German government plans rile solar industry

Germany’s solar industry is up in arms over government plans to speed up reductions in renewable energy subsidies, which critics say could thwart the country’s transition to renewable sources.

Fred Jung and Matthias Willenbacher, founders of renewable energy group Juwi, blasted a proposal released by German Economics and Energy Minister Sigmar Gabriel in a joint statement on Tuesday, saying, "The actions outlined in the draft plans to reform the Renewable Energies Act (EEG) are designed to sound the death knell for the energy transition as a whole. The plans would destroy the confidence of investors, create insecurity in municipalities and cooperatives and among citizens and raise the cost of the energy transition instead of relieving electricity customers of their burden."

Chancellor Angela Merkel’s government is looking to lower the cost of the country’s transition away from nuclear power and towards renewable energy. Gabriel has set out to modernize and the clean energy subsidy system, which has led to skyrocketing electricity bills for consumers.

German household electricity costs are the second highest in the 28-nation European Union, according to Bloomberg.

Specifically, Gabriel is seeking to slash renewable energy feed-in tariffs from their current average of around €0.17 per kilowatt hour to about €0.12 per kilowatt hour.

In addition, the plan would require a binding expansion corridor for individual technologies. For photovoltaics, the plan calls for 2.5 GW of additional capacity a year and is at the lower end of the government’s previous targets. The proposal would also keep feed-in tariff degression linked to capacity expansion in the preceding 12 months.

Tenders for ground-mounted PV systems

In order to ensure greater integration of renewables in the electricity market, Gabriel is demanding the introduction of mandatory direct marketing. From 2015, operators of new plants with an output of 500 kW or greater will have to sell their electricity directly; from 2016 the same will apply for new plants of 250 kW or more and as of 2017, all new installations of 100 kW.

In addition, Gabriel plans to do away with feed-in tariffs altogether and replace them with a tender system by 2017. The government is set to initially establish a pilot project for ground-mounted PV installations that will include a tender model for an annual capacity of 400 MW.

PV operators will also face increased costs from the proposal, which calls for a renewable energy surcharge for self-consumption. While operators of industrial-sized power plants would be exempted, new installations aimed at self-consumption will have to pay a mandatory fee towards the support of the renewable energy act, according to the draft paper.

Industry lobby association BSW-Solar condemned the plan to charge self-consumers in an open letter to Merkel, saying the proposal would deter both investors and ordinary Germans from taking part in the energy transition.

"While the U.S., Japan and China invest massively in solar energy, the German photovoltaic market has more than halved as a result of aid cuts that are too speedy," BSW-Solar said in the letter.

On-shore wind power would likewise be limited to an annual capacity expansion of 2.5 GW and likewise have feed-in tariff degression directly linked to capacity expansion.

For offshore wind, Gabriel specifies a corridor of 6.5 GW by 2020 and 15 GW by 2030. Projects that already have a direct connection to the grid would have priority. In addition, between only two offshore wind parks would be allowed to be built between 2020 and 2030.

Bioenergy would be the hardest hit by the plans. According to Gabriel’s proposal, which would offer preferential treatment to more cost-effective technologies, added bioenergy capacity would be limited to 100 MW a year due to its high costs.

Despite the cuts, Gabriel’s plan foresees an increase in the share of renewable energy to between 40% and 45% by 2025 as well as an increase of up to 60% in electricity consumption.

Gabriel’s proposal will be presented for approved at a two-day government meeting on Wednesday and Thursday.