The German Cabinet has approved a draft law for the amendment of the Renewable Energy Act (EEG), the main national funding mechanism that provides market incentives for renewable energy in Germany.

The draft, which originated from the Environment Ministry, will now be presented to Parliament where it has to pass the Bundestag (the lower house of Parliament) and the Bundesrat (the Federal Council).

Under the terms of the draft, feed-in tariffs for PV would be reduced by levels within the range 9 to 10% in 2009, depending on the nature and size of the installation. The largest decrease of 9.8% (to 32 €cents/kilowatt-hour) would be for ground-mounted systems, with roof-mounted systems receiving 9.2-9.6% lower tariffs, depending on system size. Roof-mounted systems larger than 1 MW would receive a new, lower tariff of 34.48 €cents per kilowatt-hour.

The PV feed-in tariffs would fall by a further 7% in 2010 and 8% in 2011 and beyond, compared to the current annual decline rate of 5%.

A new category of rates for self-consumed solar electricity would be introduced - designed to promote distributed systems of size up to and including 30 kW.

It is still possible for the terms of the draft law to change as it passes through Parliamentary approval.