Archive for March 2012

FiTs and the Future of European PV Markets

By Paula Mints, Principal Analyst, PV Services Program, Navigant Consulting

Discussion during last week’s annual EPIA Market Workshop in Brussels appropriately reflected the environment of several key European markets may see major changes to their feed-in tariff programs.

Brussels, Belgium — As the photovoltaic industry enters its post-feed-in-tariff (FiT) phase, it is important to remember that this incentive along with its ensuing profits was a recent phenomenon and was never intended to be unending. The industry and its stakeholders (including those who design and administer incentives) should have learned valuable lessons about how rapidly a market can overheat, how expensive it can quickly become to support a rapidly ballooning market, and how quickly PV can be deployed. Much innovation came with the FiT era. For every new entrant (many new to solar) that left, many stayed and will continue innovating.

Amidst the backdrop of several key European market leaders mulling major changes to their own FiTs, the annual EPIA Market Workshop was held in Brussels on March 21. The first session, on utility-scale PV plants, was moderated by EPIA’s outgoing president, Ingmar Wilhelm (Winfried Hoffmann was elected as president, a position he previously held), with panel members Christopher Burghardt from First Solar, Hansjorg Lerchenmuller from Soitec, Thierry Lepercq from Solairedirect, Hanwha SolarOne’s Andreas Liebheit, and Phillip Kunze from Solaria Germany. The discussion began with a comparison of FiTs and tenders. Feed in tariffs offer cost control, but only if the market can be dissuaded from boom and bust cycles, while tenders offer budget control and a least cost solution, but must be managed.

Utility scale is the largest growing segment of the market, competing on a levelized-cost-of-energy (LCOE) basis as a replacement technology, Burghardt pointed out. First Solar prefers a commercial negotiation based on a PPA or other incentive, he explained, as tender bidding often leads to a race to the bottom, which in turn can lead to failed projects. He noted that the industry needs to move from selling a financial product to selling power plants; France is running a tender, and Italy is considering it.

France cut its FiT by 70%, and then a further 30%, pointed out Lepercq, paraphrasing Nietzsche: what does not kill you makes you stronger. Depending on government incentives is dangerous and faulty, while the industry needs sustainability, he stressed. The market in France is now PPA driven, and the cost of wholesale electricity is 16 Euro cents/kilowatt-hour (kWh).

In Italy and Greece, banks are reluctant to take a risk on large-scale projects, thus passing the financial risk back to the investors and other project participants, noted Liebheit from Hanwha SolarOne.

Kunze from Solaria noted that CSP appears to be losing share. Further cost reduction is imperative, he said, and posed the question: can the PPA model survive in Europe?

In the second session, Large Scale Roof-Top Systems, moderator and newly elected EPIA president Winfried Hoffmann offered examples of commercial electricity rates in Europe:

  • Germany, €0.11/kWh to €0.15/kWh [US $0.14/kWh -$0.20/kWh]
  • France, €0.07/kWh to €0.10/kWh [$0.09/kWh – $0.13/kWh]
  • Italy, €0.13/kWh to €0.17/kWh [$0.17/kWh – $0.22/kWh]
  • Spain, €0.09/kWh to €0.14/kWh [US $0.12/kWh – $0.18/kWh]
  • UK, €0.09/kWh to €0.12/kWh kWh [US $0.12/kWh – $0.16/kWh]

Panelist Martin Heming from Schott Solar pointed out that FiTs are ending, and the market for systems bigger than 1-megawatt-peak (MWp) must become part of the energy market. Tomas Garcia from SunEdison remarked that self-consumption will be important for all rooftop systems. Panelists mused whether system designers will be motivated to innovate now that FiTs are ending — but nobody offered any answers to the question, or even suggested what the answer should and could involve. Panelists included Heming, Garcia, Virgilio Navarro from Atersa, Boris Klebensberger from SolarWorld, and Ricardo Meireles from Martifer Solar.

