Changes for solar in Germany
While the German government does not specifically plan to change the design of feed-in tariffs for PV this year, the application of the renewables surcharge to solar power directly consumed does change things considerably. Today, we review what's in store, though the details are not completely clear. It seems the German government may have finally come around to the idea of reining in "grid defection."
First, let's review the current policy that is unlikely to change.
- Feed-in tariffs will be offered for PV until 52 GW has been installed. (There is no such limit for other technologies, all of which are also eligible for feed-in tariffs.) At the end of 2013, the country had around 35 GW, with an additional 3.4 GW installed last year. In the first two months of this year, however, the market has slowed down further. The ceiling is expected to be reached by the end of this decade.
- There is a target corridor of 2.5-3.5 GW of newly installed PV capacity per year. If growth is within that corridor (such as in 2013), rates for newly installed systems will drop by one percent each month, equivalent to 11.4 percent over the year.
- These new rates apply for 20 years starting in the months of the grid connection. In other words, the monthly reduction in FITs affect only new systems, which are then locked in at the rate applicable that month for 20 years.
- Rates are reviewed every three months. For instance, installations during the time frame from July 2012 to June 2013 were tallied in July 2013, and the rates were adjusted accordingly for three months starting in August 2013. Because monthly statistics are published within a month, the public can tally their own figures and easily predict FIT changes.
- Depending on how much was installed, the rates change as indicated in the table below.
|New capacity||Monthly reduction||Equivalent annual reduction|
|> 7.5 GW||2.8 percent||29 percent|
|6.5-7.5 GW||2.5 percent||26 percent|
|5.5-6.5 GW||2.2 percent||23 percent|
|4.5-5.5 GW||1.8 percent||19 percent|
|3.5-4.5 GW||1.4 percent||15 percent|
|2.5-3.5 GW||1.0 percent||11.4 percent|
|2.0-2.5 GW||0.75 percent||9 percent|
|1.5-2.0 GW||0.5 percent||6 percent|
|1.0-1.5 GW||0 percent||0 percent|
|< 1.0 GW||-0.5 percent||-6 percent|
That is what will not be changed. Furthermore, whatever new rules are adopted, it is highly unlikely they will affect existing systems.
The main change that will affect solar is the application of the renewables surcharge to power consumed directly. Up to now, this surcharge has been applied only to power consumed from the grid, but now it is to be applied to some electricity consumed directly – before it is sold to the grid.
In order to further protect industry, it seems that conventional generators are to remain exempt, but commercial PV (systems larger than 10 kilowatts) will have to pay roughly 70 percent of the renewables surcharge, equivalent to 4.4 cents per kilowatt-hour.
I can only assume that the government has realized that, with the cost of solar now ranging from 9-13 cents per kilowatt-hour and retail rates closer to 28 cents, that there is no stopping solar going forwards; whenever feed-in tariffs are done away with, the market will continue to grow. And because solar power will increasingly have to be stored beyond 10 percent of total power supply (we are currently at five percent), it needs to be reined in somehow (see the discussion about "grid defection" at the Rocky Mountain Institute).
PV arrays installed by 1 August 2014 would not have to pay this surcharge, nor would arrays smaller than 10 kilowatts, so that practically all homeowner roofs will remain unaffected. The commercial sector, however, was always the one that would have benefited most from the policy of Eigenverbrauch (direct consumption); starting in 2009, the government actually encouraged this kind of grid defection, but now it seems to have realized what I wrote back in 2010: encouraging everyone to go off the grid is a terrible idea.
But I am only assuming the German government has reached this conclusion; no statement has been made to this effect.
Another fledgling business model would, however, suffer: direct sales of solar power to tenants. Those who rent would have to pay the full renewables surcharge (currently, 6.24 cents per kilowatt-hour. Because less than half of Germans own their own homes/apartments, the rental sector represents a potentially huge market for PV. An entire neighborhood in Berlin is now able to purchase solar power directly, but battery storage makes PV roughly twice as expensive. Adding on the renewables surcharge will be another deterrent to this kind of grid defection. (Craig Morris)