Germany has new solar FITs
The feed-in tariffs for photovoltaics announced last week are now German law – retroactively as of April 1. The law also contains a few other changes in addition to new rates. And neither the German government nor the solar sector is addressing the real problem, which the amended law does not even deal with.
For the first time ever, Germany has implemented retroactive changes to its feed-in tariffs, though there are a few exceptions. Ground-mounted systems, for instance, that were connected to the grid by July 1 and had received a permit by March 1 remain eligible for the old rates. In addition, systems already planned on March 1 that are connected by October 1 receive the new feed-in tariffs for 100 percent of the power produced, as opposed to only 90 percent, which is the limit for all ground-mounted systems up to a capacity of one megawatt.
The remaining 10 percent has to be consumed directly or sold on the market. Arrays with an output of 1 to 10 megawatts also receive feed-in tariffs for all of the power produced. Roof arrays and PV on noise barriers connected by July 1 are also eligible for the old tariffs provided that the grid connection was applied for by February 24. The market integration model, which specified that feed-in tariffs would only be paid for 80 percent of the power produced for arrays up to 40 kilowatts, has been done away with completely for this size category.
The new building-integrated rates now in effect are as follows:
- small arrays up to 10 kilowatts: 19.5 cents per kilowatt-hour
- 10 to 40 kilowatts: 18.5 cents
- 40 kilowatts to one megawatt: 16.5 cents
- 1 to 10 megawatts: 13.5 cents
All ground-mounted systems up to 10 megawatts now receive 13.5 cents as well. Feed-in tariffs are no longer provided for larger systems. In addition, ground-mounted arrays can once again be installed on brownfields by special dispensation.
The "growth corridor" is still 2.5 to 3.5 gigawatts per year, and if growth is faster by up to one gigawatt, feed-in tariffs will be reduced by an additional 0.4 percentage points per month. If the growth target is exceeded by up to two gigawatts, the rate falls by 0.8 percent per month and by 1.2 percent per month if the target is exceeded by up to three gigawatts. But if up to four gigwatts too much is installed, rates will not drop by 1.6, but rather by 1.5 percentage points per month. Any growth above that would trigger a 1.8 percentage-point production per month.
These monthly productions (as opposed to the previous annual reductions) will require Germany's Network Agency to report in more timely fashion so that investors can better assess what their likely feed in rate will be. Furthermore, they will also need to see the ceiling of 52 gigawatts coming, which would be reached in 2020 if Germany can slow down its PV growth to around three gigawatts per year. The government says it will look into how photovoltaics can be financed once that ceiling has been reached, though no one has indicated what such a policy might look like. The solar sector believes the ceiling will cause the market to boom, as Axel Berg, chairman of Eurosolar Deutschland, puts it.
Germany's new Environmental Minister Peter Altmaier says he is "optimistic that solar power will be able to do without state aid in just a few years and compete on the market," a surprising conclusion since photovoltaics has already lowered prices on the power exchange so much that investments in conventional generators no longer seem profitable. Furthermore, while the market integration model has proven attractive for wind power, it is unattractive for solar mainly because prices are so low now when so much solar power is produced – a vicious circle. The German industry also continues to claim that the cuts will somehow endanger German firms in particular, when in fact the law is blind to product origin – it handles German firms the same as it does foreign ones.
Eurosolar’s executive director Irm Scheer-Pontenagel says, "It is unprecedented for the German government to willingly contribute to the demise of an entire industrial sector that is so crucial for this structural change." BSW-Solar is also not happy about the outcome. "It is unfortunate that the potential of solar energy for the energy transition is only being tapped so halfheartedly and that, in particular, investments in large solar projects have been made so unattractive," says BSW head Carsten Körnig. "It is hard to understand that the German government simultaneously states that renewables have to be ramped up even faster to compensate for the nuclear phaseout even as it fails to draw the right conclusions and increase the growth targets for solar energy. The government continues to halfheartedly take advantage of the potential of solar energy – both for power and heat – and of the tremendous commitment that the public has for renewables."
While it is true that Germany is not doing enough with solar heat, the German solar sector should also publicly acknowledge that 52 gigawatts of installed capacity will mean that solar will not only offset medium load power plants (which it already does) and baseload power plants (which it is already beginning to do), but also even wind turbines. At that point, Germany will increasingly be switching off all of its dispatchable generating capacity and still not be able to use all of its solar and wind power. Before we increase solar even further, there needs to be a discussion about whether we want that to happen. (Sven Ullrich / Craig Morris)
Thanks for the explanation, Craig.
Osha,
A liter of oil has around 10 kilowatt-hours of energy in it. A kilowatt-hour of solar power is approaching 15 cents per kilowatt-hour. At that rate, the equivalent amount of energy would cost 1.50 euros – exactly what a liter of gasoline currently cost in Germany.
The problem is that roughly half of the energy in that solar power is lost in the conversion to produce hydrogen by means of electrolysis, so the price would actually be closer to three euros. And that does not include the cost of infrastructure and the electrolyzers themselves – so maybe we should put the price closer to four or five euros per liter, three times the current price of gas.
Of course, the equation does not stop there – hydrogen-powered fuel cells are probably twice as efficient as internal combustion engines, so maybe we will start to switch over at up price of 2.50 euros. But of course, we would then need technologies that run on hydrogen (like fuel cells), and they have been 10 years away for the past 10-12 years.
Just a back-of-the-envelope calculation.
Why not use "excess" electricity produced renewably to produce hydrogen to power vehicles and replace petroleum?