In a session on Residential Rooftop Systems moderated by EPIA director Fabrice Didier, Franco Valentini from Elettronica Santerno suggested selling solutions instead of selling systems, while Eclareon’s David Perez emphasized stand-alone off-grid single family dwellings, posing the question: do all systems have to be grid-connected? Willi Ernst from Centrosolar argued that in Germany, “solar” has become a negative. SunPower’s Oliver Schafer said that the industry needed to focus on attributes of solar other than cheap. He also noted that new building codes are needed, along with net metering and education. Self-consumption will force utilities into new business models, argued Valentini, in which they will lose their grid fees, but will find ways to recover them.

One of the negative outcomes of the FiT incentive was an absence of creativity, an attendee pointed out. Instead of creativity and innovation, the industry built bigger and bigger systems. The attendee posed a rhetorical question: now that the FiT has pushed the industry to multi-gigawatts of capacity, what do we do with it?

Lessons of the FiT Past and Future

During the heady first years of the feed-in tariff concept, it became sacrosanct to suggest that the instrument would drastically (or suddenly) change, or end. During these few profitable years, new entrants observed the significant growth enjoyed by the industry, and ignored the lessons of the past: off-grid markets, standalone systems, working in markets without subsidies, and competing on the attributes of solar other than its potential of being cheap. The industry’s history, they believed, could not possibly have any bearing on its future. They were wrong.

Those who cannot remember the past are condemned to repeat it, wrote philosopher George Santayana. Many in the industry chose to forget the FiT model’s past struggles on the belief that it would transfer to other regional markets and continue to drive industry demand. Many a business model was developed on the belief that FiTs would not end, or at least would do so in a seamless manner.

The FiT incentive drove the PV industry to gigawatt levels of demand, but it also drove it to promise ever cheaper technology and system prices. These promises, along with the current low technology prices, relate only slightly to the true cost of developing and manufacturing the technology. SunPower’s Schafer correctly observed that the industry needs to focus on PV’s true attributes: clean energy, minimal running costs once installed, and energy independence. Granted, these attributes are a tougher sale than simply being cheap – forty years of industry history should have taught this lesson — but the end, cheap is not a terribly aspirational attribute. The long-term economics of solar have much more to offer than an adherence to the goal of being cheap. The way forward for solar is in its history, if only it will pay attention to it.

Let’s not prove Santayana correct. The industry should remember its history, value its pioneers, and bring the lessons of the past forward to the future.

What’s New on Feed-in Tariffs

By Paul Gipe

What’s New on Feed-in Tariffs

Nuclear Power, Japan, Feed-in Tariffs, and the Rapid Development of Renewables

  • Andrew DeWit: Japan’s Remarkable Renewable Energy Drive—After Fukushima–At present, only two of Japan’s 54 nuclear reactors are operating. One of these will be shut down at the end of the March, and the last one will go off-line in late April or early May. Minister of Economy, Trade and Industry (METI) Edano Yukio says that Japan seems likely to spend this summer with no nuclear reactors in operation at all. . .
  • Craig Morris: French court finds nuclear too expensive–In a review of the cost of nuclear power commission on May 17, 2011, the French Court of Auditors found that the cost of nuclear power in France is currently below the rate charged to consumers, confirming charges that France subsidizes its power sector. The wind sector has responded by pointing out that wind power is cheaper than new nuclear installations. . .
  • New York Times: Japan’s Nuclear Energy Industry Nears Shutdown, at Least for Now–All but two of Japan’s 54 commercial reactors have gone offline since the nuclear disaster a year ago, after the earthquake and tsunami, and it is not clear when they can be restarted. With the last operating reactor scheduled to be idled as soon as next month, Japan — once one of the world’s leaders in atomic energy — will have at least temporarily shut down an industry that once generated a third of its electricity. . .
  • Craig Morris: The German switch from nuclear to renewables – myths and facts–A small-town energy revolution is going on in Germany, with more than 100 rural communities becoming 100% renewable. More people work today in Germany’s renewable sector than in the country’s nuclear and coal industry combined. These are not only new green jobs, but also blue-collar jobs in very traditional industrial areas, such as steel, glass and ceramics. Even worn down shipyard areas in northern Germany are revitalized thanks to the offshore wind industry. So one reason why Germans might not mind paying a little more for green power is that they largely pay that money back to their communities and themselves, not to corporations. . .


