German solar juggernaut rolls on despite tariff cuts

[kristopher]

German solar juggernaut rolls on despite tariff cuts
By James Holloway

...Germany's solar expansion continues apace. To achieve its aim of 52GW of installed PV capacity by 2020 it only needs to install 3GW per year—about half the rate at which it's currently trundling along. Clearly German solar expansion is looking beyond domestic suppliers to provide cheap, efficient equipment—in many cases to China and the US, where manufacturers have more nimbly adapted to efficiency-boosting and price-cutting advances.

It's likely that feed-in tariffs will be abolished outright long before 2020, and the consensus in the German solar industry appears to be that this will make very little difference to progress. As photovoltaic power fast approaches grid parity—i.e. a cost level with that of purchasing from the grid—the idea of financial incentives for solar installations appears increasingly redundant. If the cutting of feed-in tariffs is a strategy to undermine the march of photovoltaic solar power (as has been theorized), it doesn't seem to be working. Rather, the effect seems to be that, by making installers more cost-conscious, the least competitive manufacturers are weeded out. If the upshot of reducing feed-in tariffs is to keep the solar industry honest, how bad is that, really?

The article also has a good discussion of these charts that are used to illustrate the way solar impacts electricity pricing:






They add a couple of points that are worth noting. They quote a study saying the 25GW of solar in Germany is producing a 40% reduction in daytime pricing but only a 10% overall reduction in electricity costs. It is also resulting in an increase in nighttime electricity costs as fossil producers are forced to raise their prices to make up for lost daytime revenue. Obviously that is not enhancing the competitive position of fossil fuels in relation to new technologies.

As one writer put it, "solar PV is not just licking the cream off the profits of the fossil fuel generators—it is in fact eating their entire cake."

http://arstechnica.com/science/news/2012/04/german-solar-juggernaut-continues-despite-tariff-cuts.ars

[kristopher]

1. More on study quoted in the OP

They note a problem with the structure of the renewable incentive program regarding treatment of industrial users vs homeowners:

"At the present time, the price-reduction effect primarily benefits wholesalers and large-scale power users who obtain their power on the spot market. Thus, current solar policies allow lucrative double dipping on the part of power-intensive industries. Firstly, they benefit from lower purchase prices on the power market, and secondly they gain significant exemption from EEG Apportionment payments (apportionment payments set down by the Renewable Energy Sources Act).

However, household consumers do not benefit from the price-reduction effects. In fact, the opposite is true: The calculation methodology for the EEG Apportionment actually results in higher prices for private consumers because they have to cover the differential costs between cheap, peak demand power and guaranteed feed-in remuneration. If the price-reduction effect of photovoltaics was factored into EEG Apportionment payments, it would result in a price reduction of 0.15 cents per kilowatt-hour for household consumers."

http://www.solarwirtschaft.de/en/media/single-view/?tx_ttnews%5Btt_news%5D=14492&cHash=6caa4a57ebf519654a3a1c8151c31d62

[FBaggins]

2. Apology accepted

Very big of you.

household consumers do not benefit from the price-reduction effects. In fact, the opposite is true: The calculation methodology for the EEG Apportionment actually results in higher prices for private consumers because they have to cover the differential costs between cheap, peak demand power and guaranteed feed-in remuneration.

And, as reported previously, that apportionment is expected to rise as much as 150% over three years.

[kristopher]

3. Still on your antirenewable crusade, eh?

Because of the merit order effect solar is reducing the overall costs of electricity sold on the auction market by 10% compared to what it would be without solar. That is coming directly out of the profits of the fossil fuel generators.

The daytime reduction is up to 40% but that is mitigated by fossil fuel generators increasing the price of what they charge for nighttime electricity.

This pressure to increase prices reduces the competitive position of fossil fuels. This makes the alternatives even more competitive and will serve to further reduce the market share for fossils - a process that eventually puts them out of business. Most of us think that is a very good thing and that it is a value worth paying for.

