Wednesday, February 12, 2014

The German transition to solar gets more complicated

First, Germany passes a bunch of legislation to subsidize the transition to solar. Some of these subsidies are very generous and have the effect of driving German electricity prices sky-high.  For any enterprise that relies on a lot of electricity to operate, this becomes a threat to its very survival.  But hey, reasons some of those folks, solar panel prices are way down—why not install enough to get off that high-priced grid?

Can't have that—reasons the government which sees a loss of revenue just at a time when it is finding it difficult to pay all those subsidies it promised.  So now we see a proposal to tax the folks who have gotten off the grid.  This is especially ironic because just a few years ago, any company that was willing to finance its own solar conversion without relying on state subsidies would have been considered heroic.

So once again, Germany is confronting the costs of being first with new technology.  In some ways, this is good news because it means the days when governments needed to subsidize solar conversion are behind us.  It means that all those subsidies actually bought what folks wanted—PV cells that have become the low-cost source of electrical generation.  But for the Germans who agreed to spend this money to get the PV industry off the ground, these old arrangements are causing problems of their own.

Germany to charge fee for off-grid electricity

DW.DE  Author André Leslie

The German government has proposed a new fee that will affect companies generating their own electrictiy. Critics say the fees will drive companies away from renewables altogether.

Trucks rumble in and out of Robert Widdig's asphalt manufacturing plant in Bornheim, just south of the German city of Cologne. The cargo they are carrying is steaming hot and the air hangs thick with the smell of black road tar.

"We have to keep three big cylinders of road tar at 180 degrees Celsius from morning to mid-afternoon," the plant owner explains. "That takes a lot of electricity."

So, Widdig installed nearly 900 solar panels on the roof of one of his storage factories, in order to meet his energy needs and keep his costs down. The panels feed electricity straight into the production plant.

"It's been a great way to save some money," he says, adding that producing his own energy is particularly good because electricity prices in Germany are constantly rising.

Industry versus government

As part of Germany's transition to renewable energy, the government has been investing in renewables initiatives across the country. This includes subsidies for solar electricity projects and offshore windfarms.

Sigmar Gabriel has plans to change the way self-producers pay for power

The transistion is financed in part through a surcharge of 6.2 eurocents ($0.084) per kilowatt hour of standard electricity from the existing power grid. For the average German family, that means about 200 euros a year.

But more cash is needed to make the transistion happen and the newest proposal is that companies and individuals who produce their own energy also pay a fee. The plan was put forward by Germany's new Economics and Energy Minister, Sigmar Gabriel.

If the plan is approved, businesses which have their own solar grid or wind systems larger than 10 kilowatts will pay a one cent surcharge on the power they generate. Newly installed on-site power systems will be hit with the full 6.24 euro cent surcharge, whether they are powered by fossil fuels or alternative energy.

Ralph Schneider from Priosol Energy Investments, an alternative energy producer based in Munich, says he is not surprised by the developments.

"These days more and more clients are becoming independent, and are leaving the big utilities," Schneider says. "I've spoken with these energy companies and they are worried."

Schneider says that the surcharge is a government concession to big energy companies, which have wrestled with the transition to renewables.

DW contacted the Federal Ministry for Economic Affairs and Energy, to ask if the surcharge on independent energy production was connected to the loss of clients for major utilities. There was no response at the time this article was published.

Industry consequences

Despite considerable competition from China, Germany's solar industry remains a world leaders in renewables. But, renewables experts are undecided about the new plans from the government.

Schneider says he finds it "highly interesting" that offshore wind farms are getting large amounts of investment while decentralized options like on-site solar systems are being hit with a new charge.

He argues that on-site solar facilities take the load off the power grid, and makes more renewable energy available. This is an opinion shared by Milan Nitzschke, from Germany's biggest solar cell producer, Solar World.

"This will be a really tough hit for the solar industry here in Germany if this goes ahead," Nitzschke told DW in an interview. "This surcharge targets exactly the sort of consumers that we produce for."

Uncertain future

The surcharge is not expected to affect private homeowners with small on-site systems. Germany's Economics and Energy Ministry has recently set up a hotline for consumers who want more information about the surcharge and how it will affect them.

For Robert Widdig, the future of renewable energy at his asphalt plant depends on what the government decides to do. He has decided not to install more solar panels, unless it continues to be a sound investment.

"But only if Mr. Gabriel can be convinced to drop this surcharge," he says. more


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