With three years
in a row above 7 GW of PV systems connected to the grid, Germany used to be the
most iconic PV market for years . This has been achieved thanks to a
combination of several elements:
• A long term
stability of support schemes;
• The confidence
of investors;
• The appetite of
residential, commercial and industrial building owners for PV.
From 2013 to 2015,
the PV market went down to 3.3 GW then 1.46 GW, below the political will to
frame the development of PV within a 2.4-2.6 GW range each year. This results
into a total installed PV capacity of 39.7 GW connected to the electricity grid
at the end of 2015. 2015 was also the year that saw China overtaking Germany
and installing itself in the very first place.
Feed-in Tariff with a Corridor
The EEG law has
introduced the FiT idea and has continued to promote it partially. It
introduces a FiT for PV electricity that is mutualised in the electricity bill
of electricity consumers. Exemption is applied to energy-intensive industries,
a situation that was challenged by the European Commission in 2013. With the
fast price decrease of PV, Germany introduced the “Corridor” concept in 2009: a
method allowing the level of FiTs to decline according to the market evolution.
The more the market grows during a defined period of time, the lower the FiT
levels are. In the first version, the period between two updates of the tariffs
was too long (up to 6 months) and triggered some exceptional market booms (the
biggest one came in December 2011 with 3 GW in one single month). In September
2012, the update period was reduced to one month, with an update announced
every three months, in an attempt to better control market evolution. The latest
change has been put in place since August 2014.
With a level of
PV installations in 2015 almost 1 GW below the 2.4-2.6 GW corridor, the FIT
decline was stopped. This procedure that was supposed to control the growth of
the market is now used in Germany to halt the severe market decline.
In September
2012, Germany abandoned FiT for installations above 10 MW in size and continued
to reduce FiT levels in 2013 and 2014.
Self-consumption
The
self-consumption premium that was paid above the retail electricity price was
the main incentive to self-consume electricity rather than injecting it into
the grid. The premium was higher for self-consumption above 30%. On the 1st
April 2012, the premium was cancelled when FiT levels went below the retail
electricity prices. With the same idea, for systems between 10 kW and 1 MW, a
cap was set at 90% in order to force self-consumption. If the remaining 10% has
to be injected anyway, a low market price is paid instead of the FiT.
Since August
2014, 30% of the surcharge for renewable electricity will have to be paid by
prosumers for the self-consumed electricity for systems above 10 kW. This part
will increase up to 40% in 2017.
An Incentive or Policy
program for storage units was introduced 1st May 2013, which aims at increasing
self-consumption and developing PV with battery storage in Germany. A 25 M€ market
stimulation program has been introduced to boost the installation of local
stationary storage systems in conjunction with small PV systems (< 30 kWp).
Within the framework of this storage support program around 20,000 decentralized
local storage systems were funded by the end of 2015. A continuation of the
program is planned for 2016. It is interesting to mention that in addition to
incentivized storage systems, additional ones were installed without
incentives, around 9,000 in 2015.
Market Integration Model
In contrast to
self-consumption incentives, Germany pushes PV producers to sell electricity on
the electricity market through a “market premium”. The producer can decide to
sell its electricity on the market during a period of time instead of getting
the fixed tariff and receiving an additional premium on the top of the market price.
The producer can go back and forth between the FiT system and the market as
often as necessary. New PV installations > 500 kWp (from 2016 on PV
installations > 100 kWp) are obligated to direct marketing of generated
electricity.
In 2015, within
the “market integration model” three pilot auctions have taken place for
utility-scale PV installations. The three calls covered a capacity of 500 MW
altogether and were characterized by a high degree of competition. The price
level was reduced from call to call: from 0.0917 €/kWh it declined
continuously: The most recent price obtained from the fifth solar auction in
August 2016 was 0.0723 €/kWh.
Grid Integration
Due to the high
penetration of PV in some regions of Germany, new grid integration regulations
were introduced. The most notable ones are:
• The frequency
disconnection settings of inverters (in the past set at 50.2 Hz) has been
changed to avoid a cascade disconnection of all PV systems in case of frequency
deviation.
