27.06.2012
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Photovoltaics

The cost impact of PV

While solar power remains a way of offsetting expenses peak power production almost everywhere, Germany now has so much that baseload power is increasingly being offset. A growing number of Germans are now concerned about poor people being able to pay for their power, but some proponents of renewables say the cost impact of green power is grossly overstated. Nonetheless, the call for a right to an inexpensive daily minimum of electricity is becoming louder.

Over in Texas, the Brattle Group says that photovoltaics would be a great way for the state to cover its peak power demand – but that's only because the state has almost no PV installed relative to its peak summer consumption. The market analysts expect 5,000 megawatts of installed PV to actually lower power prices. The report unfortunately does not say what summer peak demand is in Texas, but apparently the state is currently posting new records for power demand at around 66,500 megawatts, much of it related to air-conditioning during the current heat wave.

As chance would have it, that is also roughly the level of average power consumption in Germany during the summer, though Germany has roughly 80 million inhabitants compared to 25.7 million in Texas – roughly a third. In perspective, the Brattle Group's call for 5,000 megawatts pales in comparison to the roughly 29,000 megawatts of PV that Germany already has installed at roughly the same level of summer power demand.

 - Since 2003, the price of heating oil (orange line) has risen the most, followed by electricity (blue line) and natural gas (purple line) – and all of them have risen faster than the average nominal wage (red line).
Since 2003, the price of heating oil (orange line) has risen the most, followed by electricity (blue line) and natural gas (purple line) – and all of them have risen faster than the average nominal wage (red line).
Bund der Energieverbraucher

As Renewables International recently reported, there is now concern about the cost of all that solar. At the beginning of May, German economics daily Handelsblatt reported that a study conducted by McKinsey estimated that the cost of Germany's energy transition would increase power prices by 60 percent from now to 2020. Justus Camp, who heads the German government's antitrust commission, has spoken of "cost tsunami" from renewable power. The new Environmental Minister Peter Altmaier warns that power cannot become a luxury item.

Proponents of renewables point out, however, that the current government's policies are part of the problem, and things could be done much less expensively. Renewables International has already reported on the cost of grid expansion for offshore wind; the wind sector would much prefer community-owned onshore turbines, which would not require as much grid expansion. Furthermore, the owners of nuclear plants in Germany are suing the government for 15 billion euros because Angela Merkel's coalition shut down so many plants overnight last year – a decision that was completely unnecessary, since the previous government had arranged to phase out these nuclear plants gradually anyway. Now, German ratepayers are basically being asked to pay for all of this power they are not going to get.

Increasingly, there are also calls for energy-intensive industry, which is largely exempt from the surcharge for feed-in tariffs, to have to pay the full cost, which is expected to reduce the surcharge passed on to ratepayers by nearly a third. These firms currently benefit from lower wholesale prices; ironically, as renewables make the retail rate higher, they also lower wholesale rates, as Renewables International recently reported.

Reports of poor people having their power turned off because they cannot pay their bills have apparently been grossly exaggerated. It turns out that there is no basis for such comparison because power firms have only been required to report such statistics starting this year – and Vattenfall, one of the country's four biggest utilities, says the number of such cases has remained constant over the past three years, with cases of renovations and empty apartments not reported separately from cases of economic hardship.

 - Germany's new Environmental Minister Peter Altmaier does not seem to understand some basic facts about the country's power supply system, but he's not the only one who can't get the facts straight.
Germany's new Environmental Minister Peter Altmaier does not seem to understand some basic facts about the country's power supply system, but he's not the only one who can't get the facts straight.

Environmental Minister Altmaier has openly called for the poor to conserve energy, which has met with much derision among the opposition. "The retail rate has risen by 10 cents over the past decade, but only three cents of that is due to renewable power," says Green party whip Bärbel Höhn – though the exact figure is 3.59 cents. The political opposition is calling for a policy that is commonly used around the world – from Cuba to California: a certain amount of power is to be sold at a reduced rate because everyone has a right to a minimum amount of electricity. One German consumer advocate organization has called for 500 kilowatt-hours of free power for everyone. The organization does not say whether that amount is per person or per household, but a single amount per household would be unfair in per capita terms.

A two-person household is estimated to consume 3,500 kilowatt-hours of electricity per year in Germany, equivalent to nearly 10 kilowatt-hours per day or roughly 400 watts of constant consumption around the clock. But the consumer advocates are apparently not any better at math than Bärbel Höhn, because they state in their press release that 500 kilowatt-hours is equivalent to 250 watts or half a kilowatt-hour per day (it is closer to one and a half).

The German government says it will not adopt any such credits or reduce power prices for the poor, nor will it make energy-intensive industry pay the full charge for renewable power. "The exemptions for energy-intensive industry are a good idea because power would otherwise become more expensive for everyone else," Environmental Minister Altmaier completely incorrectly states.

At present, the quality of the discussion in Germany leaves much to be desired. (Craig Morris)

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2 Comments on "The cost impact of PV "

  1. Bram Pauwels - 02.07.2012, 13:21 Uhr (Report comment)

    In Belgium we get 100 kWh per household + 100 kWh per member of this household of free electricity per year. On the other hand, I'm against this free electricity as it does not stimulate people to economize. My latest electricity bill showed 2025 kWh for a 3-person household at that time. We heat and cook with gas, we have no PV. Furthermore my electricity supplier offers electricity per kWh. The cost calculation doesn't get any simpler, 0,22 EUR/kWh. This means if you use 1 kwh of electricity more than your free electricity, you only pay 0,22 EUR. Other suppliers work with yearly fixed costs, which blur the comparison of tariffs. I can tell that for us our supplier stimulates us to watch our electricity use.

  2. Photomofo - 27.06.2012, 19:40 Uhr (Report comment)

    Thanks for this tidbit... It's good to know the wind sector is with it.
    "the wind sector would much prefer community-owned onshore turbines, which would not require as much grid expansion."

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