SOLAR PV ROOFTOP POLICIES AND STRATEGIES: THE GERMAN ... · 12/13/2017 · ENERGY TRANSITION SOLAR PV ROOFTOP SOLAR PV ROOFTOP POLICIES AND STRATEGIES: THE GERMAN EXPERIENCE MUSCAT,

/ ©ECOFYS, A NAVIGANT COMPANY. ALL RIGHTS RESERVED1

RENEWABLES: A KEY DRIVER FOR CLEAN

ENERGY TRANSITION SOLAR PV ROOFTOP

SOLAR PV ROOFTOP

POLICIES AND STRATEGIES:

THE GERMAN EXPERIENCE

MUSCAT, OMAN, 13 DECEMBER 2017

DR. KAROLINE STEINBACHER

SENIOR CONSULTANT

ENERGY POLICIES

/ ©ECOFYS, A NAVIGANT COMPANY. ALL RIGHTS RESERVED2 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED22 / ©ECOFYS, A NAVIGANT COMPANY. ALL RIGHTS RESERVED

AT A GLANCE: ECOFYS, A NAVIGANT COMPANY

Global consulting company founded in 1984 with the mission to enable sustainable

energy for everyone – since 2016, Ecofys has been part of Navigant’s global Energy

practice

We have over 600 experts skilled in energy, climate, environment, economy,

communication, law, and psychology.

Our strength lies in our strategic understanding of complex energy and climate transition

issues: Ecofys connects the dots within the triangle between governments, energy

players, and energy-intensive end-users

Ecofys has five offices in four countries: Utrecht, the Netherlands; Cologne & Berlin,

Germany; Brussels, Belgium; London, United Kingdom – as part of Navigant, our experts

are based in more than 20 offices in the US and Canada, Hong Kong, and the Middle

East

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Ecofys supports the German Federal Ministry for Economic Affairs and Energy (BMWi)

in strengthening energy policy dialogue with the countries of the Arabian peninsula.


GERMANY IS EMBEDDED IN THE EUROPEAN ELECTRICITY

SYSTEM

„Electrical“ neighbours Germany at a glance• Population: 82 million

• Largest economy in Europe,

4th largest in the world

• Gross electricity production

2016: 648,4 TWh

• Primary energy consumption

2016: 13.383 PJ

• Overall installed electricity

generation capacity in 2017: 202

GW

• Installed RE capacity: 109 GW

• Installed PV capacity: 42,7 GW

So

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i, 2

01

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GE

B 2

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7, S

tatista

20

17


CONDITIONS FOR SOLAR PV ARE MOST FAVORABLE IN

SOUTHERN GERMANY

So

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e: 5

0H

ert

z T

ran

sm

issio

n G

mb

H 2

01

6

2013 20252000

biomass

solar PV

wind

biomasssolar PVwind

hydroother


THE ENERGIEWENDE REPRESENTS THE LONG-TERM

ENERGY AND CLIMATE STRATEGY OF GERMANY

So

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MW

i 2

01

6, U

BA

20

17

.Energy

Efficiency

% greenhouse gas

reduction (vs. 1990)

% gross electricity

consumption

final energy productivity

(vs. 2008)

primary energy demand

buildings (vs. 2008)

primary energy

consumption (vs. 2008)

% gross final energy

consumption

transport final energy

consumption (vs. 2005)

Climate

Renewable

Energies

-40

-55-70 -80 to -95

+2.1% p.a. (2008-2050)

35 40 to 4550 65

8055 to 60

1830

4560

-20-50

-10-40

-15 to -20

-80

27.6%

31.7%

14.8%

-6.9%

1.3% p.a.