What’s New on Solar Energy

  • Craig Morris: What Lomborg gets wrong–We have heard it all before. Back in March, 2010, leftist British journalist George Monbiot mistakenly claimed that Germany had decided that photovoltaics is “a waste of money” and had started “to abandon their monumental mistake.” Less than two years and some 15 gigawatts of newly installed capacity later, Germany does indeed face a challenge that few other countries will reach anytime soon: its PV capacity is approaching peak power demand in the summer, as I explained last month with reference to a quite misleading article in German news weekly Der Spiegel. . .
  • John Farrell: Rooftop Revolution: Changing Everything with Cost-Effective Local Solar–The solar opportunity is driven by converging economics: the installed cost of solar has fallen 10% per year since 2006 and grid electricity prices have averaged a 2% annual increase in the last decade. . .
  • Zachary Shahan: 10 Huge German Solar Energy Myths Bjørn Lomborg is Trumpeting–No doubt, you’ve heard about Germany’s likely decision to quickly and severely cut its solar PV feed-in tariff policy, a world-leading solar policy that has made Germany a solar power hero of sorts. A friend recently shared a story by Bjørn Lomborg on these cuts with me and asked me for my opinion. It’s taken me a few days to get to it because Lomborg’s piece is so full of myths and lies, but before I get to debunking Lomborg’s claims, let’s have a little context. . .
  • Business Green: Brixton and Westminster solar schemes aim to help reduce energy bills for tenants in social housing–Plans to reduce the cost of energy for Londoners living in social housing by installing solar panels have taken a leap forward after two separate schemes were launched in Brixton and Westminster. . .

This feed-in tariff news update is sponsored by the , An Environmental Trust, and the David Blittersdorf Family Foundation in cooperation with the Institute for Local Self-Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

Renewable Energy PTC and 1603 Extensions Tacked Onto Senate Bill

By Steve Leone, Associate Editor,

New Hampshire, USA — Renewable energy policy has seemingly been on the hot seat since late summer. As early as today, it will finally find out how much political backing it has with a series of votes on Capitol Hill.

The wind and solar industries have been pushing strongly to get extensions of popular federal programs onto existing legislation, and they will now be included in a massive highway spending bill.

Sen. Debbie Stabenow, D-Mich., has introduced an amendment that would grant a one-year extension of the Production Tax Credit aimed mainly at the wind industry and would for one year revive the recently expired Section 1603 Treasury Grant that had been a boon for the solar industry. It also includes incentives for cellulosic biofuel, biodiesel and renewable diesel.

The Senate bill would need 60 votes for approval, meaning it would require a significant number of Republicans to cross the aisle. Chuck Grassley, a well respected Republican senator from Iowa has been a leading proponent of the state’s wind industry, and other states with a strong and growing renewables presence, like Arizona and Texas, have Republican senators that could look favorably on this bill.

But getting to 60 votes would be a monumental challenge, especially as the renewables industry as a whole continues to face skepticism from key members of the Republican party. Currently, there are 51 Democrats, 47 Republicans and two Independents in the Senate. Timothy Arcuri, a research analyst with CitiGroup, wrote late Wednesday that his Capitol Hill sources say it is unlikely enough Republicans would sign onto the legislation as it stands.

The amendment is one of 30 that were tacked on in a late-breaking deal. Elements of the Keystone XL Pipeline debate are included among the amendments, as is an amendment by Sen. Jim DeMint, R-S.C., to eliminate all energy tax incentives.

There’s plenty happening outside the Senate chamber as well. This week, Sen. Lamar Alexander, a longtime Republican figure from Tennessee, called on Congress to eliminate its subsidies aimed at the wind industry. Alexander resurrected his critique of “Big Wind,” and the backing it receives from the federal government in a speech to the conservative Heritage Foundation. Alexander said Wednesday that he will introduce a bill to end the Production Tax Credit before it expires.

