German solar power boom continues despite tariff cuts

FRANKFURT, Oct 31 (Reuters) - Germany's solar power systems market continued to grow strongly in September, putting Europe's biggest economy on track for a new installation record this year and increasing pressure on the ruling coalition to curb the spiralling costs to consumers.

In September nearly 1 gigawatt (GW) of new solar power generating capacity was installed, the energy network regulator Bundesnetzagentur said on Wednesday, bringing the total of new installations in the January-September period to about 6.2 GW.

Capacity grew by around 7.4 GW in all of 2010 and 7.5 GW in 2011, far above the 2.5 to 3.5 GW Berlin would like to see each year.

This prompted the government to schedule massive cuts in the levels of feed-in tariffs -- which are guaranteed to be paid for 20 years to generators of solar power -- the industry's lifeblood as long as solar power is more expensive than conventional forms of energy to produce.

Boosted by even more lavish tariff incentives in the past, Germany is the world's largest solar power equipment market, attracting industry bellwethers such as U.S.-based First Solar , China's Suntech, Norway's Renewable Energy Corp and Germany's SMA Solar.

Bundesnetzagentur said that as a result of the strong increase in generating capacity so far this year, feed-in tariffs for new solar power installations would be further cut by 2.5 percent a month between Nov. 1, 2012 and Jan. 31, 2013.

By slashing tariffs the solar equipment industry has been forced to cut prices, while the government heads off steep rises in energy bills for companies and households, which are required by law to pay the feed-in tariffs.

Earlier this month, Germany's power network operators said subsidies levied on German consumers to support renewable power will rise by 47 percent next year.

Chancellor Angela Merkel's decision to abandon nuclear power following last year's Fukushima disaster has led to a growing need for alternative energy sources, causing higher charges on consumers' energy bills.

German media have highlighted the cost to households of Merkel's decision last year to speed up the switch to renewables and switch off nuclear plants earlier than planned.

Opposition parties have accused the government of letting private consumers bear the brunt of the costs, after it exempted energy-intensive heavy industry from green energy and network usage tariffs.

(Editing by Greg Mahlich)