How Much PV Capacity Is Actually Installed in Germany?

“We now expect additional capacity of 3 gigawatts for the year,” a spokesman at the German Federal Ministry for the Environment told RenewableEnergyWorld.com. That is more than double the 1.3 GW new installation capacity initially estimated by the ministry in the pilot study it released last year.

What would seem to be a victory for solar energy advocates in Germany — booming demand for photovoltaic technology — has a hitch: Ultimately, consumers have to foot the bill for subsidies designed to kick-start demand. And it won’t be a small one, insiders say.

Rumors are afloat in Germany that the government — keen to tap renewable energies but fuzzy on required costs to support them — and other organizations may have kept growth forecasts intentionally low in the past to avoid a political backlash from consumers faced with the prospect of paying steep electricity bills.  New installation projections by the Federal Association for Energy and Water (BDEW) and the German Solar Industry Association (BWE) have tended to be on the “low side,” said one industry insider.

That, however, is an accusation BWE refuses to swallow. “We’re not manipulating numbers,” said spokesman David Wedepohl. “We were working with numbers available at the time.”

Some groups including Germany’s Federation of Consumer Protection Agencies believe consumers have every reason to be alarmed at the prospect of soaring costs. The overall costs for promoting solar energy, the federation argues, will rise steadily as more subsidized installations go online — despite a mechanism to lower subsidies as capacity grows.

In the investigative TV program Plusminus, Holger Krawinkel from the Federation of Consumer Protection Agencies, recently referred to the numbers used in parliamentary hearings on feed-in tariffs as a “scandal.”  Pointing the finger in the direction of politicians in Berlin, he added: “One wanted to keep the numbers for the total financial burden at the low end by using low figures for new installations and thus avoid a discussion over the level of feed-in tariffs.”

German news magazine Spiegel estimates the additional costs for subsidizing new photovoltaic installations in 2009, based on initial industry estimates for new installations of around 700 megawatts, could be as high as €10 billion over the course of the government’s 20-year subsidy program.

In a study published last year, German economic think-tank Rheinisch-Westfaelisches Institut für Wirtschaftsforschung (RWI) calculated the cost of PV to German electricity users could be more than €77 billion over a 25-year period. Those numbers, however, have been contested by Claudia Kemfert, a renewable energy expert who heads the Energy, Transportation, and Environment department at German Institute for Economic Research (DIW) in Berlin. She puts the number at €50 billion, citing several errors in the RWI report.

As part of a program to spur the development of renewable energies, the German government subsidizes new PV system installations through its feed-in-tariff program. The above-market prices it guarantees for a 20-year period have attracted and continue to attract numerous property owners and other groups across the country. Under the Renewable Energy Source Act (Erneubare Energien-Gesetz - EEG), power utilities are required to purchase all available solar-generated electricity at government-set rates, which vary depending on the size and location of the systems. Prices for small 30-kilowatt rooftop installations, for instance, are 43.01 euro cents per kWh [US $0.61] and 40.92 euro cents [US $0.58] for installations with 30 to 100 kilowatt capacity; and for ground installations, the rate is 31.94 euro cents [US $0.46] per kWh.

The EEG also regulates subsidy levels. If, for instance, new PV capacity exceeds a 1,500 megawatt-threshold, a reduction in subsidies for solar installations is automatically triggered. Such was the case at the end of September, when the Federal Network Agency (Bundesnetzagentur) confirmed the threshold had been exceeded. As a result, beginning January, the yearly scheduled decrease in feed-in-tariffs will be 9 percent for rooftop systems and 11 percent for ground-mounted systems, instead of 8 percent and 10 percent, respectively.

But for many, those reductions don’t go far enough. Krawinkel is one of a growing number of critics who demand a drastic cut in subsidies, by at least 30 percent, to create a solar industry that offers a competitive alternative to oil and nuclear energy. They point to the steady drop in the costs of manufacturing PV systems and their prices, which, they maintain, are no longer in sync with the subsidies. Since 2006, the prices for PV systems have dropped as much as 40 percent while the subsidies guaranteed through the EEG have decreased by only 17 percent, according to consumer protection agency estimates.

