Jefferies: Grid parity a reality in Germany

28. October 2011 | Markets & Trends, Applications & Installations, Industry & Suppliers | By:  Jonathan Gifford

Industry analysts Jefferies have taken the reductions in Germany's feed-in tariffs as an indication of approaching retail grid parity.

A graph showing rising electricity prices.

Rising European electricity prices and falling photovoltaic prices means grid parity draws closer. Image: HEPI.

As installed photovoltaic capacity is forecast to reach 5.2 gigawatts (GW) for 2011, feed-in tariffs (FIT) will fall by 15 percent. As such, Jefferies calculates, tariffs for photovoltaic systems will be between 17.94 euro cents and 24.42 euro cents per kilowatt hour. Which is quite a different proposition for the industry, as that will be equal or below the retail price for electricity in Germany.

Germany pays some of the highest electricity tariffs in Europe. In the most recent Household Energy Price Index for Europe (HEPI), released on September 29, Berlin is listed the second most expensive city for electricity in Europe with charges of 25.11 euro cents per kilowatt hour, second only to Copenhagen with 30.46 euro cents.

With the feed-in tariff equal to electricity tariff, Jefferies analyst Gerard Reid told pv magazine that photovoltaic installers will have to be ready to adjust their mindset from being FIT generators to electricity generators.

He also concluded that it is inevitable that systems costs in Germany decline to below those levels. "As an investor people have been waiting for grid parity for about six or seven years, and now it’s here."

"You can use the electricity yourself and you’ve got another marketing element, it’s more complicated but it’s another element," continued Reid.

Jefferies forecasts that Germany will install 3.5 GW of photovoltaic capacity in the years to come. Or as the Jefferies release concludes quite simply: "solar is not dead!"

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