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Germany: More FIT details emerge

More details have emerged over what the photovoltaic industry can expect to see in Germany’s new EEG (renewable energy law). The Environment Ministry has refused to comment on the speculation before the next meeting of the mediation committee, to be held today, however.

Photovoltaic plants over 10 MW in size will not initially receive a subsidy, under the new EEG plans, but this could change in the future.

Belectric

A compromise between the federal and state governments regarding  photovoltaic subsidies in Germany is becoming increasingly apparent. German news agency, dpa has today reported that the planned feed-in tariff (FIT) cuts are expected to remain at more than 30 percent.

Originally, the cuts should have come into play on April 1, however, they were delayed after a decision on the new subsidy program could not be reached. It seems certain that the cuts will be retroactively applied to April 1.

At the same time, the separate class for photovoltaic systems between 10 and 40 kW in size will be introduced in the new EEG. Plants in this category are to receive remuneration of 18.50 euro cents per kilowatt hour, from April. pv magazine has learned from political circles, however, that the monthly degression will remain.

Furthermore, the market integration model should only apply to installations between 10 and 100 kW in size. They will receive a subsidy for 90 percent of the energy generated and will have to sell the remaining 10 percent themselves. pv magazine was additionally told that plants bigger than 10 MW should initially be excluded from the subsidy program. But, this could change in the future.

Yesterday, June 26, The Financial Times Deutschland (FTD) reported that an agreement on Germany’s photovoltaic subsidies was expected to be reached before the summer break.

Germany’s Environment Minister, Peter Altmaier from the Christian Democrat Union (CDU) was said to have met with opposition and state politicians and to have agreed upon a compromise on the EEG. In addition to the abovementioned details, it was also said that subsidies will be stopped once a cumulative installed capacity of 52 GW is reached, after which the rates will be tied to market prices. Furthermore, the growth corridor, which currently targets an annual growth rate of 2.5 to 3.5 GW, will be maintained and not lowered.

Commenting on the situation, industry analysts, Jefferies stated, "Of note, no mention of monthly cuts of 1.5% were discussed, a major point of contention for the industry."

It added, "While no cap is a positive, large rate cuts are here to stay and monthly cuts haven't been ruled out. Returns are low, however, cheap KfW [bank] financing will continue to make the market attractive for levered returns in a low rate environment; but rate cuts remain a possibility. Pricing is unlikely to improve and will potentially continue to decline. We continue to favor unit plays in the solar space such as inverters over module producers given the expectations for a protracted low price environment."