Why FIT policies are important
Gerhard Stryi-Hipp
Head of Energy Policy
Fraunhofer Institute
for Solar Energy Systems ISE
[email protected]
www.ise.fraunhofer.de
SEMI PV Group
Webinar FIT For Life
January 26th, 2010
CV Gerhard Stryi-Hipp
Physicist Degree of University of Freiburg
Expert in Photovoltaics and Solar Thermal Energy
Head of Energy Policy and
Group Leader of Thermal Collectors and Applications
at Fraunhofer Institute for Solar Energy Systems ISE,
Freiburg (since 2009)
Managing Director of the German Solar Industry
Association BSW-Solar (1994 – 2008)
Board member of the European Solar Thermal Industry
Association ESTIF (2002 - 2008)
President of the European Technology Platform on
Renewable Heating & Cooling RHC-ETP
SEMI Webinar FIT For Life 26 January 2010
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PV is the most fascinating way to produce electricity
•
•
PV can be used everywhere worldwide
PV can be used in every size, grid connected and off-grid
•
•
PV does not harm the environment
PV is becoming increasingly cheaper
•
PV has the biggest potential among all RES
Source: Aleo
Why do we need Photovoltaics?
Source: Solarwatt
Source: Phönix
SEMI Webinar FIT For Life 26 January 2010
Source: SMA
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The challenge: to build up and support PV markets globally
to make PV cost competitive with other energy technologies
CHALLENGE
Today, PV is often the most expensive
way to produce electricity from RES
- but has the highest cost reduction
potential
Price learning curve PV modules
(Silicon wafer based)
WHAT TO DO?
⇒ Enlarge production
⇒ Use economy of scale effects
WHEN SHOULD WE START?
⇒ Start TODAY in order to have
(1) enough solar capacity available
when it is needed
(2) at a competitive price
SEMI Webinar FIT For Life 26 January 2010
Cumulative sold PV modules worldwide in MWp
Source: Prof. Luther/Solar Generation, PVPS 2006
Price learning curve:
Reduction of costs by doubling
the totally sold PV power
4
EPIA-Scenario: Worldwide annual PV installation
Assumption: 55% EU and 45% ROW installations
GWp
(34% annual growth)
(25% annual growth)
Remember: annual growth between 1998 and 2008 was 45%!
SEMI Webinar FIT For Life 26 January 2010
Source: Hoffmann/EPIA
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Goal of Germany: double the share of electricity from renewable
energies from 15% to at least 30% in 2020
SEMI Webinar FIT For Life 26 January 2010
2020
1998
2000
2002
2004
2006
2008
Source: German Federal Ministry for Environment, March 2008
Development of the share of Renewable Energy Sources in final energy consumption
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Different strategies are available to support PV market development
The appropriate instrument depends upon different target groups
Power producer
Grid operators
Consumer
Feed-in tariff
Quotas/Certificates*
Grants/Tax incentives
* USA: Renewable Portfolio Standard - RPS
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driven by the EEG (Feed-in tariff law)
PV Market Data 2009
Newly installed power
Total installed power
SEMI Webinar FIT For Life 26 January 2010
ca. 8 GWp
Estimation BSW-Solar
Data source: BSW-Solar
2.5 - 3 GWp
Total installed PV power in MWp
Development of the German PV market
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How does the feed-in mechanism work?
