Yesterday, German Economy Minister Rainer Bruederle announced a potential cut of up to 17 percent in the country’s solar energy subsidies.

Germany uses the policy mechanism known as a feed-in tariff, which essentially guarantees producers of solar energy a specific high price for electricity over a contracted term in order to make renewable energy competitive with traditional sources of power.

The subsidies used to guarantee these prices have already seen a scheduled decrease this year and may be slashed even further as the German government looks for ways to decrease spending. In addition, some experts are arguing that such subsidies fail “to spur competition in the industry, which represents less than one percent of the total electricity production in Germany.”

Although the German government hasn’t issued a formal order to cut solar energy subsidies, Bruederle’s remarks make it seem likely. We’ll be sure to keep our eye on the situation, as such an action could have a significant effect on solar energy stocks and investments.