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By Holger Hansen

BERLIN (Reuters) - Germany's environment minister outlined plans on Thursday to limit support for wind energy and biomass generation following a similar cap imposed on the photovoltaic sector, as part of a proposed reform of renewable energy policy.

Peter Altmaier also raised Germany's green targets, saying he wanted renewables to account for 40 percent of total power production in Germany by 2020, up from 25 percent now and an original target of 35 percent.

The increase came as no surprise, given the rapid expansion of green energy sources in the last few years, especially in the solar sector due to incentives which are now being scaled back.

Altmaier gave no concrete details on his proposals, which are unlikely to get through parliament before next year's election. He said he aims to have a draft law by the end of May but has repeatedly said that he will not be rushed.

Chancellor Angela Merkel is likely to be judged by voters partly on her abrupt decision last year to accelerate Germany's nuclear phase-out after Japan's Fukushima disaster and to move more swiftly to renewable forms of energy.

"I am convinced that the switch to renewables is right," Altmaier told a news conference, adding that a law originally drawn up over a decade ago by a different government needed changes.

For years, green power has been fed into the electricity grid and paid for at above-market rates but the government this year set limits on the booming photovoltaic sector due partly to fears that the incentives were causing price distortions.

The expansion of solar energy has been capped at 52,000 megawatts, about double the installed capacity. Once that level is reached, there will be no price guarantees, said Altmaier.

"Similar regulations lend themselves to wind and biomass," said the minister in a paper he presented to reporters.

The minister is trying to soothe fears about rising household electricity bills before next year's election.

Merkel's government has come under fire for making private consumers and small businesses bear the brunt of the cost of switching to renewable energy with an expected sharp increase in a surcharge next year..

The government has also drawn criticism for granting exemptions to big energy-intensive heavy industry companies from green energy and network tariffs.

The opposition Social Democrats (SPD) accused the government of "window dressing".

"It is not the growth of renewable energy that is driving prices but the government's serving of lobby groups and making wrong decisions," said senior SPD lawmaker Ulrich Kelber.

(Writing by Madeline Chambers; Editing by Gareth Jones and David Cowell)

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