PV feed-in tariff levels in Germany are set to decrease up to 25 percent by mid-2010 as the government obviously accepts stronger growth – still without caps March, 2010: The German government wants to decrease feed-in tariffs »as quickly as possible.« In late January, German Federal Minister of the Environment Norbert Röttgen suggested that tariffs for rooftop systems drop by an additional 15 percent, beginning on April 1. For ground-mounted systems, the decrease is set to take effect on July 1. Röttgen suggested a reduction of 25 percent for systems on agricultural land. Apparently, construction of ground-mounted PV power plants should be concentrated on brownfield sites and areas that need to be redeveloped. The 9-percent annual reduction rate from the German Renewable Energy Law (EEG) will remain in effect. For systems in Germany to remain profitable in the future, installers will have to accept lower prices. At least in the case of rooftop systems, prices will have to stabilize at a level that many installers are currently encountering. Systems on undeveloped areas, on the other hand, will only be profitable if project planners choose the location well and avoid any missteps. However, the environment minister’s suggestions are not yet written in stone. They are part of a draft law that can still change under the parliamentary process, which will likely result in some delays. And indeed, just before we went to press, sources indicated that the cut for rooftop systems will be 16 percent and will not be implemented until June 1. The Federal Environment Ministry wants to improve conditions for producers who consume their own solar electricity. At the end of the day, solar electricity consumed directly by its producer would be worth 5 euro cents (7.2¢) per kWh more than if it were fed into the grid. The current difference is just 3 euro cents (4.3¢). Such producers would need to purchase less electricity, of course. Röttgen could not say just how high the in-house consumption bonus would be when he presented his original proposal for the PV German Renewable Energy Law (EEG) revision. Thus, when calculating the in-house consumption bonus, PHOTON International based the figures on an electricity price of 21 euro cents (30.2¢) per kWh as well as the likely 5 euro cents (7¢) of additional value for every fed-in kWh. As part of the revision of the in-house consumption paragraph in the EEG, the previous power limit of 30 kW will be removed. This measure is designed to encourage the operators of solar electricity systems to install electricity storage, the minister said. It seems likely that this will promote the construction of smaller systems for in-house consumption. Commercial operations and businesses do not benefit much from the current provision, since they pay much less for their electricity than private households. However, the latest number circulated for the revised in-house consumption bonus is as high as 10 euro cents (14.4¢), which would dramatically improve the economic pull of this type of PV application. Beginning in 2011, tariff levels are set to become more flexible. If PV expansion in 2010 exceeds 3,500 MW, tariffs will be cut by an additional 2.5 percent. And if the total power of newly installed systems exceeds 4,500 MW, that cut will be increased by another 2.5 percent. Further 2.5-percent cuts will accrue if installations exceed 5,500 MW and 6,500 MW. However, if the total power of newly installed systems is less than 2,500 MW, the annual reduction rate for tariffs for new systems will be decreased by 2.5 percentage points, and the same will apply for each 500 MW below 2,500 MW. Röttgen explained that tariff levels are then tied to market development. On the whole, the PHOTON publishing group views the above suggestions favorably, since by taking this path, Röttgen has paved the way for the installation of additional PV systems in Germany while avoiding over-subsidization. However, PHOTON views the goal of eliminating the construction of PV systems on agricultural land questionable, since this will put the brakes on ground-mounted systems – the vanguard systems in terms of cost up to now – and will, in turn, affect rooftop installations. Furthermore, it is not a great idea to tie tariff levels to the volume of installed power. This regulation does not take developments on the world market into account. Thus, tariffs in Germany are unable to move flexibly in parallel with cost reductions achieved by manufacturers. Suggestions encouraging in-house consumption seem dubious and could have a negative impact on Germany’s electricity grid as a whole, since it only encourages optimizing household grids and consumption at these locations. On the other hand, it is still unclear whether the regulation will pass legal muster: after all, the regulations on in-house consumption require grid operators to pay for something that they never actually receive. Indeed, that may contradict the German constitution – and if Germany’s Federal Constitutional Court scraps the regulation some day, system operators could be forced to repay their in-house consumption bonuses. Christoph Podewils © PHOTON International, March 2010 Duplicate only with allowance of PHOTON Europe GmbH, Aachen, Germany  back