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Why Germany has the Highest Solar Power Capacity in the World

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Germany is the definite number one solar power country in the world. The latest numbers reveal that 28 GW of solar is connected to the grid – far more than any other country in the world. Italy, which is number two on the list, only have about half of Germany`s solar capacity, and the gap is getting bigger every day. Green World Investor has previously reported on Germany`s tremendous growth in the PV sector in December. According to European Photovoltaic Industry Association (EPIA), Germany`s solar power capacity accounts for 36% of total installed capacity worldwide:

Image credit: Global Market Outlook for Photovoltaics until 2016

We all know that Germany is not on the top of the list when it comes to solar insolation (strength of sunlight), so what is this country doing right that makes the solar power industry flourish to this extent?

The Germany Renewable Energy Act

The German Renewable Energy Act (in German: Erneuerbare-Energien-Gesetz, EEG) started in 2000 with a goal of growing the renewable energy sector in the country. EEG encourages cost reductions for renewable energy and better energy efficiency over time.

How successful has the Germany Renewable Energy Act really been?

As a result of EEG and the incentivized development of renewable energy, more than 110 million metric tons of carbon dioxide emissions were cut only in 2010 – a number that is increasing every year. The amount of industry jobs in the renewable energy sector has grown from 30,000 to 350,000 from 1998 to 2010. The costs of solar panels have been cut in half over a period of five years:

Image credit: Wikimedia Commons

Price reductions and growing power capacity is a direct result of the implementation of the German feed-in tariff, which is an intrinsic part of EEG. A feed-in tariff is undoubtedly the best way to grow the renewable energy sector in any given country.

How does a feed-in tariff scheme work? 

The basic gist is this: Government incentives are used to reduce the investments for renewable energy projects by paying a fixed amount for the amount of electricity generated. The rates are fixed for a certain period of time. This is a simple and direct way to incentivize investments, which in the long term encourages efficient and high-performing systems.

This is basically the same as how power purchase agreements (PPAs) work, but in the case of feed-in tariffs, the rates are much higher. As the industry matures, the rates of incentives are lowered accordingly, which is why the German feed-in tariff has been cut on several occasions since it`s introduction. However, investors are still guaranteed a certain return on investment – an absolute necessity for further growth.

The cost of feed-in tariffs is not born the year of installation as they are with tax credits, but instead spread out over a number of years. The incentivized costs are distributed over all consumers; however, initial costs are lower with feed-in tariffs.

Numbers from 2012 have revealed that the German feed-in tariff scheme has so far cost about 14 billion euros annually for wind and solar installations – the equivalent of 18 billion US dollars. Solar power installations received somewhere between 35.5 – 51.7 eurocents for every kWh they produced in 2007-2008.

How on earth does Germany cover these costs?

They are put on top of the domestic cost of electricity. Homeowners pay an extra surcharge of about 3.6 eurocents (0.046 US dollars) for every kWh. This accounts for about 15% of the total cost of electricity in a typical German household.  Not only is EEG responsible for the success of solar PV in Germany, but the act has also resulted in a 40% drop in peak electricity, which has lead to savings in the range of 520 – 840 million euros for consumers (mitigating the surcharge).

There is no doubt that the German Renewable Energy Act has been a tremendous success and potentially can serve as an archetype for similar initiatives in other countries. In fact, many countries have already followed suit. In the US,on the other hand, only a handful of states including California and Florida, have introduced feed-in tariff schemes at time of writing. However, several other states are in the process of doing so.

It will be interesting to see where how the German feed-in tariff scheme is doing ten years down the line, and if the government decides to further cut the incentives.

The federal government in Germany has set a target of 66 GW of installed solar PV capacity by 2030, which will be reached if the annual goals of 2.5–3.5 GW added to the grid are met. By 2050, Germany is aiming to produce one fourth of all its total electricity from solar power.

Article written by Environmental Engineering student Mathias. He writes more about solar panel costs at his green tech site Energy Informative.

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in or call me on +913340606492.

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One Response so far | Have Your Say!

  1. Kent O. Doering

    Still building out a good clip of 3 Gw a year.- in Solar. The wind sector is even more furious.In addition to the projects recently described here, there are two more big North Sea projects using different suppliers- including the big new Simenes 6 MWh turbines. These two helgoland projects nearing completion will put out a total of 4.330 GWh. Massive.
    And do not forget the increasing build out of agrargian region manure waste methane recapture- combined heat power systems. By 2025- the total build in Germany alone will be over 30.000 MWh, the equivalent of 30 nukes.
    And, the nukes are being converted to a special form of dry hot rock geothermal- bringing them back on line- and which will provide25% of German power needs.
    At the moment, only 2.5 % of German farms are equipped with manure methane recapture- generating about 800 megawatts of methane recapture power and providing heat-hot water. By 2025, the goal is for all German farms to be built out with this- putting 30.0000 MWh of power onto the grid as baseline backup.
    The 400 billion Euro “Desertec” project in Morocco- Saharan concentrated solar power- to provide 1/3 of French and German daytime power needs- is being complemented by 7.500 big Siemens 6 MWh turbines along the wind constant, wind rich Moroccan Atlantic coastline- for an additional 45.000 MWh going into the Moroccan, French and German grids.
    Small ‘German brewery going Aqueous fuel “overunity”.
    With that banks of , B.M.W. engines- running off special titaniusm browns gas generators (all aqeuous, drive A +++ generators- producing power for bottling and keg filling lines- and generating more Browns gas – hho-
    fed to fuel cells generating more power under the heating vats- with beer cooling heat pumps cooling the beer – heating water for the next brewing batch.
    Overuinity bakeries are also being planned with “aqueous fuel systems” using fuel cells on the ovens, and special browns gas generators.
    The build out in wind is continuing. The HeWind- project near Helgoland is the biggest offshore wind project off Germany. (Britain has more.) . 3.5 Gigawatts of offshore pöwer. Siemens built two big invertere platforms- over 20 meters over the waves-60 feet to let the north sea sorm waves pass underneath- each half the size of football field to get the HVDC power from the high seas to shore. 3.500 Megawatt hours. The build out is tremendous. The build out in in building coupled co-generative – heat hot water power replacing oil heting is proceeding at a tremedous pace. The Investment opportunity there- VW and Lichtblick Utilities. Buderus does fuel cell furnaces to supplement solar heat systems. Vaillant does small CHP systems. The buildout is massive.
    Areva, Spanish wind is booming. Check out EWEA reports.

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