The increase in price to the homeowner attributable to this specific aspect of the policy demonstrates an inherent unfairness in the design of the program that favors industry (just what you'd expect from the pronuke/coal conservative govt), not that there is no consumer benefit from solar.

So if the merit order effect isn't what is responsible for the increase you are pointing to in the link, what is?

Simply put it is the success of solar.

They are installing almost 3X the amount of solar that was their goal when the program was established and these prices were set (which is what this OP is about). This necessitated increasing collections in order to pay for the volume of installed capacity. Note carefully that this equipment is in place and generating electricity.

***

Now, I have a question for you. The ratepayers of Georgia, South Carolina and Florida are all being or getting ready to have their electricity prices raised now to pay for nuclear power plants that, if they ever get built at all, will not begin producing electricity until years from now when they would almost certainly be able to buy solar that will produce their power for less than the price of electricity from the not-yet-built nuclear plants.

What are your thoughts on the plight of those unfortunate ratepayers? Polling shows that we are far more willing to pay extra for renewables than for nuclear. You are extremely disturbed by the dastardly imposition of renewable costs on the poor, unfortunate exploited German ratepayer yet apparently have no sympathy for the poor unfortunate exploited victims of the nuclear industry in the US. At least the Germans are getting the facilities and electricity they are paying for.

[AtheistCrusader]

5. Georgia, SC and Cali make a hell of a lot more sense for PV's, than Germany.

35 degrees north versus 50 degrees north makes a BIG ASSED difference.

[kristopher]

7. That is only one consideration

Do you approach every financial decision you make on the basis of the maximum value that product brings to other consumers? Put another way, do you only buy something if you are in the top 10% of the people who benefit most from the purchase?

Of course you don't.

[AtheistCrusader]

8. I do if there are alternatives.

I will admit, PV systems are a better deal this year than they were even this time last year, but at higher latitudes, you're behind the curve. You can even see it within Germany itself, when you look at a map of PV installation densities. Roughly eyeballing it, the lower 20% of the nation hosts half of the PV installations. (and if you look at wind generator installations, the opposite is true)

It's like a rocket launch site. You COULD put it anywhere, but at the equator, you get the most bang for your buck, and that counts for a lot.

Despite massive subsidy, it seems obvious that wind is the better choice for Germany, and explains why wind accounts for 8% of their total electrical generation per year, to solar's 3%.

I don't begrudge them some diversity in generating sources, that's a good idea I guess, but damn, it doesn't seem like the best idea, given their resources.

[kristopher]

9. I see.

As I read what you say I understand that you feel that armed with the fact that insolation in Germany isn't "optimum" you are in a better position to evaluate the best fit solutions for the values the German people hold about their energy supply than they are by "eyeballing" a map?

As for the "bang for your buck" thesis you offer, I'm guessing that you haven't read the OP or followed this thread or you would probably be aware of the pressure solar is putting on fossil fuel prices and way that results in a declining spiral that will eventually put fossil fuel generators out of business. I was under the impression that achieving that goal was the first and foremost motive behind all of the nuclear supporters promotion of nuclear power, was I wrong?

I would think that given the absurdly exorbitant sums you endorsed spending on nuclear justified by CO2 reductions, that you would consider solar - with its plummeting price and soaring manufacturing base - to be an absolute bargain.

[AtheistCrusader]

10. I think the germans are aware of it.

But, I had assumed this inherent inefficiency was one of the reasons for the ending subsidies, but that's not the case, apparently. Entirely different economic reasons driving that.



I don't see any particular reason that wind power can't replace their nuclear power and fossil fuels, entirely, for less money than PV.

If I may speculate one ONE benefit of solar in their geographical location; daylight warms the region also coupled to latitude. If the sun is out and shining, if air conditioning is to be used to counter-act it, it will be accompanied by daylight that will also drive PV panels. So having SOME PV capacity makes sense, as some additional capacity will be needed for cooling, at the precise same time solar power is most available.