Principles
• Priority connection for all PV systems granted
Government
• Each solar kWh must be purchased by the utility
• Fixed feed-in tariff payment over 20 years
renewable
electricity
Feed-in
remuneration
• Reduction of the feed-in tariff annually
by ca. 9% for newly installed PV systems
Utility
conventional
electricity
€ct/k
Wh
Provides for
grid access,
sets feed-in
tariffs
FIT for residential PV systems
and electricity rate in Germany
Payment for
conventional
electricity
+ FITbonus
RES-E
Producer
Electricity
consumer
Grid parity will be reached in 2015
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PV systems, which will be installed today will receive this feed-in
tariff for 20 years
< 30
kWp
> 30
kWp
> 100
kWp
> 1000
kWp
On buildings
and on noise
protection walls
€ 39.14ct
€ 37.23ct
€ 35.23ct
€ 29.37ct
Self-used solar
electricity
bonus
€ 25.01ct
Feed-in tariff
Free land /
ground
mounted
SEMI Webinar FIT For Life 26 January 2010
Image: Solar-Fabrik
German feed-in tariffs for PV in 2010
€ 28,43ct
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Effort of mounting
BIPV
PV Market Segments
1%
Roof top
residential homes 1-10 kWp
20%
Image: Solarwatt
Ground
mounted
Image: Grammer
Image: Schüco
multi family houses, public + social
buildings, farms, commercial plants
10-100 kWp
SEMI Webinar FIT For Life 26 January 2010
Large commercial > 100 kWp
11%
57%
Image: Solarwatt
Market share
in 2008
Size of the system
Image: Sulfurcell
Image: BP
11%
Image: Geosol
Image: Phoenix
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Development of feed-in tariffs for PV within the German EEG
€ct per kWh
With increased degression rates as of 2009
Grid parity will be
reached between
2012 and 2015
€ 20ct/kWh
Retail electricity price
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Recent discussion about EEG
•
In January 2010, the feed-in tariff was reduced by 9% for systems up
to 100 kWp and 11% for systems above 100 kWp
•
On January 20th, 2010, minister Roettgen announced the proposal
of an additional reduction of
– 15% from April 1st, 2010 on for roof top systems
– 25% from July 1st, 2010 on for ground mounted systems on acres
– 15% from July 1st, 2010 on for ground mounted systems on other areas
•
The reason is the strong price reduction of about 25% for PV
systems in Germany in 2009 and therefore high profits for investors
which shall be reduced
•
In the coming weeks the parliament has to discuss and decide on
this proposal. It is likely that it will be changed in some parts
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Two Ways of Connecting PV Systems to the Grid
USA: Net-metering / Germany:
Feed-in + Production based incentive
Germany: 100% Feed-in
Solar electricity is used for own consumption first, Solar electricity is exclusively
only excess electricity is fed into the grid
fed into the grid
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A new element was introduced into the EEG in 2009
100% Feed-in
Production based incentive
€ 39ct
$ 55ct
Electricity
rate /kWh
€ 21.4ct
$ 28.9ct
Utility
Conventional electricity
Feed-in
remuneration
/kWh
solar electricity
Utility
RES-E Producer /
Electricity consumer
Examplary calculation
1000 kWh x $55ct/kWh = $550
SEMI Webinar FIT For Life 26 January 2010
Feed-in
remuneration
€ 39ct/kWh
$ 55ct/kWh
Incentive for
every solar
kWh produced
and self used
€ 25ct/kWh
$ 35ct/kWh
Electricity
rate /kWh
€ 21.4ct
$ 28.9ct
RES-E Producer /
Electricity consumer
Fed-in: 300 kWh x $55ct/kWh = $165
Bonus: 700 kWh x $35ct/kWh = $245
Saved: 700 kWh x $28.9ct/kWh =$202
Sum:
$612
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Summary: Strengths of Feed-in tariffs
•
•
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Investments in PV systems are financially attractive
=> Profit is the driver of the PV market
Investment security enables market entrance of new PV actors
=> New actors are entering the power market (competition)
The additional costs are distributed to all electricity consumers
=> Small contribution of individuals / „polluter-pays-principle“
•
The additional costs are distributed over a long period (e.g. 20 a)
=> Only the kWh produced is remunerated (output-oriented)
•
PV price reduction triggered by degressive feed-in tariffs
=> Investments are not postponed
Each RES technology can be supported individually
=> The profit is technology-independent
•
But: There are challenges of Feed-in tariffs too
•
•
It is difficult to limit market growth without disturbing the market development
=> A strategy is needed if market development exceeds the expectations
The costs are growing continuously until the payment period of the first plants ends
=> A realistic calculation of the additional costs is recommended
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Thank you very much for your attention
Image: SMA
Image: Geosol
Image: Frankensolar
Image:Phönix
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