German industry and commerce goes renewable
A growing number of German firms are making their own renewable power, and large power firms will see their business sufffer as a result -- but those who do not or cannot invest in renewables may also face higher grid fees as a result.
On Monday, German economics journal Manager Magazine reported in an article entitled "RWE, Eon and Co. losing key customers" that businesses across Germany are now covering their roofs with photovoltaics and installing wind turbines on their property – even without feed-in tariffs. According to the German Chamber of Industry and Commerce, 13 percent of all German firms have already set up their own power supply, and an additional 16 are currently planning to do so.
Increasingly, renewable power consumed directly is cheaper than power from the grid for a number of reasons. First, no taxes or grid fees apply to power you make yourself; currently, these charges make up roughly 2/3 of the retail power rate in Germany. The same factors apply to conventional power, which is why the largest industrial firms have always generated a lot of their electricity from in-house gas turbines and coal plants.
But now, renewables have become competitive. The retail rate in Germany is around 26 cents and small roof arrays make power for 18 cents; furthermore, a lot of commercial firms pay around 14 cents for a kilowatt-hour of wholesale power. Large solar roofs now provide them with electricity for closer to 12 cents.
Second, firms that pay wholesale rates generally have agreements that higher rates are charged above a certain level of consumption, so the firms have an incentive to make sure their peak demand does not rise above that level ("load shifting"). A wind turbine on company grounds or a solar roof can reliably help ensure that peak demand from the grid is reduced.
Nonetheless, the switch to directly consumed renewable power is not only good for the grid. While it does mean that more renewables can be installed without the grid having to be expanded, Manager Magazine confirms what Renewables International wrote in 2010 – grid fees are likely to increase if more people make power themselves but remain reliant upon the grid when demand exceeds the supply of wind power and solar power. Basically, the same grid infrastructure would need to be maintained for a smaller volume of power trading. The result would be greater profitability for firms and individuals that invest in renewables at the expense of those who can't or don't. (Craig Morris)