Environment Minister Röttgen: solar power support must be adjusted to market developments

The development of solar power in Germany continues to be very dynamic and the 2010 expansion rate again far exceeded expectations. Currently the installed capacity of PV installations in Germany is 17,000 MW. 7,000 MW have been connected to the grid in 2010 instead of the 5,000 MW projected at the beginning of the year.

Federal Environment Minister Norbert Röttgen noted: "The figures reflect the success of solar power in Germany and give testimony to the vast potential held by renewable energies in general. However, in the interest of electricity consumers financial support for the solar industry must be disbursed in a cost efficient manner and it must be flexibly adapted to given market developments. A rapid and overheated development of photovoltaic installations would only raise costs resulting from the apportionment of EEG fees and consequently lead to considerable problems with acceptance. It is therefore very gratifying that it has been possible to strike an agreement with the solar power sector to further incremental cuts. This guarantees a sustainable expansion of renewable energies as far as solar power is concerned and expensive and undesired developments can be avoided".

Minister Röttgen pointed out that with last year's EEG amendment major market adjustment provisions have already been put in place in the form of a reduction in feed-in tariffs by one third between the end of 2009 and the beginning of 2011. A flexible cap was also introduced which envisages degressive fees depending on the rate of solar power expansion and which will not become fully effective before 1 January 2012.

Due to the high rate of solar power expansion the additional reduction in fees originally planned for 1 January 2012 will, to some extent, be brought forward and become effective on 1 July 2011. This is the core element of a proposal Federal Minister Norbert Röttgen and the President of the German Solar Industry Association Günter Cramer agreed upon.

The following amendments have been suggested:

• The variable section of the fees reduction anticipated for 1 January 2012 will be brought forward to 1 July 2011 and can thus already take effect in the second half of 2011.
• At a market volume of more than 7,500 megawatt (MW) a further degression of 3% will become effective (current cap 6,500 MW).
• If the expansion rate projections exceed 7,500 MW the 1 July 2011 reduction can thus be as high as 15% depending on market developments (at an expansion rate 3,500 MW there will be no early reduction).
• The reduction will be based on the developments in March, April and May 2011 (reference period). The Federal Network Agency will extrapolate the installation registrations during this period to calculate the market volume for the whole year.
• The degression taking effect on 1 January 2012 coupled with the antedated degression will correspond to the legally established total degression of a maximum of 24%.
• Due to longer planning times for field arrays the reductions for these installations will become effective on 1 September 2011.

Environment Minister Röttgen stated: "My recommendation to the Federal Parliament (Bundestag) will be to amend the EEG along these lines. Since I am strongly committed to further developing solar power and retaining the EEG I think these measures are urgently needed. The fact that the solar industry supports the proposals shows the high degree of responsibility it assumes but is also makes sense economically. An overheated market will lead to strong price fluctuations which will eventually impair the competitive position of the German solar industry.

The privilege awarded to "green electricity" from all renewable energy sources is gaining increasing importance for apportionment under the EEG. The reason is simple: Energy utilities do not have to pay their EEG apportionment if at least 50% of the electricity delivered is from renewable sources and the power delivered was marketed directly rather than receiving the tariff laid down under fees under the EEG. The business advantage is considerable since the total amount of power delivered will be exempt from the apportionment payment.

The increase of the EEG apportionment sum of approximately 2 ct/kWh in 2010 to 3.53 ct/kWh in 2011 will make it disproportionally awarding to use this green power privilege and release windfall profits that go to the detriment of electricity consumers relying on other sources.

The Federal Environment Ministry therefore suggests limiting the exemption from apportionment payments for utilities making use of the "green electricity privilege" to 2.0 ct/kWh. This corresponds approximately to the 2010 EEG apportionment and thus to the benefits which can currently be achieved. This is another measure which can limit the burden placed on consumers.