The German experience – 9yrs of solar energy gross FiT has had only 0.43% impact on household electricity prices

By Angus Gemmell on

Solar Choice has been meeting consistently over recent months with senior politicians responsible for renewable energy policy at both the Federal and State levels, with a view to helping them take a well-informed view on the real impact of various feed-in tariffs on electricity prices. There is currently a real risk that the Australian public is being misinformed, and the link between rising prices and market borne feed in reward schemes greatly exaggerated.

One of the benefits of us also conducting our business in the UK as www.SolarSelections.co.uk is that we’re well plugged into the European experience with gross tariffs. Below is a sample follow up letter that summarises official figures from Germany showing that after 9 years of huge uptake the solar energy component of their gross tariff is responsible for a mere 0.43% of electricity price increase.

…………………………………………..

Dear …,

As promised after our respective meetings, please find attached “ for your information purposes – official government data we’ve just received from Germany on the impact on electricity prices of solar energy after 9 years of massive uptake pursuant to a market borne gross feed-in tariff. I hope you both find it illuminating.

There is a great deal of statistical analysis in the document. In the experience of the world’s most mature and prolonged gross feed in tariff, the impact on household electricity prices of the solar energy component in Germany is extremely minimal “ less than 0.5%.

A few points by way of summary:

  1. The German gross tariff is inclusive of energy generated by biomass, wind, some hydro and gas, as well as solar PV.
  2. By the beginning of 2010, biomass (20,525 GigaWh), gas (2,397 GWh), hyrdo (4,766 GWh) and wind (37,809GWh) together accounted for over 91% of the 71,715 GWh of electricity eligible for the gross tariff in Germany (page 30).
  3. Solar PV alone accounts for 6,200GWh, or 8.6% of 71,715 GWh (page 30).
  4. Most relevantly, even after such vast uptake of renewable energy eligible for the gross tariff, the report states at page 28: œThe resulting average EEG apportionment in 2009 for electricity customers not benefiting from the special equalisation scheme is about 1.2 cents/kWh. This is equivalent to about 5 % of the rate for one kilowatt- hour of household electricity in 2009. For a sample household that uses 3,500 kWh of electricity per year, the EEG cost apportionment thus amounts to about 3.40 euros per month [7].
  5. The solar PV component is responsible for only 8.6% of this 5% increase in electricity prices, or a mere 0.43% overall, or .014 cents per month (Euro cents).
  6. Germany has had 9,800 megaWatts of installed solar PV capacity by end 2009, all eligible for the gross tariff. NSW is now scheduled to be capped at only 300 megaWatts.
  7. In Germany installations in the many megawatts are eligible for the gross scheme. In the UK the gross tariff is capped at 5megaWatt installations. Most Australian schemes are capped for installations under a mere 30kW.

What’s more a strong gross tariff drives a competitive market that allows solar to be affordable for the average punter “ not make it more remote. Solar Choice’s observations in Australia are that there’s vastly more uptake from electricity price conscious members of the public, rather than those not price sensitive. A solar energy install company solely operating in the wealthy eastern suburbs of Sydney would probably not be able to sustain a business.

This was corroborated by the NSW review, which found that the mortgage belt heartland benefited the most from the solar bonus scheme (also see commentary attached).

Regards,

Angus Gemmell

Managing Director

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Comments

  1. Hi J,
    Thank you for your thoughtful comments! You certainly have a point. It seems that, for the time being at least, governments are trying to make installation of PV and other renewable systems as attractive as possible. The federal Solar Credit (REC) scheme, as well as the state-by-state Feed-in Tariff schemes are all set to decline as time goes on and as Solar PV technology becomes more affordable and therefore competitive with conventional energy production. A few states already have net-tariffs or net-tariff options available. (For more on Feed-in Tariffs see this post: http://www.solarchoice.net.au/blog/update-on-solar-power-incentives-state-by-state/.) As gross feed-in and other incentive schemes expire people will be forced to think more deeply about the type of issue that you have raised. In the meantime, the uptake in production and distribution is helping to lower the price of solar arrays/systems and paving the way for PV to become more commonplace in the future. Gross feed-in tariffs are admittedly not ideal in terms of energy efficiency or even economics, but they do effectively serve the purpose of making solar power much more commonplace and competitive.
    -James Martin

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