Germany to cut subsidy for ground mounted Solar Farms

Germany has been the world’s largest market by solar installations and capacity for the last 5 years. The total installed capacity of solar energy in Germany has now touched almost 32 GW with almost 1 GW of solar power capacity installed in September 2012 alone. Germany has been trying to rein in the growth in German solar panels to 3-5 GW a year from the current rate of 7-8 GW a year. However despite repeatedly cutting feed in tariffs for solar energy production, the growth has refused to stop. The Chinese solar panel producers have reduced prices by almost 80% in the last 3-4 years as overcapacity has meant that the price decline in solar systems has not stopped despite numerous bankruptcies.

The problem is whenever a sharp cut is announced in solar subsidy a massive surge of installations takes place to take advantage of the higher subsidy. December 2011 saw a massive 3 GW of solar installations in a single month which implies 100 MW of solar power installed in a single day. In comparison, big countries like Russia don’t have a total installed capacity of 100 MW.

The German government under pressure to control the rising electricity bill may cut subsidy support for large ground mounted solar farms completely in 2013. Despite low feed in tariffs, almost 80% of the solar installations were from solar plans of more than 1 MW size. The reason was that solar panel producers were trying to unload inventory and Germany is the only country with unlimited feed in tariffs and streamlined and quick approval for solar farms.

Germany Electricity Price Rise leads to Blame Game

There has been furious debate about the role of Erneubare Energien-Gesetz (EEG) as the consumer surcharge on electricity for funding renewable energy is set to rise sharply in 2013. The surcharge is set to rise by almost 50% to 5.3c/KwH from around 3.6c/Kwh currently. The so-called ‘Umlage’ – charges levied on German consumers to support renewable power – will fund the 20 billion euros that will be paid out for green energy in 2013. Opposition parties have accused the government of letting private consumers bear the brunt, after it exempted energy-intensive heavy industry from green energy and network usage tariffs. While the media is criticizing the renewable energy industry, wind and solar energy associations have hit back citing the massive amounts of damage caused by fossil fuels and the energy security due to renewable energy. BWE has cited that the electricity price increase has been less than the rise in fuel costs such as oil. The states and the federal government are also not aligned and are working at cross purposes.

Read about the December Surge.

The influx of cheap solar panels from China has let the December 2012 explode to almost 2-3 GW according to the German solar association BSW. The high rates of return of over 10% due to super cheap Chinese solar panels at 80-90c/watt has been the major reason for the explosion in demand which could be the biggest month in Germany ever. While German Solar Market has remained robust as ever, the German solar panel producers like Solon, Sunways have been vanquished with a number of major solar companies failing and getting acquired. The Asian solar companies have been the major beneficiaries of this demand growth in Germany and Europe. The massive rise in demand will imply that according to the EEG, here will be a 15% cut in July 2012 after a 15% cut in January 2012. This would bring the solar FIT prices quite low and provide a restraint to the galloping German solar energy installations which is reaching more than 25 GW.

DigiTimes

Germany may stop all incentives for ground-mounted large-size solar installations in 2013. Hence, In September, installations in Germany which were close to 1GW, more than 80% of the systems were large-size systems. As Germany’s government switch subsidies to rooftop systems, estimated monthly installations of rooftop systems in Germany will be around 200-300MW.