But beyond that, compared to wind power and wind power ONLY, it just seems like a bad deal, for most of Germany. Especially since it is less useful when it is most needed in the winter, for heating purposes.

Am I wrong on 'eyeballing it' or not?
Solar installations: http://en.wikipedia.org/wiki/File:SolarGIS-Solar-map-Germany-en.png
Wind installations: http://en.wikipedia.org/wiki/File:Windkraftanlagen_in_Deutschland.png

The wind turbines are a little more distributed from the midpoint, but I would call my characterization of the solar install patterns completely accurate.

It just kind of boggles my mind that they focused so much on PV, over wind. Or at least, this article has the appearance of such. I personally would have thought they would simply be an exporter of the panels to countries with better sunlight.

[kristopher]

11. What do you think of New Jersey's PV program?

Research it a bit and let me know if it helps you understand Germany.

[AtheistCrusader]

12. Ok.

Interesting. Germany has only slightly fewer hours of sunlight per day than Newark NJ. Both considerably more than Seattle. (My hometown)

This doesn't really answer my question on ROI. Just like I don't accept the 'clean coal' clowns arguments on cost based on subsidies they receive, I am interested in the actual ROI for renewables.

Solar THERMAL seems to be better. Wind seems to be better.
Why the focus on PV to the point they under-budgeted and have to halt the subsidies? That tells me the subsidies were not in line with ROI, and should be spread among other generation sources.

I don't like anecdotes, but the thing I wake up to every morning, is the neighbor across the street. Again, I live in Seattle, so, the hours of daylight proposition is slightly worse, but the neighbor has lost his ASS on his PV install. Even with subsidies. (Granted, his is primarily competing with the cost of hydro, not coal or nuclear, where the value proposition of PV would be somewhat better)

He would have been money ahead installing his solar thermal kit, and been done with it. Adding the PV stuff was just a horrible mistake. If the panels don't last longer than 40 years, he'll never recoup his costs, and that was his expectation going into it. To say nothing of decaying inverters, which one can reasonably expect to happen on decades-long timelines.

No matter how I look at it, Rooftop PV just never seems like the winner to me, at these latitudes. There are better renewables.

Closer to the equator? Want to link power generation to cooling needs? By all means, rock out with your PV panels out.

[kristopher]

15. You are not capable of making the argument ...

... that the Germans and New Jersians(?) have for investing in solar?

Really? The only possible reason to put money in a socially desirable, urgently needed, and growing technology is the Return On Investment that is achieved on that portion of development that is accomplished at this particular stage of deployment?

You are acting far less intelligent than you've demonstrated yourself to be and far less concerned about climate change than you've indicated.

[AtheistCrusader]

16. But there is a problem if you don't.

Next year's deployment is likely to be far less than their goal, with the subsidies suspended. (perhaps they will correct this mid-year)

They are not having this issue with wind power. Why not focus most resources there? Why PV at all? That is my question. It doesn't make sense to me.

If I can deploy more Mw worth of generating capacity with wind, why PV at the levels they attempted to subsidize?

As a result of the subsidy, power bills are going way up, assuming the Government doesn't do something to intervene, like channeling in some money from another source. A huge jump in power bill is not generally a good way to get people to continue to adopt this technology.

[kristopher]

17. "power bills are going way up" due to renewable subsidies is a right wing meme

They are going up in Germany but they are also going up everywhere else. The contribution of renewable energy to that price increase is not nearly as significant as the right wing big energy lovers would have us believe.

And you STILL haven't even tried to explain the investment in solar in terms of those who are making it. You've proven your insight, so please don't pretend you don't understand their motives. You clearly have a desire to avoid expressing the positive side of the investment equation and want to focus attention on only the negative. Why would you take that approach?

Rising electricity prices have little to do with renewable energy
Published On Sat May 05 2012 Tim Weis

While spring in Ontario has yet to bring much rain, there’s been no shortage of mudslinging over rising electricity prices. But there’s more to it than critics of renewable energy would you have you believe: new data helps to clarify how prices are linked more to nuclear power than clean energy programs.

