Germany has shelved plans to subsidise its domestic solar manufacturing industry by rewarding consumers for buying European-made panels, after its ruling coalition parties failed to agree the policy, the economy ministry said on Wednesday.

Photovoltaic panels made in Europe make up only a small fraction of Germany's market, and German manufacturers have been complaining about an influx of cheap Chinese panels, pushing companies to scale down production or shut it down completely.

Last summer, the economy ministry suggested introducing a "resilience bonus" - a feed-in remuneration for consumers using domestically made solar panels on their roofs, to boost demand for European solar components.

But the subsidy plan was challenged by the pro-business FDP coalition party as an expensive market intervention. Downstream solar developers, heavily dependent on Chinese modules, also rejected the bonus, saying it would create chaos in the market.

"It is very unfortunate that this is not to come now. Even though everything has not been negotiated yet, the scepticism among the coalition partners unfortunately remains too great," economy ministry State Secretary Michael Kellner said in a statement on Wednesday.

Kellner said the ministry will not give up on finding ways to support the industry and will look for other alternative funding options through the European Union.

The solar manufacturing industry could also benefit from expanded state credit options, as the financing conditions for photovoltaic industry projects offered by the KfW state-bank have been improved again, he added.

Europe's solar panel manufacturing industry has urged the European Union to step in with emergency measures to avoid local firms shutting down under price pressure from Chinese imports.

 

(Reporting by Riham Alkousaa, Editing by Miranda Murray and Ros Russell)