NSW abandons FIT cut

The government of Australian state New South Wales has decided not to implement a previously proposed reduction of its feed-in tariff (FIT), sparking relief from the country’s solar sector.

It had sought to cut the FIT payment by one third to 40 cents from 60 cents and implement this reduction retroactively, but now the state government has taken a u-turn in its decision following pressure from the country’s nascent solar industry.

The UK has similarly proposed to reduce its FIT payments, but the change would not affect previously guaranteed payments under its present government.

New South Wales Premier Barry O’Farrell said this week that he will renege on introducing the rate cut retroactively, according to local reports.

Taking retrospective action calls into question the validity of government guarantees for set power rates under the FIT scheme.

PV FIT for 2011 may remain unchanged

Solas Power has learned from a German PV expert that it has been mooted that the FIT will go up again. However, this has not been offically confirmed and it is believed that this is not finally decided yet.

Although, the FIT for wind will be very much supported as wind turbines are more efficient and generate more energy.

IT is believed that the FIT for PV will probably be frozen until end of this year but nobody knows when or whether it will really come into force.

This week during the Intersolar in Munich everybody hopes that there will be a final decision made, but politicians are slow and the lobby of the nuclear power is always very strong and in opposition to support renewables.

German Givernment drops plans to reduce FIT in March 2012

The German government has dropped its plans to add a further unscheduled cut in incentives for photovoltaic energy in March 2012, according to a draft of the reform of the Renewable Energy Act obtained by Solas Power on Monday.

Environment Minister Norbert Roettgen had said on 30th May that the government was considering cutting the feed-in tariff (FIT), or incentives, for photovoltaic by an additional 6% in March 2012 But in the draft of the Renewable Energy Act's reform there are no longer any plans for a further cut in March 2012.

There are already cuts in the FIT of about nine percent set to take effect on July 1 and then again on 1st January, 2012.

Solar Industry saved from extra Feed-in tariff cuts in Germany

Solar industry saved from extra feed-in tariff cuts in Germany

The German cabinet, under the leadership of Chancellor Angela Merkel has removed controversial proposals to include an extra 6% cut to the German feed-in tariff next year.

The German cabinet, under the leadership of Chancellor Angela Merkel has removed a controversial proposals to include an extra 6% cut to the German feed-in tariff next year. The German cabinet today agreed on closing all its nuclear power plants between 2015 and 2022. Although wind energy will be supported at higher rates to secure 35% of its energy needs come from renewables, the solar industry retains support but without the extra FiT reductions.

In a week that sees the global PV industry verge on Munich, Germany for Intersolar Europe, a serious concern held by the industry that PV installations in Germany would suffer a serious decline due to the continued cuts has been lifted.

The German cabinet agreement means that on January 1st, 2012 only a 9% cut to the FiT is expected. However, each annual gigawatt of PV installations over the quota of 3.5GW will result in a further 3% cut in the FiT. This will be applied to the 12-months to the end of each September.

A 24% ceiling cut has also been proposed should installations reach over 7.5GW. The same system will also be adopted for 2013, potentially giving much needed mid-term stability to the tariff conditions.

According to a research note from Jeffries International, ‘The German solar market is going to remain the bedrock of global solar at least for the next three years with the minimum annual goal of 3.5GW.’

Ratification is expected later this month

German Legal Overview

GERMAN LEGAL FRAMEWORK SOLAS POWER: log onto the German government website for details on the German FIT and legal framework see http://www.res-legal.de/en/search-for-countries/germany.html

Emerging Markets in FIT

EMERGING MARKETS in Renewable Energy FITs

Solas Power as part of its global presence is currently seeking new markets and one market that has become of interest are, Turkey, Uganda and Vietnam.

No newcomer to the concept, Turkey revised their program, expanding it modestly, and added a new twist with bonus payments for "Made in Turkey" products.

This week it is the US's former military foe, Vietnam, that dipped its toe into the feed-in tariff waters by announcing a draft proposal.

But it is Uganda that will set heads spinning this week. Quietly, without fanfare, Uganda has announced one of the most sophisticated, if not the most sophisticated program in Africa.

Vietnam

Vietnam's program is il-defined and limited, providing a tariff only for wind energy. Further, the tariff is supplemented by a government subsidy, presumably paid by taxpayers in the communist country.

Uganda

Of particular interest are the highly differentiated tariffs for hydro projects from one to eight megawatts. The tariffs are in fact linear but presented in tabular form in increments of 100 kW.

Further, the Uganda program specifies capacity caps for each technology by year. This is clear policy guidance on how much the country wants of which technology.