To start with, electricity prices are going to go up no matter what source of energy we choose to use. Half of the provincial electricity system’s generating capacity — including almost every nuclear reactor — needs to be replaced or rebuilt within the next 10 years and you simply cannot build power plants in 2012 at 1980s prices.

While it’s the only province so far to be phasing out coal, price increases are by no means exclusive to Ontario. In coal-powered Alberta, energy prices are forecast to rise by 50 per cent between 2010 and 2016. Between 2002 and 2010, rates in Nova Scotia rose by 37 per cent. In Saskatchewan they rose by 36 per cent. And B.C. Hydro forecasts a rate increase of 32 per cent between 2011 and 2014.

What seems to be unique to Ontario is the fear that renewable energy is the sole cause of the increase. Although Ontario’s ambitious clean energy development targets are being met by establishing contracts with renewable energy generators in the form of feed-in tariffs (FIT), the province has similar long-term contracts with both nuclear- and gas-powered plants.

The difference with renewable energy, however, is that FIT prices are fully disclosed, while the same cannot be said for nuclear...

http://www.thestar.com/opinion/editorialopinion/article/1173543--rising-electricity-prices-have-little-to-do-with-renewable-energy

[AtheistCrusader]

18. I cited an article earlier about the specific cause of rising costs in Germany.

I am curious, and will go look, to see what percentage of PV Canada is deploying. I know they have significant production capability.

Again, I have not defended or encouraged nuclear in any way here, let alone coal. Just want to be clear on that. That ship has sailed. It is done. Over. The dangers and cost have made it un-viable.

Yet, we have a renewable solution: wind with pumped hydro storage. PV does have that one nifty effect: it kicks into max gear right when cooling demands are highest. Other than that, every dollar sunk into PV sounds like a waste, when you could get more mileage (wattage) for that same dollar with other renewables, without even bothering with Natural Gas at all. What fun!

*WE* should be doing what Germany attempted. WE have significantly sweeter solar power opportunity in kWh/square meter in over half of the united states than you do in Germany at all. You have to go south in Europe to Spain or deep into Italy to match the south/southwest united states.

WE should adopt their tariff model, and kick in some additional funding because Americans generally get pissed when bills get bigger, and yay, improvement.

[kristopher]

19. There are several obvious reasons for pursuing solar at this stage ...

... and yet a bright individual like you can't get beyond matching peak load?

Your enthusiasm for wind is commendable but it is hard to understand your reticence when it comes to the positive values that promote investment in solar. So be it.

[AtheistCrusader]

20. Actually, I'm a pretty big fan of solar, but not always PV.

For instance, there is MASSIVE energy savings to be had in solar thermal, heating household water on the rooftop. That is an ENORMOUS bang for your buck, and you couldn't achieve that same water heating via PV with battery storage, with 5x the surface area on the rooftop.

Then there is concentrating solar, another solar thermal solution. Expensive, but less expensive than, say, geothermal, with fewer side effects, and more wattage per square foot than large PV farms, if I recall the numbers right.

There IS a closing gap between PV efficiency and conservation that will continue to make PV a better proposition over time, but it has a long way to go before it's on-par with other renewables.

[AtheistCrusader]

4. Why solar in Germany?

http://www.slate.com/articles/news_and_politics/project_syndicate/2012/02/why_germany_is_phasing_out_its_solar_power_subsidies_.html

Seems like other renewables like Wind would be a better choice, given Germany's latitude and climate.

[kristopher]

6. Solar works everywhere.

Yours is a value statement, not a technical argument.

[XemaSab]

13. I interpreted that as an economic argument

If a peach tree produces 500 lbs of fruit in Fresno and 200 lbs of fruit in Chelan, but an apple tree produces 500 lbs of fruit in Chelan and 200 lbs in Fresno, then why would a farmer who wants to make good money grow peaches in Chelan or apples in Fresno?

[kristopher]

14. So did I.

That's why I wrote that it was "a value statement, not a technical argument."