Perspectives of the German PV Market after Recent Changes in the Renewable Energy Act

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1 6 th Germany California Solar Day, September 14 th, 2010 Perspectives of the German PV Market after Recent Changes in the Renewable Energy Act Gerhard Stryi-Hipp Head Energy Policy Fraunhofer Institut for Solar Energy Systems ISE

Gerhard Stryi-Hipp Head Energy Policy Fraunhofer Institut for Solar

2 Introduction In 2009, Germany was by far the largest PV market in the world In 2010, the German PV-market shows a strong growth, about 6 GWp new installed PV capacity is expected The additional reduction of the FIT in 2010 leads to the most competitive PV market with the lowest PV system costs worldwide The German PV demand is driven by the goal to secure FIT-levels before the FIT is reduced additionally => What will be the driver in 2011?

in 2010 leads to the most competitive PV market with the lowest PV system costs worldwide The German PV demand

3 Photovoltaic market development in Germany PV-Market Data Germany 2009 New installed Totally installed end of 2009 Turn over 3.8 GWp 9.3 GWp 12 Bln No of jobs ca No of PV component manufacturer in Germany Average of annual market growth PV system price <100 kwp end of 2009 per kwp Production of solar electricity Share of solar electricity on demand Production of solar cells 2008 Production of PV modules 2008 ca % TWh 1.1% 1.4 GWp 1.2 GWp

3 GWp 12 Bln No of jobs ca 80 000 No of PV component manufacturer in Germany Average of annual market growth 2000 2009

4 2010 policy reacted on strong PV price reduction in 2009

5 Political decision: Additional reduction of PV-FIT on July 1 st, 2010 and Oct 1 st, 2010 Type Change Roof-top systems - 13% on July 1 st / -3% on Oct 1 st Ground mounted systems on acre land No FIT anymore Ground mounted systems on conversion areas - 8% on July 1 st / -3% on Oct 1 st Other ground mounted systems Target annual market Advantage self-used electricity (up to 500 kwp) from July 1 st on Degression rate from January 2011 on Appropriate reduction: (according study of Fraunhofer ISE) - 12% on July 1 st / -3% on Oct 1 st 3,500 MWp <30% self used: 3.6 ct/kwh >30% self used: 8 ct/kwh 9% annually + 1% for any 1000 MWp above 6% for systems < 30 kwp 10% for systems > 30 kwp

Advantage self-used electricity (up to 500 kwp) from July 1 st on Degression rate from January 2011 on Appropriate reduction: (according study of Fraunhofer ISE) - 12% on

6 Feed-in tariffs for PV electricity FIT in ct/kwh / as of Jan 2009 Jan 2010 July 2010 Okt 2010 Jan 2011 Jan 2012 Roof top systems $ 41.3ct <30 kwp 43, RT <100 kwp RT <1000 kwp RT >1000 kwp Ground mounted systems - 9% Conversion area % Other GM Acre land $ 30.3ct - 13% -12/-8% - 3% - 3% -13% (7 GWp) - 9% up to 3.5 GWp + 1%/GWp - 9% up to 3.5 GWp + 3%/GWp System price: 2500 $ 3100 System price: 1850 $ 2300 Self consumption bonus (as of July 2010: higher rate for self consumption share > 30% of electricity demand) <30 kwp % < 100 kwp - - < 500 kwp = $ 1.25

94 28.43 25.02 24.26 21.11 Acre land 31.94 28.43 - - $ 30.3ct - 13% -12/-8% - 3% - 3% -13% (7 GWp) - 9% up to 3.5 GWp + 1%/GWp - 9% up to 3.

7 2011/2012: Degression rates will depend on market size Source: BSW-Solar

8 Feed-in tariff development: grid parity in 2011/2013 Grid parity = electricity price of private customers equal to solar electricity price (PV FIT with an additional reduction July/Oct 2010 of totally 16% for roof top and 11% for ground mounted systems on conversion areas) Grid parity will be reached between 2011 and 2013 Reduction as of 2011: only 9%/yr, will be perhaps much higher

totally 16% for roof top and 11% for ground mounted systems on conversion areas) Grid parity

9 Two Ways of Connecting PV Systems to the Grid USA: Net-metering / Germany: Feed-in + Production based incentive Solar electricity is used for own consumption first, only excess electricity is fed into the grid Germany: 100% Feed-in Solar electricity is exclusively fed into the grid

used for own consumption first, only excess electricity is fed into

10 Production based incentive (self-used bonus) Example Q4 2010, 40% self used PV electricity 100% Feed-in Production based incentive Utility Utility Feed-in remuneration /kwh 33.03ct $ 41ct solar electricity Electricity rate /kwh 23.8ct $ 29.7ct Conventional electricity Feed-in remuneration 33.03ct/kWh $ 41ct Incentive for every solar kwh produced and self used (>30% self used) 21.03ct/kWh $ 26.3 ct/kwh Electricity rate /kwh 23.8ct $ 29.7ct RES-E Producer / Electricity consumer Examplary calculation 1000 kwh x 41ct/kWh = $ = $ 1.25 RES-E Producer / Electricity consumer 40% self used: Feed-in: 600 kwh x $ 41ct/kWh = $ 246 Bonus: 400 kwh x $ 26.3ct/kWh = $ 105 Saved: 400 kwh x $ 29.7ct/kWh = $ 119 Sum: $ 472

03ct/kWh $ 41ct Incentive for every solar kwh produced and self used (>30% self used) 21.03ct/kWh $ 26.3 ct/kwh Electricity rate /kwh 23.8ct $ 29.

11 Demand is increasing before reduction of FIT occurs Monthly by Bundesnetzagentur registered PV capacity

12 Position of the German government We want to increase the deployment of renewable energies consequently and want to increase energy efficiency further Our target: Renewable energies shall take over the major part of the energy supply Norbert Röttgen (Minister for Environment) Until 2050, climate gas emissions shall be reduced by 80 to 95% and the energy supply in Germany shall be realized mainly by renewable energies (Süddeutsche Zeitung ) Norbert Röttgen, German minister for environment source:

Environment) Until 2050, climate gas emissions shall be reduced by 80 to 95% and the energy supply in Germany shall be realized

13 RES-Industry electricity forecast 2020: 47% RES, 7-8% PV 40 TWh solar electricity responds to ca. 42 GWp installed PV-capacity Total installed end of 2010 : ca. 15 GWp Only an annual installation of 3 GWp is necessary to reach the goal Goal of the German government (National Action Plan 2010): 52 GWp PV in 2020

42 GWp installed PV-capacity Total installed end of 2010 : ca.

14 Conclusions Germany was in 2009 and will be in 2010 by far the largest PV market worldwide with 3.8 GWp and estimated 6 GWp new installed capacity The strong reduction of FIT in 2010 leads to a very low PV system price in Germany accepted by the investors However, the German PV market is growing fast due to strong market structure and very low administrative barriers The government wants to limit market growth by depending FIT-reduction on market volume It is not unlikely that in 2011 or 2012 the PV industry is not any longer able to reduce PV price to the necessary level at which PV investments are attractive at a given FIT Image: Frankensolar Image: SMA Image: Geosol

the German PV market is growing fast due to strong market structure and very low administrative barriers The government wants to limit market growth by depending

15 Thank you very much for your attention

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