Different sides of the argument over government support for renewable energy were in the headlines in Europe last week, as Germany laid out a proposed framework for the future of its feed-in tariff mechanism and developers unveiled big plans for solar in subsidy-free Spain.

Chancellor Angela Merkel’s government announced 11 October a proposal to cap renewable energy subsidies when capacity reaches national targets. The move is designed to keep costs in check as the country phases out all its nuclear power plants by 2022.

Environment minister Peter Altmaier said the plan would see the state ending payments to wind and biomass as limits are reached. The exact limits were not described.

The proposed roadmap follows the government’s announcement in June that it will end further support for solar when capacity reaches a cap of 52GW. Some 20% of Germany’s electricity was renewably sourced in 2011, mainly from wind, biomass and photovoltaic projects. Germany’s installed renewable energy capacity at the end of 2011 included about 23.7GW from solar, 28.6GW from wind and 5.4GW from bioenergy.

Under Germany’s feed-in tariff system, which was adopted in 2004, power suppliers are obliged to acquire electricity from renewable sources at a guaranteed rate, depending on the technology, with the costs passed on to consumers.

The recently announced plan appears to be the latest compromise proposed by Altmaier to economy minister Philipp Rösler, who believes lowering feed-in tariffs will help counter rising electricity prices. In order to keep costs in check, hard caps would be put on renewable capacity, above which subsidies would stop. In exchange, the government intends to raise its target for renewable power from 35% to 40% by 2020. Altmaier did not say whether the reform would be completed before Germany’s general election in the autumn of 2013.

The cost of electricity may be a heated election issue. Germany’s power grid operators announced this week that it is boosting the surcharge consumers pay for funding renewable energy by 47% to just over EUR 0.5/kWh in 2013.

While feed-in tariffs are likely to remain for some time in Germany, rising electricity prices and Europe’s debt crisis have forced some countries in the region to pull back spending on new renewable capacity. Still, developers are looking to build plants even without government support. This is especially true in the solar industry, which has been helped by falling equipment costs.

Indeed, last week proved large-scale solar PV projects may not be over in Spain even after the country suspended renewable energy tariffs in January as part of government austerity measures.

German renewable energy developer SAG Solarstrom announced on 10 October plans to build 440MW of solar power plants in Spain. Solarstrom agreed with the solar companies Valsolar 2006 and Cavalum SGPS to develop and construct four PV projects with a total output of around 440MW in Badajoz, in the Spanish region of Extremadura, as part of a joint venture. The project has a total investment volume in the “three-digit million range,” according to the company.

Solarstrom is not the only German solar energy developer to announce this year it will go big in Spain, subsidy free. In April Wuerth Solar and Gehrlicher Solar said they plan to build PV plants in southern Spain that do not rely on feed-in tariffs and compete with wholesale power prices.

Wuerth intends to build a 287MW plant in the Murcia area for EUR 277m, while Gehrlicher said it plans to develop a 250MW solar park in the Extremadura region for about EUR 250m.

All of these projects need authorisation by the central government before they can proceed. They will also need equity and debt finance. Both those hurdles may turn out to be high ones for the developers to get over.

Elsewhere, one of the biggest market movers last week was First Solar. The US thin-film PV panel maker and project developer had big gains despite a depressing week for the WilderHill New Energy Global Innovation Index, or NEX. Shares of First Solar added 10% in theweek, while the NEX retreated 3.3%, a somewhat steeper decline than broader market indexes.

First Solar said on 8 October that it would supply 585,000 panels to two planned photovoltaic plants in India’s Rajasthan state.

Meanwhile, for the second week in the row, US advanced biofuels producer KiOR was the NEX’s biggest loser, moving down 18.2%. KiOR’s shares have fallen by about 62% over the past year.

It has been a challenging year for clean energy overall. Bloomberg New Energy Finance announced last week that global investment in clean energy totalled USD 56.6bn in the third quarter of 2012. This was down 5% on the second quarter and 20% lower than in Q3 2011, explained partly by weaker figures from the US and India, and a lull in wind farm financings.

The figures suggest that the full-year 2012 figure for investment in clean energy is likely to fall short of last year’s record USD 280bn. If so, 2012 would be the first down-year for world investment in the sector for at least eight years.

The numbers may look disheartening, but Michael Liebreich, chief executive of Bloomberg New Energy Finance, said the decline should not be exaggerated either. “The third quarter figure was still well over USD 50bn,” he said, “roughly equivalent to investment in the whole of 2004.”