SOLAR MODULE SALES PRICE of $1 per Watt - no longer theory

Solar module sales price of $1 per Watt no longer theory

Edwin Coot of Solar Plaza has stated that In 2010, the objective is to reach a selling price for solar modules of $1 per Watt,” says Lynn Sha, Vice President of Chinese manufacturer QS Solar. In other words, it will become possible in 2011 to produce solar energy cheaper than the cost of electricity from the grid (“grid parity”), and this is without subsidies.
By Edwin Koot, Solarplaza

Revolutionary price level will mark start of solar revolution
This revolutionary price level could be sufficient to create sustainable growth in the solar energy market (PV) even without the availability of any government incentives. “The solar industry has always claimed that its goal was to attain this level of $1 per Watt. Reaching this benchmark will be the turning point from which markets will emerge and grow without any government aid. It is the start of the solar future,” says Edwin Koot, CEO of SolarPlaza, the global, independent solar energy platform.

Module prices are currently under pressure. Last year’s enormous growth of the solar industry and market by more than 100% was caused by a generous feed-in tariff in Spain. Many new companies started production of solar modules. This year, support in Spain has been decreased and capped. “This could not have come at a more dramatic moment. The simultaneous loss of Spain as a major market, the inevitable industry oversupply, and the financial crisis have pushed down module prices since Q3 last year,” says Koot. “Good for customers, challenging for the industry.”

QS Solar started production of its amorphous silicon thin-film modules last year. “We will bring down the sales price to our goal of $0.75/Wp through the continuous expansion of our production capacity and process optimization.” The company currently has 3 production lines with an installed capacity of 95 MegaWatts, and it plans to increase another 4 lines by 2009, which will lead to a total capacity of 235 MW by next year.

The $1 per Watt level is already sufficient to achieve grid parity in many markets. A lower level might not even be needed to serve an infinite global market potential for photovoltaic solar energy.

Lynn Sha and CEOs from the world's leading PV companies (such as Q-Cells, Suntech Power, Applied Materials, and Akeena Solar) will be discussing the above topics at "The Solar Future" conference organized by SolarPlaza on May 26th in Munich.

About SolarPlaza
SolarPlaza, based in Rotterdam, Netherlands, Solarplaza.com is the independent global platform for knowledge, trade and events for the photovoltaic solar energy (PV) industry.

EEG compromise: PV-funding to be tailored to installed capacity

Solas Power has learned that a heated debate was had in Berlin between branch representatives and members of the German government on the adjustment of solar incentives, a step which can indeed be seen as an earlier than planned reduction. Future feed-in-tariffs (FIT) are to be adjusted in accordance with annual installed capacity. Possible cutbacks are being brought forward to July 1. Market experts see the danger of an artificial stimulation of the market and warn against a misinterpretation of the possible pull-forward effects.

The German solar industry association (BSW-Solar) has agreed to a new compromise on PV funding with the German Federal Ministry for the Environment. The resolution sees further reductions to FIT’s in accordance with the amount of solar electricity installed annually. The expected installed capacity for the year 2011 will be based on the figures for new installations in the period from March to May. By multiplying the result by a factor of four, the Federal Net Agency should then come to a projection of the estimated installed capacity for the year 2011.

Should the calculated PV market capacity be more than 3, 500 MW, further reductions of 3 percent are to be introduced mid-year on July 1. The resolution reached between legislators and BSW-Solar has determined a decline of 6 percent should projected capacity be over 4,500 MW, annually installed capacity of over 5,500 MW would incur cuts of a further 9 percent, more than 6,500 MW by 12 percent and an installed capacity to the same amount as last year, over 7,500 MW, will be subject to a 15 percent reduction. As the planning of open-space plants requires more time, their degression will not come into effect until September 1, 2011.

Funding is, as previously planned, to be cut by a further 9 percent at the turn of the year, 2012. Furthermore, an audit carried out by the Federal Net Agency will verify that the estimations made in spring 2011 were accurate. According to the announcement, subsequent corrections will be made should this be of necessity.

Right Direction – Questionable Impact
Following this announcement, the adjustments presented by Norbert Röttgen, Minister for the Environment and Günter Cramer, president of BSW-Solar are to be sent to parliament for deliberation. A final decision is expected in February. As the country will soon be in the throws of state elections, experts assume that there will not be a lengthy bargaining process on percentage points, as was seen in the year before last.

„The modification of incentives in line with market conditions along with a regular review of tariffs is generally a step in the right direction and is supported by the industry” assessed Markus A.W. Hoehner, CEO of the market research and consulting house EuPD Research. Generally speaking, the fact that tariffs are to be aligned with the figures for installation should also be greeted. However, as to what extent a reduction in FIT’s can contribute to a pacifying of the markets is open to doubt. “The announcement, itself, of an early adjustment on July 1 equates to a simulation of the market,” says the expert and warns against potential pull-forward effects.

