California grabbed the solar spotlight this week by passing two big solar bills. One beefed up a still-feeble feed-in tariff, while the other required utilities to pay residents with solar installations for any excess generation. In addition to these two moves, the Governator vetoed a bill that would have penalized utilities like Sempra Energy (NYSE:SRE) and Pacific Gas & Electric for the purchase of solar power generated beyond state lines, and the state teamed up with the U.S. Department of the Interior to expedite the siting and permitting of large-scale projects.

Germany's politicos sent out some mixed messages this week on the future of the country's world-leading solar subsidy program. The federal election at the end of September ushered in a center-right government coalition, generating concern that the new government will sharply scale back Germany's feed-in tariff, which currently requires power companies to pay as much as 43 euro cents ($0.64) per kilowatt-hour for solar electricity. Early in the week, an unnamed coalition source told Reuters that any cut would be modest, perhaps around half of the 30% figure that has been bandied about.

However, Bloomberg brought us a very different report later in the week, with a spokeswoman for the pro-business Free Democrats saying that lawmakers had agreed to "quite an enormous" cut. As of today, that cut is still under wraps, but if it's in excess of 20%, that would be quite a blow to the German market, which has been the world's biggest in recent years.

This affects not only domestic firms like Q-Cells and SolarWorld, but firms like First Solar (NASDAQ:FSLR), Yingli Green Energy (NYSE:YGE), and Canadian Solar (NASDAQ:CSIQ) as well. Nearly three-quarters of First Solar's net sales in 2008 went to German customers. The subsidy digression rate in Germany (10% next year and 9% in 2011) is already outpacing the contractual price declines written into First Solar's long-term contracts, so additional cuts will further challenge customers' internal rates of return.

Perhaps this will all prove to be much ado about nothing, and Germany will get the 15% cut that has already been signaled. A steeper cut should cause solar investors to sweat, however.

There were a few more notable news items for the week. Siemens (NYSE:SI) scooped up a leading solar thermal player, which positions the company to make a serious bid at dominance in this area. LDK Solar (NYSE:LDK) saw its VP of manufacturing depart soon after its polysilicon plant achieved initial production, which didn't sit well with some observers. Canadian Solar raised guidance (and some fresh equity), Suntech Power (NYSE:STP) pounced on Pakistan, and Spain's Acciona won a $2 billion bid to build 500 megawatts of solar power plants for the U.S. Army, the largest solar contract awarded to date by the Department of Defense.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. First Solar and Suntech Power are Rule Breakers recommendations. The Motley Fool has a disclosure policy.