Just as California Governor Arnold Schwarzenegger signs into law a statewide feed-in tariff (see Margaret’s post from a few hours ago), Bloomberg has reported that Germany’s new ruling coalition intends to reduce incentives for solar power generation:

While talks “are still in a preparatory phase” on energy policy for the next four years, “we’ll definitely cut solar subsidies,” Georg Nuesslein, the deputy energy spokesman for Merkel’s Christian Democrats and their CSU Bavarian sister party, told reporters in Berlin today.

Germany, the world’s largest market for solar products last year, guarantees renewable energy generators fixed amounts for the power they produce to nurture solar-panel makers such as Bonn-based Solarworld AG. Merkel’s prospective allies, the Free Democrats, or FDP, have called for those subsidized tariffs to be slashed, arguing they drive up the price of electricity.

“We’ll meet the FDP proposals halfway,” Nuesslein said, without being more specific. Owners of solar panels receive as much 43 euro cents (64 U.S. cents) per kilowatt-hour of power they generate. That’s set to fall as solar equipment becomes cheaper.

Since its introduction in 2000, Germany’s feed-in tariff has been widely credited with spurring phenomenal growth in the domestic solar energy sector. The costs associated with paying a premium price for solar power, however, have fallen in part on consumers. At least one German panel maker, meanwhile, has complained that the subsidies have benefited foreign manufacturers — namely Chinese firms — at the expense of domestic producers. While it’s not clear whether such complaints have influenced the coalition’s decision, it is hoped the cuts in solar subsidies will reduce costs for electricity users.