Hoehner, a market observer with over a decade of expertise in international markets of renewable energies points out: “The German PV market is still overheated, the reoccurring discussion on amendments to incentives fuels this situation further.” Germany currently finds itself in a dilemma. Without further adjustments the market is threatened by excessive growth, a point which speaks for the measures suggested. Yet a “run” in the first half of the year is likely to overcompensate for the slowdown effects of said adjustments.

„The review of the EEG in 2012 will play a decisive role in the future of photovoltaic in Germany“, believes Markus A.W. Hoehner. “Legislators, industry representatives and stakeholders now face the challenge of developing a concept that encompasses all sources of renewable energy. A clear message on the future of the German renewable energy industry should also be sent to international markets in order to strengthen investment security”. Hoehner sees the tone in which this discussion has taken place as positive. In comparison to last year, there is a greater willingness to enter talks and a clearer course of action can be recognized. Although the current debate may not be crucial to the long-term development of the industry, it certainly shows the direction to be taken. It is imperative that a destabilization of the markets, as seen recently in France, Spain or Czech Republic, is avoided.

German Solar "Gold Rush"; Act now to capitalise on this Opportunity

German Solar "Gold Rush" now on, Invest now.

Solas Power has noted that Germany has mooted that the should cap solar power subsidies, cutting payments for new plants once added capacity exceeds 1 gigawatts nationally in any one year, a panel of experts that advisesChancellor Angela Merkel said.

The Berlin-based panel’s findings, released in a 680-page report today, call on Merkel to steadily reduce aid annually as well as apply a cap on subsidizing “overcapacity.” A jump in capacity is pushing up German power prices and squeezing out investments in other renewable energy sources, the panel said.

“A drastic throttling of solar subsidies in coming years is a must,” the panel said. The subsidies are pushing up power prices at a rate that is “endangering the acceptance” of renewable energy, they said. The government forecasts an added 9.5 gigawatts of solar capacity this year, almost 10-fold growth over what the panel said is acceptable.

Merkel’s government is steadily paring solar aid rates to curb the cost to consumers who pay for subsidies in their power bills.

Solar-panel prices fell about 50 percent in the last two years, spurring a boom in new installations on roof-tops and fields and led to a glut on the German market. The government has so far shied from implementing a cap, which solar power federations claim would dry up panel sales.

The findings of the panel will shore up support among lawmakers in Merkel’s Christian Democrats in parliament who want inclusion of a cap on solar subsidies in a revamp of the renewal energy legislation law this year.

The panel’s recommendation of a 1-gigawatt cap “confirms the policy position” of the Christian Democrats, their economic spokesman Joachim Pfeiffer, said in an interview. “We have to look at solar subsidies as well as a cap in the course of amending the renewable energy law,” Pfeiffer said.

Solas Power believes that now is the time to act if investors are to take advantage of the German FIT system and that the window for opportunity is fast closing.

SRU releases report on 100% renewable energy and capping of subsidies

Solas Power has confirmed that the Advisory Committee on Environmental Issues to the German Parliament (Sachverständigenrat für Umweltfragen – SRU) today submitted its special report on ways to achieve a 100% renewable electricity supply to Federal Environment Minister Röttgen. 100% renewable electricity generation is possible by 2050. Subsidies for new PV systems should be capped.


Last May, SRU presented a report, according to which a 100% renewable, yet affordable energy supply was possible in Germany by 2050. The new 663 page expert opinion looks at 8 scenarios for 100% renewable electricity generation. It contains suggestions for an amendment of the Renewable Energy Sources Act (EEG), so as to obtain a cost-efficient renewable energy portfolio by 2050.

SRU member Prof. Dr. Karin Holm-Müller, an economist, called the EEG a success story, which was copied by other countries. Its supporting pillars, the obligation of grid operators to purchase renewable energy (Einspeisevorrang) and the fixed feed-in tariffs, should continue to apply in the future. However, there was a need to amend feed-in tariff to curb costs, Mrs Holm-Müller said. Feed-in tariffs for the rapidly growing but relatively expensive solar electricity should be reduced and capped, SRU demanded.

Solar tariffs were much too high, the report says. Despite cuts in the past, the industry was growing, and expansion forecasts for 2010 exceeded estimates. This expansion was not cost-efficient. There was still a great cost savings potential in the PV market. Not only did the high PV costs endanger consumer acceptance of the EEG system as a whole, but expenses for solar electricity also limited funds for producing renewable energy from more cost-efficient sources.

