials," he said.
Seb Berry, head of public affairs at the UK's largest solar company, Solarcentury, said they would campaign against the proposals:
"Today's leak from the EST confirming the government's intention to more than halve the domestic tariff from 8 December to 21p makes a mockery of the feed-in tariff consultation process established by the Energy Act. The minister tried to reassure the industry yesterday that he supported this sector and valued our investment, jobs, innovation and rapid growth. Today those reassurances ring hollow."
Juliet Davenport, CEO of utility Good Energy, said: "Clearly we'll have to wait until Decc comes out with the final details on Monday, but if these rumours are true they are very concerning. Feed-in tariffs have been successful at the end of the day because they give households control over their energy supply, insulating themselves from price hikes and reducing their carbon footprint."
But the consultancy PwC argued that the deep fast cuts proposed by the government were better than the risk of a bubble which would lead to over capacity in the short-term, followed by cuts later, which would mean sharper job losses. "A deep and fast cut in Fits will be required to protect the UK solar industry from stalling or creating a market bubble before any rate changes take effect," the consultancy said in a report on Friday.
On Thursday, Germany, the world's biggest solar-panel market, said it will also cut subsidies for solar photovoltaic power. Rates will be reduced 15% from January 2012, the Bundesnetzagentur, the federal grid regulator, announced. Power from panels will earn €17.94to €24.43 a kilowatt-hour, depending on size and location.
Deep cuts to the popular feed-in-tariff have been overseen in recent years, with the German government arguing that economies of scale and improvements in technology are resulting in rapid reductions in the cost of the sector, meaning the industry no longer needs such a high-level state aid. Since Germany's Renewable Energy Sources Act (EEG) was introduced 11 years ago, providers are guaranteed fixed prices for the electricity they feed into the grid. Like the UK scheme, it is paid for by consumers, adding €3,59 a kilowatt hour on energy bills or, according to calculations by The Rheinish-Westphalian Institute for Economic Research (RWI)€ 85,4bn for the solar built between 2000 and 2010 and ensuing payments.
The Bundesnetzagentur revises the tariff regularly. A 9% reduction every year is given by law, but it can be higher depending on actual new installations. "During the past 12 months an additional new capacity of approximately 5.200 megawatts has been registered. This figure results in a 15% lower remuneration compared to the actual Fit for systems connected to the grid beginning January 1 2012," said Matthias Kurth, president of the federal grit regulator. The rate could have been cut by as much as 24% (the annual cut's ceiling) if a larger amount of solar, 7,500MW, had been added.
In 2010, Germany added a record 7.400 megawatts of solar power, and small green energy firms have become sizeable within just a few years. The renewable industry supports 380,000 jobs in total, 108,000 within the photovoltaic industry alone. "Germany is the global market leader in the renewable energy sector," the German environment minister, Norbert Röttgen, said .
However, German solar cell manufacturers can hardly keep up, now that prices are collapsing and Chinese suppliers are flooding market. "The prices were falling down more rapidly than German manufactures expected. but they will prevail in the long time because of the better quality," Daniel Kluge from the German Renewable Energy Federation said.
Probably, there will be a run in the next weeks, as a lot of home owners will cover their roofs with solar-modules before the 15 percent reduction at the beginning of January.