What critics say is so absurd about the current situation is that, despite hefty subsidies, solar energy still doesn’t play a role in Germany’s energy market: It currently accounts for about 1 percent.

And even that number, some may argue, could be disputed, given the varying statistics being generated by the government and other organizations. Take for example installed PV capacity in 2008: In its report “Development of Renewable Energies in 2008” updated in December 2009, the Ministry for the Environment lists 5,877 MW in 2008, compared with 3,977 MW in 2007 (December 2009 update available only in German).  By comparison, the Federal Network Agency in its “Monitoring Report 2009” registers 4,825 MW installed capacity in 2008, compared with 3,870 MW the year before. The report, published in mid-2009, classifies the data provided by the Federal Association for Energy and Water, as “preliminary” (the report is in German and can be accessed here).

Yet another set of differing numbers comes from the specialist solar energy magazine Photon, which conducts its own market research. In 2008, according to the magazine, Germany had 5,950 MW of installed PV capacity, compared to 4,017 MW a year earlier. The Photon researched is based on grid operators and inverter manufactures, among other sources (See the Excel chart, here).

But it’s been the low-growth forecasts, arguably, that have caused the most commotion. Before the EEG was amended in 2008, the Federal Association for Energy and Water projected annual new PV capacity of around 700 MW through 2014. Based on that figure, the association calculated the additional cost of solar energy per household at €2.14 a month [US $3.06].

By 2008, however, the German Solar Industry Association had already estimated annual growth of approximately 1,500 MW, slightly higher than the government projection. And, in November 2009, the association’s managing director Carsten Koerning projected growth of between 2.5 GW and 3 GW — figures similar to those now quoted by the German government.

“Back when they were made, the targets specified by the solar sector were several times greater than the targets considered feasible by skeptics, who would have laughed at forecasts in line with what was eventually installed,” said Craig Morris, a renewable energy expert based in Germany.  He said he would be “surprised” if certain groups deliberately made low forecasts.

Decisive Numbers Coming Soon

Rock-solid numbers could be on the way, however. Since the start of 2009, all operators of PV systems are now required to register their capacity with the Federal Network Agency in order to collect fees, according to spokesman. “This is new” and will allow the agency to work with hard numbers and not estimates, he said. “We expect to publish the figures for 2009 sometime in February.”

The Federal Network Agency, Environment Ministry and German Solar Industry Association declined to provide a forecast of new PV installations for 2010. Photon projects growth of between 5 GW and 10 GW, according to spokesman Bernd Schuessler.

In what could be a move to avert the type of deep cuts demanded by consumer advocates, the solar industry proposed reducing subsidies by as much as 14 percent instead of the 9 percent under the current law, in a meeting on January 13 with government officials in Berlin. A spokeswoman for the Ministry of the Environment said the government will assess the talks and make a recommendation over the next several days. It is said to be considering cuts in subsidies of between 15 and 19 percent.

To their defense, manufacturers and operators of PV systems argue that their industry is a still young, has faced some tough technology hurdles and needs a helping hand to compete with long-established fossil fuels and nuclear energy. And that means a continued flow of subsidies.

So far, politicians in Berlin have agreed with those arguments. But growing concerns among their constituents about footing a fat bill for solar energy may force the policymakers to cut subsidies far deeper than many of them ever thought they would do so soon.

John Blau is a U.S. journalist based in Germany. He specializes in business, technology and environmental reporting and also produces extensive industry research. John has written extensively about environmental issues in Germany.

Just in: Photon is reporting that Berlin Federal Minister of Environment Norbert Röttgen (CDU) presented plans in Berlin today that show his ministry aims to have 5 percent of German power consumption generated by PV by the year 2020, installing at least 3 GW of PV per year.

Röttgen also said that the feed-in tariff should be reduced by an additional 15 percent as quickly as possible.  Photon reports that Röttgen indicated tariffs for ground-mounted systems on agricultural land should come down by 25 percent and that the 9 percent yearly reduction already built into the German law should remain.

Photon reported that Röttgen wants the new reductions to take effect by April 1 for roof-mounted systems and July 1 for ground-mounted systems.  Since the government will need to pass modifications such as these to the feed-in tariff law, implementation of the changes may be delayed by a few weeks.  — Editor