The government last week reduced subsidies for new solar power plants to EUR 197.55 per MWh for roof-mounted installations and EUR 176.55 per MWh for stand alone installations.

The tariffs were set to drop 40% below the reference price set in 2009 in the second half of the year, but the new regulation means they will be 52.45% lower as of 1 July (applicable to new installations).

The government argues that the subsidies are too high as the cost of equipment has plunged in the recent years.

"At the current tariffs the investment breaks even in seven years while the tariffs are provided for 15 years," according to government documents.

The Photovoltaic Association does not oppose the lowering of the subsidies per se and it agrees with the government to a certain extent, but it claims the calculations fail to take into account the situation on the domestic market.

The industry wanted feed-in tariffs to be differentiated based on installed capacity, as smaller installations are not profitable while big plants generate excessive profit.

In the current circumstances it only pays to build big installations, said Robert Otorepec, the deputy president of the Photovoltaic Association.

However, only big foreign investors, mostly from Germany, have enough money to do that and they bring their own contractors and equipment.

Moreover, the costs of paperwork are the same regardless of size, according to Otorepec.

"The goal is to make solar energy an electricity source, but we are behaving like we don't want it," added Marko Femc, a member of the association's board.

Slovenia currently has installed solar capacity of about 150 MW, with the installations producing about 160,000 GWh per year, according to the Photovoltaic Association.