Within weeks of the Solar Democrat/Green Party coalition coming to power in German last year, plans for a massive new PV programme using long-term interest free loans were announced. But can the government live up to the promises?

January 1999 began with a big bang for PV power in Germany: Federal Economics Minister, Werner Müller, announced a six year DEM 1 billion (about 600 million USD) initiative to help install 100 000 PV systems (300 MWp) throughout the country. A ten-year 0% finance scheme is proposed, administered by the state reconstruction bank Kfw, under which the customer will have a two-year 'holiday' before starting repayments. If the system is still running after nine years, the final year's repayment will be waived. This translates to 40% of the cost of a system being met by the government. If it can be achieved, such large-scale installation would help drive down module prices, which would be positive for PV world-wide, not just in Germany. The government itself sees the initiative as a bridge to a new solar age.

Nevertheless, there appear to be a number of problems with the propose structure of the programme, which need to be resolved before bridge-building begins. Not least is the conflict between the 100 000 rooftop loan scheme, and the application of rate-based incentives, which have been introduced as a means of funding renewable energy installation in a number of cities around Germany with a good effect. Rate-based incentives pay a premium to buy-back energy from producers who feed renewable energy into the grid. In several places, home-owners can earn as much as 2 DEM/kWh for their PV generated energy. Obviously if the rate-based incentive and interest free loan schemes are applied together, users can theoretically obtain a subsidy of more than 100% for their system.

The government has placed a blanket ban to prohibit disbursement of the national loan in cities where rate-based incentives apply, but this move has been heavily criticised by many organisations involved in the implementation of solar projects.

The various parties are working to resolve the difficulties, but in the interim subscription to the 100 000 rooftop programme is slow. Let's hope the big bang does not end as a small sizzle.

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