Now that it’s 2012, the new EEG (Renewable Energy Sources Act, the main law governing renewables incentives in Germany) is in effect!!
I’ve put together a little summary of what the EEG 2012 means for PV, based on the official FAQs. Note: I’m only considering rooftop PV (not freestanding).
Source of Funding: EEG Surcharge (“EEG-Umlage”)
Funding comes from a public goods charge on the electricity bills of all purchasers of non-green power. The charge is currently 3.53 cents/kWh, but it should fall to 3.1 cents in the next several years, dropping to 0.7 cents/kWh (real values, so not considering inflation) by 2030.
Exemption from EEG Surcharge for Green Power Purchasers
If an electricity provider (naturstrom, Greenpeace Energy, etc) provides its customers with electricity that is at least 20% from intermittent renewables (wind, solar) and at least 50% from renewables overall (including hydro and biogas), then its customers can be exempted from 2 cents/kWh of the EEG public goods charge. This gives providers a little more freedom to pay more for renewables yet still charge their customers competitive rates.
Particularly if the provider is close to the 50% limit, then the 50% that is regular “gray” power is now about 2 cents/kWh cheaper than competitors’, and that 2 cents/kWh savings can be combined with the 2 cents/kWh exemption on the 50% that is “green” power to give 4 cents/kWh of wiggle room, where the green power provider can pay a premium price for renewables without charging customers extra. Extra costs that go beyond the wiggle room will have to be passed on to consumers. And to the extent that providers overshoot the 50% mark and have less cheap gray power, they are going to have to pass more costs on to their customers.
Degression rate updated biannually to hit capacity target corridor. See the official rates, degression info, and sample calculations at http://erneuerbare-energien.de/files/english/pdf/application/pdf/eeg_2012_ver…, section 6. The public goods charge is used to pay for the “EEG Differential Costs” – the difference between the FiT and the actual market price of the electricity.
Eigenverbrauch (on-site or “self” consumption)
There is a separate incentive for consuming electricity on-site rather than feeding it into the grid. Not covered in the FAQs, as it is more or less unchanged from EEG 2009 and will remain in force until the end of 2013. From http://erneuerbare-energien.de/files/english/pdf/application/pdf/eeg_2012_ver…, section 6 (“own consumption”):
If the installation operator consumes less than 30% of the solar electricity generated, 16.38 ct/kWh will be deducted from the applicable feed-in tariff. If the installation operator consumes more than 30%, only 12 ct/kWh is deducted for this share of the electricity. The deductions are specified from the date of commissioning, i.e. they remain fixed. A period of one year is taken as the basis for calculating the share of own consumption.
I don’t quite understand this, but I think it means that if I use 1 kWh myself, I get to avoid paying for the electricity (maybe 25 cents here) and I get a bonus incentive equal to the FiT minus 12-16 cents, which leaves me ahead by 25 minus 12-16 cents (ie, 9-13 cents) relative to just using the FiT. Then for the energy I don’t consume onsite and instead feed into the grid, I just receive the regular FiT.
Electricity consumed on-site is also exempted from the public goods charge, so that’s another 2 cents/kWh bonus.
Marktprämie (renewable energy bonus)
Rather than receiving FiTs, PV system owners can sell their electricity directly. They can do this on the energy exchange or through a separate contract, and they receive whatever the going rate is, plus an additional bonus (“Marktprämie”) from the EEG funds. This bonus is equal to the otherwise-applicable FiT minus the average market price of electricity (over a month, I think? FAQs don’t say), plus an allowance for administrative costs. So, if a renewable energy system operator sells at the average price, the incentive is equal to the standard FiT. But if the operator is able to shift generation to times of high demand, or to store energy and then discharge at times of high demand, then the operator makes more money than the FiT alone would give – effectively getting paid double for the difference between what they are able to sell for and what the average market price is.
Goals for the Marktprämie
- Promote renewable energy generation at times of high demand and not at times of low demand
- Not sure how this really works for solar, other than maybe incentivizing slightly west-facing roofs or incentivizing onsite storage
- Introduce renewable energy to the regular electricity exchange market
- More opportunity for competition and new business models
- Put renewable energy on the path to gradually take over a majority role and be a mainstream part of the regular market
Future PV installations must allow for remote shut-off in emergencies, to preserve grid stability. They should also feed in not more than 70% of their maximum power capability (I think?), to avoid peaks that could cause grid instability, would require more robust grid infrastructure, and would reduce the number of PV systems the grid could safely accommodate. This should result in only minor losses (1-3% over the course of a year) as typically PV systems do not operate at their maximum ratings.