Austria's conservative Austrian People's Party (AVO) has agreed to a compromise on subsidies to renewable forms of energy which would increase those subsidies from 17 to 21 million Euros a year, according to the Austrian daily Die Presse.

The subsidies are being touted as necessary for the country to meet its target of 10% power consumption through renewables by the year 2010. Currently 7.8% of Austria's energy consumption needs are met by renewable forms of energy.

The compromise comes after heated debate over the future of renewable energy subsidies in Austria. Renewable energy industry groups have been asking for more government support, citing a slowdown in new project applications, which they blame on insufficient subsidies.

However, the proposal to raise subsidies has been criticized by the AVO's coalition partner the Social Democratic Party of Austria (SPO), which instead has been calling for energy-efficiency laws focused on meeting emissions reduction targets.
 
E-Control, the Austrian energy regulator, also has raised concerns over energy efficiency and consumption in the country. According to a recent E-Control report, reducing energy demand is the biggest challenge facing Austria's drive to meet renewable energy targets. E-Control president Walter Blotz was quoted in the Austrian media as saying that, at the current rate of demand growth, renewables in Austria would not meet the projected increase in electricity demand of 25% by 2020.