Germany installed a record of around 4,300 megawatts of solar power capacity in the first half of 2012, raising the total in the world's largest market to more than 28,000 MW, the federal network agency (Bundesnetzagentur) reported last week.

Nearly half of that amount, or about 1,800 MW, came in June in a building frenzy just before a 30 to 40 percent cut in government-mandated incentives took effect in July.

Government-mandated incentives have helped Germany become a leader in renewable energy, and it now has more than a third of the world's installed solar generation capacity.

The country gets 5.3 percent of its electricity from solar power, up from 4 percent in 2011. All renewable sources combined provide about 25 percent, including wind at 9.2 percent and biomass at 5.7 percent.

On sunny days Germany's 1.2 million solar power plants can produce as much power as 20 nuclear plants and cover about a third of the country's electricity needs during daylight hours on weekdays and about half on weekend days.

A steep fall in solar power prices in Germany has also helped drive down prices worldwide.

Utilities and consumer groups have complained, however, that the state-mandated feed-in-tariff (FIT) incentives for solar power add about 2 cents per kilowatt/hour to German electricity prices, which are already among the highest in the world.

The FIT is the lifeblood of the industry until photovoltaic prices fall further to levels in line with conventional power production.

German consumers now pay about 4 billion euros ($5 billion) per year on top of their electricity bills for solar power.

In 2011 Germany installed a total of 7,500 MW of solar power capacity, including about 3,000 MW in December before a prior cut in its feed-in-tariff (FIT) incentives. The 7,500 MW was the previous record for a full year but it included only 1,700 MW in the first half.

Merkel's centre-right government has accelerated cuts in the FIT to as much as 40 percent this year after July, pushing it well below the retail electricity price of 23 cents per kw/h.

(Writing by Erik Kirschbaum in Berlin, editing by Jane Baird)