PV number games from Germany’s Ministry of Economics

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Shortly before the meeting on Wednesday of Germany’s ruling coalition’s energy task force, Minister of Economics, Philip Rösler of the FDP (German Liberal Party) had drawn up a possible compromise solution.

In an internal paper of the Ministry, obtained by pv magazine, details are given as to how a controlled additional expansion of some 3.5 gigawatts (GW) annually might be affected. From Rösler’s perspective, a one-off reduction of 21 percent is necessary to achieve this. This means a reduction of only six percent more than that set by the revised Renewable Energy Law (EEG) as of July 1. With this, the photovoltaic feed-in tariff (FIT) would lie, depending on the size of the installation, between 14.17 and 19.30 euro cents per kilowatt hour.

This plan is not radically different from the position of Federal Minister for the Environment, Norbert Röttgen (Christian Democrat). Until now, Röttgen has kept to the stipulated annual degression of a maximum 24 percent. However, he wishes to spread this over multiple small cuts during each year. Before the coalition task force’s meeting, he too had suggested quick action in adjusting the solar subsidies. On the basis of the paper, it is difficult to understand why no compromise was, therefore, able to be reached.

Rösler’s paper is interesting, because it creates a clear connection between a one-off reduction and additional photovoltaic installations. The Ministry of Economics has determined, in its view, that a one-off reduction of the photovoltaics FIT between 32.5 and 25 percent would be necessary to keep newly installed capacity at between one and two GW annually.

In the case of a 15 percent reduction, as the current EEG stipulates, the Ministry reckons on new installations with a capacity of around six GW this year. When asked how the ministry came up with these numbers, it replied, "Please find the figures sought in the documents attached." Two documents were attached: Report from FGH/r2b and Consentec: Optimizing and restructuring EEG subsidy for improved grid and market integration of renewable energy from 12.09.2011, and Degression and subsidy rates from January 2012 (both German language).

Furthermore, it remained unclear of if the Ministry of Economics remained behind the official National Renewable Energy Action Plan, or if it committed to the Federal Government’s Energy Concept 2010. This is a relic from the pre-Fukushima days, when the German Government was still supporting nuclear energy.

The National Action Plan envisages an installed photovoltaics capacity of just under 52 GW by 2020, whereas the Federal Government’s Energy Concept only envisages 33 GW installed by then. A footnote of Rösler’s paper elaborates: "In energy planning scenarios, 33,000 megawatts is envisaged as a just about economically sustainable capacity goal."

Additionally, the Ministry of Economics is, with figures about Germany’s solar cell market share, once again fanning the flames against Chinese photovoltaics manufacturers. In the paper, the share held by German manufacturers is given at 15 percent and those of Chinese at 60 percent. Figures from 2008 are contrasted with this, showing a market share of 59.5 percent for German companies and 21 percent for Chinese ones.

The sources for the current numbers are provided by German business weekly, Wirtschaftswoche and Berlin’s Center for Solar Market Research. The Center for Solar Market Research is led by Wolfgang Hummel, who has already caused a commotion in Germany with questionable figures relating to the industry. How large Germany’s share in value creation through photovoltaics is not accounted for. Yet this really would be the relevant measure.

The Ministry of Economics is also attempting to pass the buck to the photovoltaics industry about grid expansion costs. According to the Ministry of Environment’s (BMU) Lead Study 2010, on which basis figures about photovoltaics expansion were supplied to the EU, additional grid expansion costs of up to 21 to 27 billion euros will be incurred up to 2020. When compared to the Federal Government’s Energy Concept 2010, this represents additional costs of around 11 to 14 billion euros.

A note is made about in Rösler’s paper: "In contrast to the scenarios given in the Energy Concept, the BMU Lead Study is working on the basis of an almost identical expansion of onshore wind energy (an additional 2,500 megawatts), while photovoltaics will be expanded in clearly greater measure (an additional 18,500 megawatts). The significantly increased photovoltaics expansion anticipated in the BMU Lead Study leads to a disproportional increase of grid expansion costs from 11 to 14 billion euros."

Until now, the question of how this money will be used also remains unanswered by the Ministry.

In its grid study, the Germany Energy Agency (DENA) sees the need for more than 4,000 kilometres of new high-voltage power lines. However, these lines are required, above all, to bring offshore wind power from Germany’s North to densely-populated areas in the South.

If photovoltaics were to receive greater encouragement, the expert view is that a clearly-reduced level of new cables would be necessary. Furthermore, FITs for photovoltaics are already, with July’s agreed degression of 15 percent, below the level of offshore wind power installations in some parts.

Translated by James Harris.