(2015)

-15.9%

(2015)

+1.3%

(2015)

2020 2030 2040 2050Achieved

2016

2025 2035 2045


RENEWABLES HAVE BECOME GERMANY‘S NO. 1 SOURCE OF

ELECTRICITY

So

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co

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20

17

ba

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d o

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B 2

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7

0

100

200

300

400

500

600

700

Gro

ss e

lectr

icity p

rod

uction

in

TW

h

hard coal lignite natural gas mineral oil

others nuclear renewables

gas: 12%

hard coal: 17%

lignite:

23%

nuclear:

13%

RES: 29%

hydro: 3%

solar: 6%

wind: 12%

biomass &

waste: 8%

mineral oil &

others: 5

Electricity mix in 2016(648.4 TWh in total)

* preliminary data

rounded figures


CONTINUOUSLY DEVELOPED POLICIES HAVE FOSTERED THE

DEPLOYMENT OF RENEWABLES

So

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20

16

ba

se

d o

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GE

ES

tat2

01

6

0

10

20

30

40

0

50

100

150

200

250

199

01

99

1

199

5

200

0

200

5

201

0

201

42

01

5

201

7

202

0

hydro

biomass

wind onshore

solar PV

wind offshore

2020 target[right axis]

Sh

are

of R

ES

in

gro

ss e

lectr

icity

co

nsu

mption

Gro

ss e

lectr

icity g

en

era

tion fro

m

ren

ew

ab

les in T

Wh

PV programme

“1.000 Roofs”

EEG EEG

Amendment

Electricity Feed-In Law Energy

Concept

EEG

Amendment

Share of RES

[right axis]


RESIDENTIAL INSTALLATIONS ARE A KEY SEGMENT OF THE

GERMAN SOLAR PV ROOFTOP MARKET

Capacity Market share

(Capacity)

Market share

(Installations)

Typical

operator/

Owner

Estimated share of

self consumption

< 10 kWp 30% 70% private person 30%

10 – 40 kWp 30% 25% private person,

farmer, SME,

public sector

40%

40 – 100 kWp 13% 3% private person,

farmer, SME,

public sector

40%

100 – 1,000 kWp 23% 1.5% farmer, SME,

public sector,

fund, enterprise

40%

≥ 1,000 kWp 4% 0.5% fund, enterprise 20%

So

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SW

20

15


THE SHARE OF LARGER PV INSTALLATIONS IN GERMANY IN

ANNUAL INSTALLED CAPACITY INCREASES


POLICY MAKERS HAVE TO DECIDE WHETHER PRICES OR

CAPACITY VOLUME OF THE SUPPORT SCHEME SHOULD BE FIXED

Quota

Obligation for suppliers:

Minimum RES-E share

Increasing over time

Penalty

Tradable certificates for RES-E production, submitted to authority

Power sold on conventional markets

Government fixes quantity, market decides price

Market price

RES-support

Green

certificate

revenues

FIT Feed-in premium (FIP)Sliding Cap & Floor Fixed

Quota

Volume basedPrice based support

Fixed feed-in tariff (FIT)

Fixed tariff (€/MWh)

Guaranteed during lifetime or x years

Purchase obligation

Feed-in premium (FIP)

Fixed, capped or sliding premium (€/MWh)

Guaranteed during lifetime or x years

Power sold on conventional markets

Government fixes price, market decides quantity

Germany (<100KWp)

GER (>100KWp)


FEED-IN TARIFFS/PREMIUMS CAN BE DEFINED ADMINISTRATIVELY

OR THROUGH COMPETITIVE BIDDING (AUCTION)

Market price

RES-support

Green

certificate

revenues

FIT Quota


„Classic“ FIT/FIP:

government defines support level

Auctioning of FIT/FIP:

market defines support level

Green certificates:

market

defines

support level


Sliding Cap & Floor Fixed

Germany (<100KWp)

GER (>100KWp)

Germany(>750KWp)

Germany(<750KWp)


GERMAN FEED-IN TARIFF SCHEME PROVIDES SECURE

INVESTMENT CONDITIONS AND ASSURES COST RECOVERY

Guaranteed tariffs for a period of 20 years to cover levelized costs of electricity

• Risk minimization for investors

Remuneration per kilowatt-hour

• Incentive to maximize energy production for plant operators

Monthly digression of feed-in tariffs for new installations; higher installed capacity

