Permanent Advantage From German EEG for Solar

Craig Morris yesterday wrote about an article at Manager Magazin (in German) which gives some very interesting information.

The topic of the article is a trend in German industry and commerce to make some of their electricity themselves. People are starting to put solar PV on their roofs and consuming all the electricity, not even bothering to register for the feed-in tariff.

The lead example in that article was a fish market installing 315 kW of solar on the roof of their cooled storage room. They use all electricity from that for their own cooling, therefore reducing their need to buy from the grid by one third.

And they already save money from that, while also locking in that part of the electricity cost for the next couple of decades.

Manager Magazin says that 13% of DIHK (Association of German Chambers of Industry and Commerce) member firms already have built their own electricity capacity, and a further 16% have plans to do so. There are about 3 million member firms, and the rate in industry is even higher.

One reason for that is that when you produce your own electricity, you pay only the cost of generation. You pay no tax, no grid transmission cost, and no feed-in tariff surcharge.

With the surcharge increasing to 5.227 cents per kWh next year, that factor alone has some influence on the profitability of these projects.

So even if the anti-renewable FDP suddenly gets over 50% of the votes next year (not likely to happen) and finally is able to abolish the EEG going forward, the cost for legacy systems would still have to be paid over these surcharges. And that would assure a permanent advantage for solar, which can’t be reduced by changing feed-in tariffs or reaching the 52 GW cap.

For 2011, power consumption was at 536.8 TWh. 55.5 TWh of that was self-produced (Prognos AG, October 9th report, page 18).

For 2013, these number are expected to be 537.1 TWh and 58.5 TWh under average assumptions for GDP growth.

That’s still not a very large movement of the self-generated share. But if the trend reported by Manager Magazine is correct, those estimates by Prognos AG might be way too conservative.

And this has the potential to very strongly increase surcharges. If one considers various reductions in the surcharges for large scale industry users (estimated at 96.2 TWh in 2013) there are only 441.3 TWh of electricity left to share the burden to begin with.

If everybody in industry and commerce started to generate 50% of their energy themselves, that would leave only around 250 TWh of electricity to share the burden of the surcharges. That alone would be enough to about double them.

So while it is a welcome effect for now that higher surcharges make it easier to build solar PV for commercial users, in the long term, the present system might become unsustainable. Not because there is too much renewable energy receiving feed-in payments, but because there is too much out of the system.

Of course, getting solar panels on the roofs of commercial users without a feed-in tariff was the purpose of the EEG from the start on. It was only a temporary measure to get solar off the ground.

It would be ironical if that goal being achieved successfully would threaten the financial basis of the EEG. But that could very well happen in the mid term.

Related post: Grid parity and feed-in tariff surcharge

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

5 thoughts on “Permanent Advantage From German EEG for Solar

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