BERLIN (Reuters) - Germany will add a record of some 8 gigawatt (GW) of photovoltaic capacity this year, widening its lead as the world’s top solar power market, the head of Germany’s BSW solar industry association said on Monday.

Construction workers fix solar panels for a new solar power plant near Olching-Esting westward of Munich July 7, 2010. REUTERS/Michaela Rehle

Carsten Koernig told Reuters the surge in demand for photovoltaic systems would take Germany’s total solar power capacity to between 17 and 18 GW -- five times greater than the next largest producer Spain with a total of 3.5 GW.

“It’s a fantastic development to add 8 gigawatts this year,” Koernig said, noting much of the boom came in the first half ahead of an extra round of cuts in the feed-in tariffs (FITs) that utilities must pay solar power producers.

He said he expects growth to cool in the years ahead to between 3 and 5 GW per year -- or an equivalent amount of power to that produced by between three and five large coal-fired plants.

“No one would have predicted that last year’s record of 3.9 GW would be doubled again this year. I don’t think this level is sustainable. But we’re hoping for annual increases of three to five GW. That would bring Germany’s total to 52 to 70 GW by 2020.”

In such a scenario the share of solar power in Germany’s overall electricity production would rise to between 9 and 12 percent by 2020 from 2 percent currently, he added.

Germany is the world’s biggest market for photovoltaic, which turns sunlight into electricity. The industry boomed with the Renewable Energy Act (EEG) in 2000, that guarantees investors above-market fees for solar power for 20 years.

BSW is a lobby group that represents solar companies such as Q-Cells and Phoenix Solar.

HIGHER RATES

Steep cuts in FITs in mid-2010 prompted many investors to pull forward their plans and a feared collapse in demand in the second half ended up being only a slowdown. A record 2 GW was installed in June alone.

“We’ve seen a bit of a cooling down in the second half after the FIT was cut by an extra 16 percent on July 1,” Koernig said. “But we’re still confident the total added this year could be about 8 GW. The cuts in the FIT this year fueled demand.”

Utilities are obliged to pay higher rates per kilowatt hour of electricity produced for 20 years. That rate had been falling by about 8 to 10 percent per year before dropping an extra 16 percent in July.

The FIT will fall another 13 percent in 2011.

Industry experts fear rising energy costs could lead to further cuts in FITs or even a cap on new installations when the EEG comes under review next year.

A similar a move had caused the Spanish market, once the world’s No.1, to collapse.

“We don’t know what’s going to happen next year,” Koernig said, but he noted opinion polls regularly show 75 percent of the German public willing to pay two cents more per kw/h for their electricity to support the expansion of green energy.

“That’s quite a high level of support,” Koernig said, adding the industry is cooperating closely with the government in shaping policy.

“We’re confident any steps will be reasonable ... We’re not worried about any kind of a cap. I don’t think there will be a cap here. We’re not worried about having developments here like in Spain.”