German solar sector faces cut in subsidies

New German govt likely to trim renewables subsidies

* Germany expected to become world's largest solar market (Recasts with new comments, changes dateline from FRANKFURT)

BERLIN, Oct 1 (Reuters) - Politicians from Germany's new centre-right government who begin coalition-building talks next week have indicated the country's generous state aid for solar energy faces cuts.

The new government of Chancellor Angela Merkel's conservative bloc (CDU/CSU) and the Free Democrats (FDP) has been widely expected to take a critical look at subsidies for renewables.

"If the cost of photovoltaic subsidies continue to rise at such an extreme rate we will have to examine the Renewable Energy Act in 2010," said Joachim Pfeiffer, the conservatives' energy expert.

"Subsidising solar energy with all our might just to keep production in Germany is the wrong thing to do," he added.

The FDP's environment expert Michael Kauch noted the act was next due to be assessed in 2011, but said the FDP would try to amend the scope of subsidies and how often they can be negotiated.

Germany's Renewable Energy Act (EEG) has been copied in dozens of countries around the world and guarantees investors fixed feed-in tariffs for solar power that utilities are obliged to buy at high prices.

Makers of solar cells and panels in Germany, expected to become the world's biggest solar market this year, have been propped up by incentives paid to household producers of solar energy. [ID:nLN593222]

At the moment, households get feed-in tariffs of 32-43 euro cents per kilowatt hour of solar energy, while wind-powered electricity is produced at 9 cents and conventionally produced power is traded for as little as 5 cents, German newspaper Handelsblatt said. (Additional reporting by Markus Wacket) (Reporting by Ludwig Burger, Editing by Michael Shields and Rupert Winchester)