03.07.2014
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Photovoltaics

Does solar still pay in Germany?

Solar continues to be built in Germany – quite a bit of it, actually, relative to peak summer demand. Nonetheless, the market is poised to be roughly cut in half this year – for the second year in a row. A major German solar planner seems to be in financial trouble. How low can Germany go?

First, the good news: Germany installed just over 204 MW of PV in May, as the country’s Network Agency announced (in German) a few days ago. Germany is on target to install 1,984 MW for 2014 as a whole, equivalent to roughly 1/30 of its summer peak demand. To reach such a level, the US would need to install around 20 GW per year.

Now, the bad news: Germany installed just over 204 MW of PV in May, putting the country on target for 1,984 MW this year. You see, the country had 7,500 MW per year each year in 2010, 2011, and 2012. Installers have seen their market cut 75 percent.

On Tuesday, we saw one prominent example of the effects when German project planner Juwi announced (PDF in German). Allegedly because of the changes made to Germany’s Renewable Energy Act, “investors have lost confidence in wind power projects for the time being,” and the firm says its revenue from PV is only a quarter of the volume for 2012. A quarter of firm’s employees are going to be laid off, most of them in Germany.

At present, German feed-in tariffs for PV drop by one percent per month, equivalent to 11.4 percent annually. But as Photon’s overview of prices for PV equipment reveals, prices have been stable over the past two quarters (below, I include the chart for polycrystalline panels, but charts for other types of PV and inverters look quite similar).

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Photon

Increasingly, the margins are disappearing for PV systems for new investors. Granted, as the market slows down, the “breathing corridor” kicks in; the monthly reductions for new systems decrease. In fact, feed-in tariffs will even remain stable – no monthly reductions – as soon as less than 1,500 megawatts is installed.

 - As legal expert Matthias Lang shows, the monthly reductions for PV have been tweaked in the new amendments to take effect in August.
As legal expert Matthias Lang shows, the monthly reductions for PV have been tweaked in the new amendments to take effect in August.
Bird & Bird

As more and more German solar firms fold and more people are laid off within the sector, one can’t help but wonder whether all of this could not have been prevented. The solar sector itself resisted all attempts to reduce feed-in tariffs or employ any kind of annual limit during the years of 7.5 GW of new installations. Photon warned of a pork cycle when the breathing corridor was implemented; German renewables professor Volker Quaschning explained (PDF in German, but initially at the beginning of 2012) why a total of 200 MW need to be installed in Germany was necessary, and Solarpraxis ran with the idea.

Never mind that the government wants to discontinue feed-in tariffs for PV once 52 GW has been built – or that the official 2011 roadmap for the Energiewende has 67 GW of PV installed… in 2050.

From the viewpoint of installers, it would have indeed been better to break the market up into segments so that, say, the roughly 22.5 GW built from 2010-2012 could have been stretched across six years instead of three. Firms like Juwi would then not have hired so many people that it now has to layoff. But the firms themselves campaigned hard for the 7.5 GW boom to continue.

Now, the government is imposing a surcharge on solar power consumed directly (without being sold to the grid). It will make this electricity a few cents more expensive per kilowatt-hour, thereby forestalling for a brief time what is likely to be a completely new PV market – one in which firms and households alike find that, with or without the surcharge, solar is cheaper than power from the grid, even including storage. No one quite knows what that future will look like for firms like Juwi or when exactly it will begin. It may come too late for a lot of Germany’s current installers. (Craig Morris)

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2 Comments on "Does solar still pay in Germany? "

  1. RalfLippold - 05.08.2014, 10:09 Uhr (Report comment)

    Honestly, it is no wonder that these outcomes (folding of solar firms) is happening right now in Germany. What once was subsidized, and pushed heavily by the government produced effects (solar installations with energy produced that could not be fed into the grid, but the builders of these installation be assured to get fixed revenue from "feeding" electricity into the grid). Now the politics has "seen" that (bad) effects of its former action, and now tries to turn the wheel, stopping the overheating process.
    But where you put out the fire completely, or cut the tree "auf Stock" (only leaving about a foot of the trunk) there won't emerge a wealthy industry.
    Innovation hat es stets schwer sich gegenüber etablierten Prozessen, Wirtschaft und Politik durchzusetzen. Was durch verstärkte öffentliche Förderung positiv gewollt ist schlägt im Raum des kapitalistischen Wirtschaftssystems oft ins Gegenteil um. "Policy Resistance" nennt es Prof. John D. Sterman von der MIT Sloan School of Management, wo er den Lehrstuhl für System Dynamics leitet als direkter Nachfolger von Prof. em. Jay W. Forrester, der das Feld gründete. http://www.stewardshipmodeling.com/policy_resistance.htm
    Was vor 40 Jahren mit zarten Anfängen auch in der deutschen Hochschullandschaft begannt, das Fach System Dynamics einzuführen, ist angesichts der beobachteten Entwicklungen insbesondere rund um die durch die Energiewende angeschobenen bzw. bewirkten mehr als wünschenswert.
    The reason for using English and German in my answer, and this in mixed terms is to make readers who are following in German aware what might be missing in this country.
    Gegenwärtig gibt es lediglich eine Hochschule, Hochschule Aalen, die in Deutschland einen Master in System Dynamics anbietet http://www.htw-aalen.de/studium/asd/studienbewerber.php
    Hat das deutsche Bildungswesen eine Entwicklung verschlafen?
    Sachsen als "Wiege der Nachhaltigkeit" könnte sich neben seinen Stärken als industrieller Standort und Mikroelektronik sowie Nanotech-, Biotech- und Life Science Schwerpunkt auch als künftiger System Dynamics Hotspot in Deutschland entwickeln. Bieten sich doch auf konzentriertem Raum und geschichtlicher Vergangenheit durchaus gute Chancen, einen solchen Studiengang zu entwickeln.

  2. JoeJoe - 04.07.2014, 21:46 Uhr (Report comment)

    Totally agree the solar community had a reckoning coming but this reckoning has gone too far. Where is the Captain of the ship? Germany is subsidizing batteries in the kitchen and taxing self-use in the closet. Was ist das? Lowering the FiT to speed the transition towards more self-use is logical, just and fair. Harmonizing the FiTs between all the tranches would have been fair and sensible. These measures could have been designed to reduce the accumulation of the surcharge pool by as much or more than a self-use tax. There are many fair and sensible policies that could have been implemented to help reduce the surcharge pool... Germany chose a tax on self-use with funky rules and exceptions and last minute add in somes. Then you approved the law? What!? Dummkopfiest thing ever.
    How did you guys allow behind the meter taxation to become law? Are you confident this tax isn't going to lead to more behind the meter taxes? Are there any good political cartoons circulating around of solar taking it from behind? You could have group of monkeys handing off a stack of papers to the Dumb and Dumber characters who subsequently hand off the energy policy legislation to Gabriel. You can almost image a commercial with a tax collector waiting there in the bedroom when you turn on the bedside lamp and then following you around the house as you make coffee and toast... scribbling notes and judging. Dummkopfiest thing ever.
    Consider an old-school bumper sticker campaign... Self-use is Freedom... or... Stick this tax where the Sun don't Shine.

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