• Peak shaving at
70% of the maximum power output (systems below 30 kW) that is not remotely
controlled by the grid operator.
Critical
Energy Observatory (OCE) has just published a report on self-consumption in
which three specific issues are addressed: legislation (aspects of it that have
facilitated the development of consumption elsewhere); shared facilities; and
the relationship between energy consumption and poverty. The Observatory
analyzes three experiences: the German, the California case and Cyprus. Here an
outline collection of this analysis by the OCE about the German case.
How Solar PV Self-Consumption
is regulated in Germany with an Average PV Yield of 1,055 kWh/kW/year?
"A self-consumption to democratize the electrical system." That's the title
of the latest report that has recently come up by the Critical Energy
Observatory, this think tank that was founded by a group of young engineers and
scientists in early 2007 and continues to produce since reports focusing on the
world of energy. The last, this, on consumption. In it addresses three very
specific experiences: Germany, California and Cyprus. Here we will focus on the
German case, which is particularly relevant to begin their climate, certainly
-between the three- farthest from the Spanish.
Indeed, in
Germany, solar radiation supply numbers are far from those recorded in Spain.
However, a strong policy supporting the photovoltaic industry over the past
quarter century stable and durable-policy has resulted in a national park
photovoltaic unparalleled throughout Europe. At the end of 2015, Germany had 39,6
GW of installed solar photovoltaic power (PV). Moreover, during that year using
this technology generation covered 7% of electricity demand. Far from these
records, Spain had late last year 4,420 MW PV (ie, 4,42 GW... versus 39.6).
That scrawny domestic photovoltaic park -ridiculous, compared with the German-
generated last year in Spain 2.9% of the total produced electricity (sources: Red
Eléctrica de España and EIA-PVPS.org).
European Solar
Radiation Map from ww.ise.fraunhofer.de
The German Case
of Success
The first pro-solar
regulation legislation in Germany explains the OCE in his report was the
Electricity Feed-in Act enacted in 1991. Between 1990 and 1995, the German
government promoted the program of the "1,000 solar roofs". The
success of this first program led to its extension by one more ambitious: that
of the "100,000 solar roofs", which was developed between 1999 and
2003. However -shades the OCE-, the real impetus for the development of
renewables was produced with the German Renewable Energy Act (EEG) of 2000,
which guaranteed a fixed amount for the injected energy into the gridnetwork
and recognized the right to collect payment for 20 years.
Of course, there
is no “Sunshine-Taxes” itself, however overproduced injected energy is therefore
remunerated
For PV
installations with lower power consumption than ten kilowatts (10 kW), the
procedure established by the EGG -explain from the OCE it is simple: the owners
of the facility can consume directly generate electricity without paying any
charge or tax . In other words, there is no tax in the sun. In addition
continues the OCE-, pour energy network that do not use and receive a fixed
price for it (Feed-in Tariff, FiT) the amount of which varies depending on the
time of commissioning of the facility. There is also the option of receiving a
fixed premium (Feed-in Premium, PIF) that adds to the value that reaches the
electricity market, this scheme is known as "Market Model
Integration". Payment of FiT is guaranteed for 20 years. [Down evolution
of FiT and the price of electricity during the last 15 years].
Every two months
The Federal
Agency (Bundesnetzagentur) published every two months, the amount of the FiT
for new installations. This is it decreasing over time so that: (1) adjustment
to falling technology prices; (2) have an incentive to improve the new
facilities; and (3) associated dimension the total expenditure is committed over
the next 20 years. Currently, the rate is between 0.12 and 0.08 euros per
kilowatt hour (€/kWh), depending on the size of the installation.
