The German grid operators are required to publish once a year on November 15th their estimate of how renewable energy will develop in the next couple of years, and what will be the effects on the costs and surcharges.
This year’s report is now available. It covers the years from 2013 to 2017 and is required reading for anyone interested in renewable electricity in Germany.
The document is over 140 pages long, so I won’t be able to discuss more than a very small part of it in a blog post.
For starters, they think that solar will continue its very strong growth for another couple of years, until it hits the ceiling of 52 GW in 2015.
Since market participants know of that ceiling, it makes sense to expect one last final boom immediately before that goal is reached. As the report points out, new installations won’t get support from the second month after the goal is reached on. That leaves one month after passing 52 GW for one last final push.
That strong growth however will not increase cost much. The cost for solar is estimated to reach 10.1 billion next year, and will then peak at 11.2 billion in 2016, and then go down ever after (there will be no new solar panels added to the system, and every year old ones will grow out of the support scheme).
Generation from solar will grow close to 100 percent from 27.8 TWh this year to 52.5 in 2016. Generation from all renewable sources will break the 200 TWh barrier in 2017, which will make the goal of reaching 35% of generation in 2020 very conservative.
The largest increase in cost in the coming years will come from offshore wind, which is still at only about 130 million this year but is expected to reach about 4.5 billion in 2017. For that investment, it is expected to contribute a respectable 28.5 TWh in 2017.
They also explain that the newly introduced “market premium model” is already very popular and expected to gain share in the mid term. All of offshare wind and a large majority of biomass and onshore wind are expected to be traded under that model.
That model was introduced in 2011. Under that model, owners of generators don’t sell their electricity to the grid companies, but directly to the wholesale market. They get not the whole feed-in tariff, but the difference between the feed-in tariff and the average market price.
That means if an operator is able to sell its electricity in average above the wholesale market price, they get an extra profit from that. That will, all things equal, help to stabilize prices, since those generators that can time-shift (like hydro and biomass, as well as wind with added hydrogen storage ability) will of course sell in the market at the time slots where prices are highest.
There is much more in that report, but this is already too long. Again, I encourage anyone able to read German to have a look at that document.