(observed period: 6 months) leads to lower tariffs

• Incentive to innovate and reduce costs

• Indirect control of capacity expansion (target of 2.5 GW/a of PV)

• If capacity additions are below target corridor, tariff remains stable/increases slightly

Financing of the scheme through levy per kWh consumed

• Stable stream of income

• Outside political sphere (no tax/budget)

• Industry exemptions exist, burden on consumers & small businesses


FEED-IN TARIFFS TRIGGERED IMPORTANT INVESTMENTS IN

PV IN GERMANY – PEAKED IN 2010-2012

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ort

20

16

Feed-in tariff in €ct/kWh for

medium solar PV rooftop installations

Annual investment in PV in bn €


PRICE DECLINE IN ROOFTOP PV SYSTEMS AND MAJOR PEAK

IN CAPACITY ADDITIONS 2010-2012


THE SUPPORT SYSTEM FOR PV IN GERMANY IS ADAPTING TO

MORE COMPETITIVE RENEWABLES

• EEG 2017 sets a fixed expansion corridor for RE (2,5 GW PV per annum)

• 2018 will see first combined auctions for PV and wind

Capacity Policy instrument Current support

level

Autoconsumption

< 10 kWp FiT, administratively set EUR 12,20ct No EEG levy on auto-

consumption

10 – 40 kWp FiT, administratively set EUR 11,86ct 40% of EEG levy paid on auto-

consumed electricity

40 – 100 kWp FiT, administratively set EUR 10,61ct 40% of EEG levy paid on auto-


100 – 750 kWp FiP, administratively set

(mandatory direct

marketing)

EUR 8,84ct 40% of EEG levy paid on auto-


≥ 750 kWp FiP, tendered EUR 4,91ct (average,

auction in Oct 2017)

No auto-consumption allowed.


DECLINING FIT FOR PV AND RISING ELECTRICITY PRICES IN

GERMANY MAKE AUTO-CONSUMPTION RELEVANT


EASY AND FAST PERMITTING AND INSTALLATION REDUCE

COST OF ROOFTOP SOLAR IN GERMANY

• Fast and easy process of permitting/inspection and interconnection (online

registration, no permitting fee or inspection required), leads to significantly lower

cost of installation than, e.g. in the US

• Dense network of installers, high number of installations led to learning and

reduced transaction cost

Step Small Rooftop PV Medium and Large Rooftop PV

Permitting (building code) No permit required Generally no permit required

Planning and permitting

(grid)

Few days Grid connection request: 8-10 weeks

Planning for installation (in parallel):

<500 kW: min. 2 weeks

0,5-1MW: min 3 weeks

Installation Few days >500 kW: 3 weeks and less

0,5-1MW: 3 to 4 weeks

Data

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SW


ADVANTAGEOUS FINANCING CONDITIONS FACILITATE

INVESTMENT IN ROOFTOP SOLAR

• German Bank for Reconstruction (Kreditanstalt für Wiederaufbau, KfW) offers low-

interest loans for RE installations through commercial banks

• Program 270: Max. EUR 50 million

- Up to 20 year guaranteed rates

- Starts from 1,2%, interest-free period at the start of the loan

- May finance 100% of investment

• Program 275: Special program for PV & storage, interest rates from 1,1%, up to

13% grant

• Attractive financing offers are also available from commercial banks – strong

regulatory framework reduces risk

• Investment can be depreciated over 20 years

• VAT can be recovered through tax declaration


POLICY, ADMINISTRATION AND MARKET DESIGN

UNCERTAINTY ARE MAJOR RISKS, INCREASING COST OF RE

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CORNERSTONES OF GERMAN (ROOFTOP) PV SUPPORT

POLICY

1. Long-term certainty and risk mitigation through levy-financed feed-in

tariffs covering cost and guaranteed for 20 years and priority feed-in for

renewables

2. Gradual shift to market integration – through direct marketing, market

premium and auctions - for (larger) PV rooftop installations

3. Low administrative burden for installers and owners of rooftop PV

4. Easy access to low-cost finance through public bank KfW

5. Low cost of permitting and installation compared to other jurisdictions

6. Strong societal and political consensus creates positive investment

climate

KEY DRIVERS


CONTACT

Dr. Karoline SteinbacherSenior Consultant

Ecofys Germany GmbH

Albrechtstr 10c

10117 Berlin

[email protected]

Find the full set of offices here.