As time goes by
Along with
the evolution of the FiT, the price paid by consumers for domestic electricity
in Germany has also evolved logically. Above we can see how, for installations
made before 2011, self-consumers received, for each kWh hour injected into
the network, a price (FiT for PV) greater than the price they had to pay to
import a kilowatt hour network (price paid by households and industry for
electricity). However, later that year for facilities, the crossing of the
curves indicates that self-consumers receive a lower price per unit of energy
injected into the network paid when importing this energy; that is, from that
year, the remuneration system automatically encourages instantaneous
consumption (consumption that occurs in times of generation).
Exemptions and/or tax benefits
In
addition, facilities with power ranging from 10 kW and one megawatt (1MW) can
only charge FiT by 90% of the electricity they generate. In other words, they
must self-consum at least 10% of its electricity production. Consumption
facilities also enjoy an advantageous situation as regards the tax EEG assessment.
This tax, which is included in the electricity bill of all German consumers, is
intended to finance the energy transition. On the one hand, self-consumption
installations with less than 10kW they are exempt from this tax; on the other,
those with a higher power, must pay only 35% of EEG assessment in 2016 and 40% in
2017.
The ownership
of facilities
Explains
the OCE in its report, "citizen participation is often cited as one of the
main factors that have enabled the success of the energy transition in
Germany". And certainly, of all renewable power was installed in Germany
in 2012, 47% was in the hands of citizens and cooperatives "allowing
- point from «Observatorio Crítico de la Energía» - evolution from a strongly oligopolistic towards a
more democratic system." In this sense, the OCE believes that "the
participation of citizens and investors in new renewable projects also implies
a greater social acceptance of the transition, even though this has meant an
increase in electricity rates."
The reasons of its success
According
to the Observatory, the main aspects that have allowed the development of
renewable energy facilities owned by citizens, farmers and consumer
cooperatives is the existence of conditions of remuneration of the energy
generated "simple and stable." As noted by several of the sources
consulted the OCE- explains, "the fact that producers are guaranteed a
fixed income through a FiT is maintained for 20 years has been key to many of
them have decided to participate in electric sector ". [Down, graphic
referred to the facilities of ten kilowatts less power, 10 kW].
The German
government amended the EGG in August 2014
A study by
the Federal Office of Cooperative Energies shows that cooperatives are planning
to make an investment in the short term have increased from 92% in 2013 to 67%
in 2014 and has decreased the number of newly formed cooperatives. The study
attributed these decreases to the complexity introduced reform EGG.
Furthermore, according to some experts consulted by the OCE, the reform
involves "financial expenses that places cooperatives at a disadvantage
with respect to large power companies".
Batteries
Another
aspect that is very interesting from the German model concludes the OCE- is
the incentive created for the installation of batteries with photovoltaic
panels by Standard & Storage program. The German Development Bank grants to
owners of systems with power less than 30 kW low-interest loans for the
installation of these storage systems. In Spain, Mr. Rajoy government not only
does not encourage the installation of battery systems in self-consumption
facilities, but he has already devised a tax
for that kind of sites.
Sunny Taxes?
Certainly,
the tax on batteries devised by President Rajoy is recently paid
by nobody.-It happens with it the same thing that is happening with the
so -called “Sunshine Tax”,
but in any case no longer weigh down the takeoff of a sector that surely would
be launched if not for these threats Mr. Nadal has included in its Self-Generation
Royal Decree - Far from Moncloa, the Canary Islands regional government has
decided not to wait for a new government formation and has taken a step
forward: a few weeks ago, it approved
batteries subsidize consumption installations connected to the grid.
Why O&M
Standardisation has become the key to PV’s future?
The
maturing of the solar operations and maintenance business has shown a spotlight
on the need for some universally accepted standards and practices across the
industry. Vassilis Papaeconomou Alectris.com
managing director explains why such a step forward will be vital
to ensuring the full value of solar assets is realised.
Consecutive
Spanish governments put in place a legal framework allowing that the revenues
coming from the price of retail electricity were below total system costs,
which created the tariff being paid by electricity consumers. The cumulated
deficit amounts now to 15 M€ and it is estimated that the cost of renewables
paid by electricity consumers has contributed to around 20% of this amount. In
order to reduce this deficit, retroactive measures have been taken to reduce
the FiTs already granted to renewable energy sources but no other significant measures
have been taken to reduce the deficit.