Therefore, SRU calls for a cap on new PV capacities. Once the annual cap is reached, funding is suspended until next year.

SRU’s recommendations follow shortly after the Federal Ministry for the Environment (BMU) and the solar industry association BSW Solar jointly presented a proposal of solar feed-in tariffs cuts of up to 15% on 1 July and 1 September 2011. The proposal does not contain a hard cap on solar expansion, which has been strictly opposed by the industry association BSW Solar. The magazine Spiegel therefore said the SRU proposal challenged Minister Röttgen. Thomas Bareiß, energy spokesman of the Christian Democratic Party in the Bundestag, a fellow-party member of Minister Röttgen, has repeatedly called a cap the ultima ratio. In October last year, he told Handelsblatt he favoured a cap of 2,000 MWp.

While the SRU report stresses that it was up to the government where exactly it wanted to set the cap, Financial Times Deutschland said SRU member Prof. Olav Hohmeyer spoke out in favour of a 1,000 MWp cap in an article to be published by the newspaper Die Zeit on Thursday. The economist, who lectures at the university of Flensburg, said he believed that PV would only play a “miniscule role” in the renewable energy supply of the future.

SRU does not consider the extension of the operation times of the German nuclear power stations necessary. Furthermore, it does not consider the construction of new coal-fired power plants using CCS technology necessary.

The report also focuses on ways to accelerate the necessary national and international grid expansion, as well as efforts to link the national transformation process with the European energy and climate policy.

SRU also suggests to accelerate grid expansion by drawing up a national plan for transmission networks until 2030 (Bundesfachplan Stromübertragungsnetz 2030). Besides, the committee recommends to render investments in networks more attractive and to hold tender procedures for important power lines. Also, the great storage potential that exists in Norway with its hydro power plants, should be made accessible, SRU says. To this end the German government should strive for a close cooperation with Norway, SRU recommends.

SRU believes that it is of great importance that the national transitition process towards a renewable energy supply is supplemented by a European climate and energy policy, in particular an expansion of the European transmission networks and a “European Renewable Energy Roadmap until 2030″.

Discussion About Mid-Year Solar Feed-in Tariff Cuts Gathers Momentum

Solas Power News has learned that with massive solar expansion despite regular cuts of feed-in tariffs and rising electricity prices, the debate about further cuts is gathering momentum. However, information about an agreement between the Federal Government and the solar industry is still limited.

According to the news agency Reuters, the ministries involved and the solar industry agreed to bring forward the solar feed-in cuts due at the beginning of next year to July of this year. Cuts could be as high as 12%, depending on the expansion.

Referring to information from dpa, the internet site Verivox, a provider of electricity price comparisons, confirms that additional mid-year cuts of up to 12% are being discussed, but says a spokesperson of Environment Minister Norbert Röttgen (CDU) had pointed out that the details are still to be decided.

A number of papers reported that the solar industry association BSW Solar continues to be strictly opposed to a cap on solar expansion. Thomas Bareiß, energy spokesman of the Christian Democratic Party in the Bundestag, a fellow-party member of Minister Röttgen, has repeatedly called a cap the ultima ratio. At the beginning of the week, Minister Röttgen stressed in the newspaper Weser Kurier that solar feed-in tariffs should pave the way for a market introduction of solar power, but were not intended to become long-term subsidies.

GERMAN FIT TO BE REDUCED FROM 1st July 2011

SOLAS POWER has learned that the Federal Ministry for the Environment (BMU) and the solar industry association BSW Solar jointly presented a proposal to bring forward parts of the regular 2012 solar feed-in tariff cuts to 1 July and 1 September 2011. The July/September reductions up to 15% shall depend on PV capacity installed in March, April and May 2011. The move is due to the continued massive solar expansion and the increasing costs for consumers in the recent past, which triggered criticism from various parties, including consumer protection agencies.


The proposal contains the following main elements:

•The proposed 1 July/1 September 2011 reduction shall bring forward parts of the 2012 degression currently contained in the Renewable Energy Sources Act (EEG);
•For freestanding PV systems, the degression shall be effective 1 September, for other systems it shall be 1 July 2011;
•The July/September reduction will cover the quantity dependent part of the 2012 degression, i.e. the part of the 2012 reduction that depends on the additionally installed capacity in 2011 ( additional 3% above 3,500/4,500/5,500/6,500 MWp);
•For capacity growth exceeding 7,500 MWp, an additional 3% degression shall be introduced. This brings the maximum mid-year reduction to 15% (i.e. 5 times 3%);
•The 9% reduction for 2012 that applies regardless of additionally installed capacity remains unchanged and shall remain to become effective 1 January 2012;
•The 2011 mid-year degression rates will be based on a forecast for which the new capacities of March to May 2011 will be extrapolated for the whole year by the Federal Network Agency;
•For installations starting operation after 1 January 2012, the degression rate shall depend on the actual market growth in 2011 (and not the extrapolated figures used for the July/September 2011 reduction).
Based on this proposal, a hard cap on solar expansion, which had been strictly opposed by the industry association BSW Solar, is off the table for the time being. ”We welcome the decision, which expresses the political commitment with respect to the expansion of photovoltaics, the German production facilities, and the 130,000 jobs created by the industry”, Günther Cramer, President of BSW Solar said.

