German Solar self consumption faces problems

Germany is facing hurdles in its solar energy industry, as the government plans to impose a green energy levy common to all retail consumers of electricity on self-consumption on PV generated electricity. Germany has been a pioneer in solar energy having single-handedly sparked a revolution in solar energy through its highly evolved and progressive EEG law, which decreased FIT rates on renewable energy every year forcing the solar industry to cut costs.

Read more about the German Solar Industry here.

Solar energy has now become competitive with retail price of electricity in Germany and now many homeowners are installing solar systems for self-consumption and to sell to a small set of neighbors. The bone of contention is now on deciding if the electricity based on self-consumption is charged with the green energy levy. Germany has financed its RE subsidies by levying a small energy charge on per unit of electricity. This has become 6 euro cents /KWh as it subsidizes more than 30 GW of solar energy and a bigger amount of wind energy. This levy might be imposed on generators of solar energy which will mean a death knell for the industry. Solar FITs are no longer viable and pure play economic generation will be hurt if a levy is imposed on solar electricity.

The German solar group BSW is up in arms over this proposal. Electricity prices are already a controversial topic in Germany where retail prices are one of the highest in the world. Industry pays a much lower electricity price which is uncommon. Most countries such as India and China subsidize retail customers, while industrial customers have to pay higher prices. This is reverse in Germany, where industry is given lower prices to keep them competitive with the other countries.

I think that the German government will back down and allow self-consumption without levies, as it makes little sense. Nobody will install solar panels if a levy is imposed as it will destroy the economics. This will also push back Germany’s target of 100% electricity generation from renewable energy by 2050.