ECOFYS.COM

mailto:[email protected]

https://www.navigant.com/locations


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BACKUP SLIDES


RENEWABLES HAVE BECOME QUITE CHEAP.

WHY IS THERE STILL A NEED FOR SUPPORT?

Challenges of competing in the wholesale market

• Investors and lenders ask for investment certainty (high share of capital costs, low

operating costs)

• Electricity infrastructures and markets have not been designed to accommodate

RES-E (merit order effect, need for grid reinforcement, etc.)

• No level playing field for RES-E in some countries (e.g. market power of large

utilities)

• Some RES-E technologies still going through learning curve

• External costs of fossil/nuclear power not fully internalised

Grid parity of RES-E on distribution level already reached in many countries, but

question who pays for system services and consumer levies (e.g. for RES).


MORE THAN HALF OF GERMANY‘S INSTALLED CAPACITY IS

RENEWABLE

So

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ne

rgy C

ha

rts 2

01

7

42,7

5,3

50

29,5

4,44

25

21

10,3

7,4

42,7

5,6

Corresponds to about

13% of the world‘s

installed PV capacity.

70% of PV in Germany is

rooftop

Approximately 1.6GWp

added in 2016


EU MEMBER STATES INCREASINGLY INTRODUCE AUCTIONS

TO DETERMINE SUPPORT LEVELS

Auctions ongoing

Auctions planned for /

under consideration

Unknown / not planned

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GENERAL OPPORTUNITIES AND CHALLENGES OF AUCTIONS

FOR RENEWABLES

> Ensuring sufficiently high realisation

rates/target fulfilment

> Higher risk for RES-E producers than

administrative FIT/FIP, favouring

bigger market actors

> Risk of underbidding or “winner‘s

curse” leading to prices below costs

and non-realisation of projects

> Risk of strategic behaviour

(collusion) leading to high prices and

support costs

> Control of maximum volume and

support cost

> Support level is determined by the

market, not the administration

> Competition between RES-E

producers may lower prices

(compared to administrative

FIT/FIPs)

> Potential to discover real

production cost of RES-E

Opportunities Challenges


DESPITE ZERO-BIDS IN GERMANY, DEVELOPERS STILL

RECEIVE REVENUE FROM MARKET

€/kWh

Support under sliding FiP

Revenue under sliding FiP

Long term market price development

Auction price

Revenue and support under a sliding market premium


DESPITE ZERO-BIDS IN GERMANY, DEVELOPERS STILL

RECEIVE REVENUE FROM MARKET

€/kWh

Support under sliding FiP

Revenue under sliding FiP

Long term market price development

Auction price

Revenue and support under a sliding market premium

• Revenue under sliding FIP is not given by the auction price only, but

also by market price

• “Zero bids” mean that project will be built without a subsidy.

• Developers still receive revenue from the sale of electricity


SHARE OF RENEWABLES HAS GROWN IN ALL SECTORS, BUT

FASTEST IN ELECTRICITY

So

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ba

se

d o

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E-S

tat 2

01

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i2

01

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go

ra 2

01

7

31,7

13,4

5,1

35,0

14,0

10,0

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

electricity heating and cooling transport

Share

of R

ES

in G

erm

any in %

1990

1995

2000

2005

2010

2016

2020 target


THE EU AND GERMANY ARE ON TRACK TO ACHIEVE THEIR

RENEWABLES GOALS

So

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20

16

ba

se

d o

n E

uro

sta

t 2

01

6 a

nd

EC

20

17

0%

5%

10%

15%

20%

25%

200

4

200

5

201

0

201

5

202

0

Sh

are

of re

ne

wa

ble

en

erg

y in g

ross f

ina

l e

ne

rgy c

on

su

mp

tio

n %

EU28 -development

EU28 - target

Germany -development

Germany - target

Linear (EU28 -development)