After having heavily opposed last year’s feed-in tariff cuts, the solar sector itself is in favour of the cuts now proposed, as Björn Klusmann, managing director of the German Renewable Energy Federation (BEE) told the newspaper Frankfurter Allgemeine. Without a further reduction of solar feed-in tariffs, the whole renewables sector might have come under pressure because of the rising electricity prices.

According to BSW Solar, more than 230,000 solar power plants with a total capacity of 7 to 8 GW have been connected to the grid in Germany in 2010. Solar energy meanwhile accounts for about 2% of total final energy consumption. However, almost half of the estimated EUR 13 billion in reallocation charges paid pursuant to the EEG are attributable to solar energy, the newspaper Frankfurter Allgemeine Zeitung writes. With the so-called EEG reallocation charge, consumers have to pay the difference between market prices for renewable energy and the feed-in tariffs pursuant to the EEG.

BMU also proposes to contain the costs of the “Green Power Privilege” (Grünstromprivileg). This relates to an exemption for utilities that supply electricity deriving at least for 50% from renewable energy sources. We will cover this proposal in a separate blog post.

The proposal for the new 2011 feed-in tariff reduction will be presented to the Bundestag for decision, and may be amended during the parliamentary process. Technically, the proposal is likely to be added to an existing proposal to amend the EEG in the context of the European renewable energies directive (Directive 2009/28/EC). This would allow an expedited parliamentary procedure to introduce the 2011 reductions.

Proposal to Change exemption in EEG for utilities

Solas Power has learned that the Federal Ministry for the Environment (BMU) today also published a proposal to change the so-called Green Power Privilege (Grünstrom Privileg), an exemption in the Renewable Energy Sources Act (EEG) for utilities that mainly supply renewable energy.

Section 37 para. 1 sentence 2 EEG stipulates that utilities shall be exempted from the so-called EEG reallocation charge if they supply electricity originating for at least 50% from renewable energy sources. The exemption applies to the total electricity supply of the utility, hence also to conventional electricity. With the EEG reallocation charge, consumers have to pay the difference between market prices for renewable energy and the feed-in tariffs pursuant to the EEG.

BMU proposes to retain the exemption but modify it as follows so as to reduce costs for consumers:

•The EEG reallocation charge exemption will be reduced to 2.0 Cent/kWh. The current normal reallocation charge is 3.53 Cent/kWh;
•The amendment shall become effective on 1 July 2011.
The amendment is essential to avoid a further increase of the reallocation charge, BMU argues. In view of the increase from 2.047 Cent/kwh in 2010 to 3,53 Cent/kWh in 2011, it is to be expected that more and more utilities try to benefit from the exemption. This would lead to a higher EEG reallocation charge for the others, as costs would have to be split among fewer consumers. The proposal of a reduced EEG reallocation charge of 2.0 Cent/kWh i roughly equivalent to the charge in 2010. An potential further amendment shall be examined as part of the EEG progress report due on 31 December 2011 (Section 65 EEG).

German FIT Analysis

Figure 1. End-user electricity consumption (gray columns, left Y-axis), and physically measured cumulative feed-in of renewable electricity with EEG incentives (green columns, right Y-axis). 2000 has been measured only from April 1st (BMU spreadsheet). Germany's end-user electricity consumption more or less stabilized in 2005-2008. 2009 has been a global crisis year, with a considerable drop in electricity consumption (Germany: minus 5,6% as compared to 2008). Renewable electricity production under EEG feed-in conditions - almost all fed directly into the net - grew continuously, up till 74,9 TWh in that "crisis" year, with strong to massive (PV) growth of new installations promising more full-year renewable electricity production in coming years. Average growth of EEG production in this period has been 7,2 TWh/year. Year-on-year growth percentage was, on average, 26%.

German Government announces FIT reduction for 2011

Solas Power News - The German Government has reached an agreement with the country’s solar industry to tailor solar photovoltaic (PV) feed-in tariffs to installed capacity.

German FIT Update

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