Grid parity still doesn’t matter (but grid defection does)
Germany is now focusing on the direct consumption of solar power, which remains prohibitively expensive. But a recent survey found that PV + storage could be competitive with power from the grid by 2020. The result could be a disastrous wave of grid defection.
Renews is a regular publication by German renewables organization AEE. Issue 70 (PDF in German) focus is on Eigenverbrauch, which I generally translate as “direct consumption.” Essentially, it is when you consume your own solar power without it ever having to touch the grid. You have two options towards this goal: simultaneous consumption and production; and power storage.
The issue is very hot in Germany right now partly because the government aims to clamp down on the trend by applying the renewables surcharge to renewable power consumed directly. Small arrays, however, will remain exempt.
The study speaks of an average retail rate in Germany of 28 cents per kilowatt-hour, with the highest new feed-in tariffs for PV coming in at 13 cents. Germany reached grid parity for PV at the beginning of 2012, and solar power from new arrays now costs less than half as much as retail electricity.
Americans assume that households will naturally switch to net-metering after grid parity. The policy to promote direct consumption was implemented in Germany, however, does all the problems that net-metering does not fix: as the share of solar power in total supply increases, peak solar power on the grid needs to be spread more evenly across the day.
I spoke out against policy support for the storage of solar power back when it was implemented in 2009, but Germans continue to like the idea. The main problem I see is twofold: first, solar will need to be stored seasonally for Germany to meet its peak power demand in dark winter evenings; and second, storage makes everything expensive, so we should try to limit storage is much as possible.
The Renews article contains a section on the pros and cons of direct consumption, so I was interested to see whether they address my concerns. They do not, which is not surprising – that discussion would undermine everything else they say. But they do provide an interesting overview.
The KfW bank now offers up to six and 60 euros per kW of battery storage for solar up to 30 kW of PV. In return, the system can only sell 60 percent of its rated capacity to the grid at any one time. The goal is to reduce peak solar power production.
One option is the use of electricity for heat, a strategy that Denmark is also pursuing. But go on vacation for two or three weeks in the summer, and you will not be able to store very much of the heat produced. And by the time the winter comes, it won’t be available.
Renews gives the example of a family of four that consumes 4,000 kilowatt-hours of electricity per year. 1,200 can be consumed directly (simultaneously), and a heat pump with thermal storage increases that number to 1,800. A 5 kW battery pack brings the figure up to 2,800.
Battery storage is still prohibitively expensive. Renews puts the figure at between 24 and 82 cents per kilowatt-hour. On the other hand, by 2020 PV + storage is expected to reach grid parity.
Therein lies the problem – Germans will go for PV plus storage in the 2020s when the combination costs 30 cents per kilowatt-hour, and there is little anyone can do to stop them. This option is bad in terms of the overall cost of the energy transition; onshore wind power is a much better option at 5-9 cents per kilowatt-hour, but then people don’t get to say they make their own energy at home.
Renews speaks of “macroeconomic costs” without mentioning this problem; instead, the article says that the best way to increase the share of solar power consumed directly is to build smaller arrays “although there is enough roof space for a larger system. That would mean that potential roof area is wasted.” They describe the situation in the US very well, but they do not address the problem of seasonal storage of solar power.
Feed-in tariffs will probably no longer be offered for PV once 52 GW is installed, but Renews says that 90 GW or more could nonetheless be built thanks to direct consumption. In other words, households will defect from the grid, making this wonderful piece of infrastructure for more expensive for everyone who has not defected or cannot defect. And once again, Renews has nothing to say on this matter. (Craig Morris)