Germany’s SRU wants to cap PV market; reports say no plans in place

However, Reuters Africa has reported that the country’s Environment Ministry said it had no plans to put a cap in place. According to the news agancy, a spokesman for the ministry in Berlin said it had announced its own plans just a week ago to lower incentives this year. He reportedly said that Environment Minister Norbert Roettgen had expressly said there would be no cap on incentives. "We already presented our proposals last week," the spokesman said, adding that would remain its position. Speaking to pv magazine though, the Ministry has said no new developments have taken place since last week.

High costs

The German Advisory Council on the Environment (SRU) considers the high costs caused by the current development of PV to be detrimental when it comes to achieving complete coverage through renewable energy in Germany. Therefore, it is demanding a further cut in the feed-in tariff, and strict limitations on additional installations.

In its special expert opinion entitled "Paths to a One Hundred Percent Renewable Power Supply" the advisory committee, which consists of seven scientists, recommends that the PV subsidies in Germany be fundamentally changed. And, in addition to demanding that installation of new PV plants be capped at a maximum of 1,000 MWs, they also support an upper limit of 500 MWs, according to SRU member Olav Hohmeyer, professor at the University of Flensburg.

Demand has virtually exploded because of the drastic price reductions for PV plants together with high remuneration rates at the same time. "Our concern is that if uncontrolled growth continues, then this will be used by groups that are more interested in an extension of the operating periods of nuclear power stations and construction of new coal-fired power stations, in order to undermine the Renewable Energy Act [EEG]," Hohmeyer goes on to say. At the same time, he does not see any danger that a cap on the market could have similar consequences as in Spain, where the number of new installations almost collapsed after the introduction of a quantity limit.

However, the opinion also says it is up to the government to specify the concrete amount of any ceiling. At the same time, the experts describe the targets specified in the national action plan for renewable energies (NAP) of the German federal government for installation of additional PV capacity from 2,500 to 3,500 MWs annually as "indefensible". Apparently it is not cost-effective, even if it is assumed that demand for electricity will drastically increase in the years to come. With the current pace of development, "approximately half of the capacities that would be maximally required in a one hundred percent renewable energy supply in the year 2050 would be installed already in 2020".

Growth rates too high

The current growth rates when it comes to PV are clearly too high, concludes Hohmeyer. A reduction in the feed-in tariff alone is not enough to slow down construction of new installations. He accuses the PV industry of playing with "marked cards" when it comes to potential cost reductions. For the advisory council, it would also be conceivable – apart from a ceiling on the market – to put a restriction on size for PV plants in the Renewable Energy Act. From the scientists’ point of view, roof installations would completely suffice in Germany. "Germany has done its part for the development of photovoltaics," adds Karin Holm-Müller of Rheinische Friedrich-Wilhelms-Universität in Bonn. There should now be a search for more economical alternatives. This means installing PV plants there where they are more efficient than in Germany. Thus the costs of further development could be shared with other countries, the experts go on to say.

EEG reallocation does not indicate true difference in costs

In light of the costs, the scientists do not share the opinion that PV will achieve grid parity in two years and be more inexpensive than offshore wind electricity in Germany. The Advisory Council recommends removing the cap for PV installations again once the costs for solar electricity fall below fifteen cents per kilowatt-hour. Otherwise, the scientists see conversion of the power supply in Germany to one hundred percent renewable energy endangered, because of the high costs of PV.

Additionally, the change should be as cost-effective as possible. The scientists pointed out at the same time that the currently sharply criticized EEG reallocation in the amount of 3.53 cents per kilowatt-hour does not reflect the true difference in costs between renewable and conventional sources of energy. "The EEG reallocation exaggerates the cost difference," insists Hohmeyer. Renewable energies account for clear price reductions on the market for electricity, corresponding to 50 to 60 percent of the current EEG reallocation. According to him, the difference in cost is thus below two cents per kilowatt-hour.

Nevertheless, Germany should not rely on the expensive forms of energy too early he said, with a view toward PV. This would make a change in energy policy much more expensive for electricity consumers. It follows from these considerations "that it is imperative to drastically cut subsidies of photovoltaics in the years to come," concludes the 680-page opinion. "The later the plants are installed, the lower are the social costs."

The German Advisory Council on the Environment considers complete coverage through renewable energies to be both feasible and possible even before the year 2050. The scientists oppose extension of the operating periods for nuclear power plants. New construction of coal-fired power stations is likewise unnecessary. What is particularly important, however, is to advance grid development, as well as the development of storage capacities in the years to come. However, the scientists do not consider harmonization of the subsidies for renewable energy throughout Europe to be either necessary or useful.