Linear (Germany -development)


INDUSTRY EXPOSED TO COMPETITION IS EXEMPTED FROM

EEG LEVY

• Energy-intensive industries are exempted from the EEG surcharge to a large extent

• Exemptions worth 4.8 billion euros in 2015

• Large share of electricity consumption in Germany is exempted from surcharge

Self-consumption (no

levy/reduced levy 1,85

ct)

Full EEG surcharge:

6,17 ct

Reduced EEG surcharge for

industry (0,05-1,23 ct)

So

urc

e: F

rau

nh

ofe

r IS

E 2

01

7 (

Rece

nt F

acts

ab

ou

t P

V in

Ge

rma

ny)


THE PRICE OF SOLAR PV ROOFTOP INSTALLATIONS IN

GERMANY IS DECLINING

So

urc

e: F

rau

nh

ofe

r IS

I 2

01

7 (

Rece

nt F

acts

ab

ou

t P

V in

Germ

an

y)


MONTHLY DEGRESSION OF FIT IS COMMUNICATED IN

ADVANCE BY THE REGULATOR (BNETZA)

Start of operation

Solar PV installations on buildings and noise protection walls

Up to 10 kWp Up to 40 kWp Up to 100 kWp

01.01.2017 * 12,30 11,96 10,69

01.02.2017 ** 12,30 11,96 10,69

01.03.2017 ** 12,30 11,96 10,69

01.04.2017 ** 12,30 11,96 10,69

01.05.2017 ** 12,27 11,93 10,66

01.06.2017 ** 12,24 11,90 10,63

01.07.2017 ** 12,20 11,87 10,61

01.08.2017 ** 12,20 11,87 10,61

01.09.2017 ** 12,20 11,87 10,61

01.10.2017 ** 12,20 11,87 10,61

01.11.2017 ** 12,20 11,87 10,61

01.12.2017 ** 12,20 11,87 10,61

01.01.2018 ** 12,20 11,87 10,61

Source: Data Source: BNetzA


COST OF CAPITAL IS VERY LOW IN GERMANY, EVEN

COMPARED TO EUROPEAN NEIGHBOURS

So

urc

e: D

iaC

ore

Pro

ject 2

01

6


A PLATEAU HAS BEEN REACHED FOR TOTAL SUPPORT COST

OF PV PER YEAR

So

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rau

nh

ofe

r IS

I 2

01

7 (

Rece

nt F

acts

ab

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t P

V in

Germ

an

y)


PRICES FOR SOLAR PV ROOFTOP MODULES ARE MORE THAN

72 PERCENT LOWER THAN IN 2006

Average price for ready-for-use

rooftop PV modules with capacities

up to 10 kWp (without VAT)

6,000 US$/kWp

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% So

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e: B

SW

-So

lar

20

16

1,650 US$/kWp


THE MAIN SUPPORT SCHEMES EXPOSE PLANT OPERATORS

TO DIFFERENT LEVELS OF RISK

Market price

RES-support

Green

certificate

revenues

FIT Quota


No market price

risk

Limited market price risk Full electricity market price risk

Certificate market

price risk

RES-E producer sells directly to the market and is

responsible for scheduling and balancing RES-E

Market integration

through TSO


Sliding Cap & Floor Fixed

Germany (>100KWp)

GER (>100KWp)


HOUSEHOLD ELECTRICITY PRICES HAVE RISEN – LARGEST

PART IS MADE UP BY LEVIES, CHARGES AND TAXES

Graph: Agora Energiewende 2017:

Data Source: BMWi

Documents

SOLAR PV ROOFTOP POLICIES AND STRATEGIES: THE GERMAN ... · 12/13/2017 · ENERGY TRANSITION SOLAR PV ROOFTOP SOLAR PV ROOFTOP POLICIES AND STRATEGIES: THE GERMAN EXPERIENCE MUSCAT,