In the House, Rep. Mike Pompeo, R-Kan., has introduced a bill that would repeal all energy tax credits. Such a bill would affect renewable energy industries far more than fossil fuels. It’s the second time he’s proposed this legislation, the first coming in May when energy policy was not the issue it is today.

Acuri also wrote that several states are considering their renewable portfolio standards (RPS), and that bills to fully repeal the targets have been introduced in North Carolina and Ohio, while others that would scale back standards have been proposed in Colorado, Maine, New Mexico and Washington. According Acuri, these bills are unlikely to pass, and the nation’s main RPS driver — California’s 33 percent standard — maintains wide support.

At the federal level, the industry is still working to assess the prospects of the Clean Energy Standard that was recently introduced by Sen. Jeff Bingaman’s, D-N.M. The standard would include renewables like solar, wind, geothermal, biomass and hydro, as well as sources such as natural gas and potentially clean coal.

“We’ve already seen what well-structured clean energy standards have meant in states,” said Rhone Resch, president and CEO of the Solar Energy Industries Association. “They’ve opened electricity markets to allow for more competition from renewable sources of energy and ultimately drive down the cost of electricity for consumers. This success can be replicated at the national level.”

Content Technologies

Federal Cabinet Approves Solar Feed-in Tariff Cuts

Published on March 1, 2012 in Energy Efficiency, Environmental Politics, Legislation, Renewable and Solar.

The Federal Cabinet (German government – Bundesregierung) approved a reduction of solar feed-in tariff cuts, apparently based on the agreement between Mr. Röttgen and Mr. Rösler. The reduced tariffs shall reflect the decreasing market price for solar modules and shall stabilize the EEG surcharge.


A draft bill is not yet officially available, but it looks as if the decision may be substantially identical with the agreement on solar feed-in tariffs reached last week between Minister Philipp Rösler (Federal Ministry of Economics and Technology – BMWi) and Minister Norbert Röttgen (Federal Ministry for the Environment, Nature Conservation and Nuclear Safety – BMU).

According to the press release, a one-time cut of over 20% shall become effective as of 9 March 2012. Furthermore, feed-in tariffs shall be reduced monthly by 0,15 ct/kWh starting 1 May 2012. In addition, plant operators shall only receive feed-in payments for a limited amount of electricity generated, the press release says.

According to the proposal by Ministers Rösler and Röttgen, small roof-top installations up to 10 kW shall receive feed-in tariff payments for 85% of the energy generated in one calendar year, while all other installations shall receive payments for 90% of the energy, starting 1 January 2013 for all plants commissioned after 9 March 2012. This shall create an incentive for self-consumption of the energy exceeding the limit or for direct marketing. A table with details of  the proposal of 23 February can be found here.

The government’s communication also mentions that the expansion of new solar power plants shall be limited, without going into detail further. The ministers had suggested last week that BMU shall be given the competence to issue ordinances in cooperation with BMWi so that the ministries can faster adjust monthly reductions and tariffs in case the solar expansion deviates from the target corridor of 2,500 to 3,500 MW annually. The target corridor itself shall decrease by 400 MW annually starting in 2014 and shall range from 900 to 1,900 MW in 2017.

The energy information provider energate quotes BMWi state secretary Stefan Kapferer as saying the ministry expected the German Bundestag (Parliament) to possibly make changes with respect to the 9 March 2012 cutoff date and the right to issue ordinances, but was optimistic to have wide support among the ruling CDU/CSU and FDP coalition parties for an amendment of the Renewable Energy Sources Act (EEG) that regulates feed-in tariffs.

Procedurally, the amendment of the EEG has to somehow be brought before the Bundestag and the Bundesrat for their vote.  The intended timing makes it is impossible to follow standard parliamentary procedures to get the amendment through the Federal Parliament and the Federal Council. Therefore, the government will have to fast track the amendments, presumably by adding the amendment to some other legislative project already further advanced in the parliamentary process. While this has been done for previous amendments of the EEG, this approach does not exactly add to the transparency of the lawmaking process or enhance the likelihood of the amendments having undergone close parliamentary and public scrutiny .

Source: Bundesregierung

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