In the summer of
2013, the Government announced a new reform of the electricity market. Under
the 24/213 Power Sector Act, the FiT system was stopped in July 2013 and the
new schemes are based on the remuneration of capacities rather than production.
The new system is based on estimated standard costs, with a legal possibility
to change the amounts paid every four years. This has caused many projects to
be in a state of default. The biggest project has changed hands, since
international investors found interests in the acquisition of this projects.
The 24/2013 Power
Sector Act considers very restrictive forms of self-consumption. During 2015
the regulatory framework for self-consumption was developed under Royal Decree
(RD) 900/2015. This RD established that the maximum capacity of the self-consumption
installation must be equal or below the contracted capacity. It also specifies
two types of self-consumers:
• Type 1: maximum
capacity installed of 100 kW – there is no compensation for the electricity
surplus fed in the grid.
• Type 2: no
limit to the allowed capacity – the surplus can be sold in the wholesale market
directly or through an intermediary. A specific grid tax of 0.5 €/MWh has to be
paid together with a 7% tax on the electricity produced.
Regulation
indicates that self-generated power above 10 kW is charged with a fee per kWh consumed
as a “grid backup toll”, commonly known as the “sunshine tax”. Adding battery
storage to the installation also implies an additional tax. Geographical
compensation is not allowed, and self-consumption for several end customers or
a community is not allowed.
The Spanish PV
industry has obviously, still on the downside with taxes, applied to
self-consumers and no feed-in-tariff at all. However, grid parity has been
reached in Spain thanks to two factors: rich solar irradiation resource and
good prices for components. Given the context of no feed-in-tariff, the future
of the Spanish PV market lies in the deployment of big PV plants and the elimination
of the self-consumption barriers. However, the opposition political parties and
the main social stakeholders have expressed their support to a fair development
of PV through self-consumption, and depending on the 2016 elections outcome in Spain,
the regulation could change again. Given the need to meet the EU energy and
climate 2020 targets and the Paris Agreement, It is of utmost importance that a
new legislative framework is developed in Spain promoting the use of renewable
energies again.
So Self-consumption
is allowed in Spain. Tips to highlight:
· The size of the PV plant cannot exceed the
maximum power contracted.
· Two different regulations exists depending on
the system size:
·· Type 1: under 100 kW, self-consumption is
allowed but the prosumer receives no compensation for the excess PV electricity
injected into the grid.
·· Type 2: Above 100 kW without limitation,
self-consumption is allowed and the excess PV electricity can be sold on the
wholesale market directly or through an intermediary. A specific grid tax of
0.5 EUR/MWh has to be paid together with a 7% tax on the electricity produced.
· All systems used for self-consumption above
10 kW are charged with a fee per KWh consumed. It is justified as a “grid
backup toll” and is known as the so-called “Sun tax”.
· At least two meters have to be installed,
depending of the cases (LV or HV connection).
· Adding battery storage implies also an extra additional
tax.
·
Geographical compensation is not allowed, and self-consumption for several end
customers or a community is not allowed.
± Tax Collector: Type 1 or Type 2
Spain’s Self-Consumption Schemes
Sources:
FAIR
TRADING COMMISSION, Renewable Energy Rider Decision, 2013: http://bit.ly/1DLIeG4
"PRESS
RELEASE -COMMISSION INCREASES THE CAPACITY LIMIT OF THE RENEWABLE ENERGY RIDER
TO 9MW”, Fair Trading Commission, Barbados: http://bit.ly/1whpiGs
http://www.ree.es/en/statistical-data-of-spanish-electrical-system/annual-report/spanish-electricity-system-2015
http://www.energias-renovables.com/articulo/como-esta-regulado-el-autoconsumo-en-20161025
http://www.energias-renovables.com/articulo/como-esta-regulado-el-autoconsumo-en-20161025
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