I posted a note on a LinkedIn asking what the heck is going on in Germany. If you follow me on Twitter or on Facebook (@SolarFrankA and @SolarPowerWrld, and Facebook), you know I’ve been a little perplexed about what exactly is going on in the German solar market. One day, I’ll see stories saying it’s up, and the next day there’s an article saying it’s down. Frankly, it was making my head hurt.
So into the breach stepped Thomas Stein, a consultant with piedra solar in Germany. As a result, he’s obviously intimately involved with the market and provided me with a thorough explanation, which he graciously allowed me to post here:
As you may know, the German Renewable Energy law (EEG) has been paying generous FITs to owners/operators of PV-systems in the past. The law has a build-in mechanism that mandates certain cuts in these FITs if certain volumes have been installed in a certain period of time. That’s part of the law, and the cuts have been implemented several times in the past. But because of the market prices dropping faster than in the EEG anticipated, the cuts were seen as not severe enough by the Government to keep PV-development within the pre-determined growth channels in Germany.
In the past, whenever it became known that another cut would be likely, a rush started to get as many installations connected as possible to profit from the higher FIT, which is always guaranteed for 20 years plus the year of connection.
In the second half of 2011, the EEG knew 4 different sizes of PV-installations: 0-30 kWp, 30-100 kWp, 100-1000 kWp and over 1000 kWp. Differences were also made for BIPV and open field; BIPV pays a higher FIT.
Open field has become almost obsolete last year with the latest cuts already; paying not enough for most investors. Small systems with 30 kWp max. on roofs were getting € 0.2874 per kWh if installed before Dec. 31, 2011. Installation means a working PV-generator only – basically you could connect a couple of modules to an inverter at the project location and then document the energy production of the system by simply powering a small light bulb; then the installation was considered to be “connected.”
As one can imagine, that has led to huge registration numbers in November / December 2011, but not actual completed installations – they were often completed in 2012, as soon as the time was there or weather permitted. Even so, it has been perfectly legal to do it that way.
The next round of pre-determined cuts of 15 % came 01.01.2012 because 5.2 GW were registered between October 1st 2010 and September 30th 2011. That ́s the time-window that ́s being looked at for the cuts starting in 2012! Small systems up to 30 kWp were getting now only € 0.2443 / kWp. Larger systems between 30 and 100 kWp were getting € 0.2323; from 100 to 1000 kWp € 0.2198 and above 1000 kWp € 0.1833 per kWh – only if installed on roofs or attached to buildings (facades).
In addition, you can benefit if you are using the power produced by the PV-system in your house (self- consumption). In that case you are still getting a reduced FIT for the power you have consumed, depending on the total (more or less than 30 % of produced energy), and of course you save the purchasing costs for the power from the utility. Provided your system is not larger than 500 kWp. And this rule is limited to 2012 and 2013 only.
The proposed new cuts (legislative is still considering it, but everybody assumes that it will become law on May 11) have come as a surprise, because they mean a reduction of approximately 32 % compared with the rates paid until the end of 2011.
For systems having been connected before April 1, 2012, the rates are as described before. There are additional rules now concerning grid stability and connection, meaning that PV-systems < 30 kWp must be restricted to feed only 70 % of the capacity into the grid or otherwise provide a mechanism that allows for remote deactivation and control. Parallel, a new rule was put in place that dictated that only 80 % of the production capacity must be fed into the grid for systems < 10 kWp, and 90 % for systems between 10 and 1000 kWp. Between 1000 kWp and 10000 kWp, you are allowed to feed in 100 %. The maximum size that will be subsidized is 10000 kWp now. All clear?
A roof-mounted installation that received € 0.2443 until April 1st now receives only € 0.195 / kWh if installed in April. If installed in May, the rate drops to € 0.1931 and so on. The rate is always paid for 20 years.
As you can see, now we have a monthly reduction of 1 % starting April 1st for all system sizes.
In addition, there is the concept of the “breathing lid” that allows for even more cuts starting in November 2012, depending on how much was installed in the last 3 months before. This lid allows for more cuts or less reductions, depending on the total. So nobody knows what ́s going to happen in November, but the total reduction in one year can now be 29 % (24 % before).
There are transition periods to allow for systems to be installed under the “old” rule (from Jan. 1–March 30) if a request for grid connection was made before a certain date (different for systems on roofs / open fields and on conversion areas!); roof/open field systems can then be finished under the “old” rule until June 30 2012, the other systems have until Sept. 30 2012.
This is in no way a complete overview, and the author does not assume any liability for the content.
I want to thank Thomas for the hard work in putting together this summary of the German market. It is clearer to me now and to my readers. Let us know what you think.