EPIA: Germany’s solar tender plan ‘makes no sense’ while PV prices fall

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Reported plans for Germany’s first national solar tender could “reduce market volumes” while the price of installing solar farms are falling and therefore do not appear to make sense, a director of the European Photovoltaic Industry Association (EPIA) said today.  

Frauke Thies, policy director for the organisation, told PV Tech on Wednesday that while details are as yet sketchy and the plan still to be approved at the top level, an auction through which a total of 1.2GW of solar farm projects will be awarded by the German government “doesn’t make sense to reduce market volumes over a time when prices are becoming ever more attractive”.

According to a statement released by Germany’s national solar trade organisation, BSW Solar, the provisional plan will mean that newly built solar farms no longer receive fixed subsidy support under the feed-in tariff (FiT). Owing to a ruling on state aid from the EU, the existing programme must instead be replaced with the mooted auction process.

The plan will go before the German Federal Cabinet for approval on 28 January. If approved, it will mean that over the coming three years, the 1.2GW will be spread out so that the first three trial auctions this year will award 150MW, 150MW and 200MW respectively. In 2016, 400MW of solar farms will be approved and in 2017 up to 300MW, with any amount which remains unallocated carried over to the next year’s auctions.

Additionally, solar farm sizes will be capped at a maximum of 10MW generation capacity, while there has been no definite word as yet on what constitutes a solar farm, although it could mean all new ground mounted projects will count. The auctions are apparently part of a plan to install 7.5GW of additional solar generation capacity across all segments by the end of 2017.

The country’s biggest trade advocacy body for the industry, BSW Solar has already weighed in with its criticism of the plan. BSW Solar expressed its unhappiness that the continued expansion of solar farms will be greatly slowed down even as the power generated from them continues to fall in price. The organisation argued that in some areas of Germany, solar farms, once installed could produce electricity at €0.10 per kWh and that once total costs were taken into account, this would make solar energy cheaper to produce than coal or nuclear. BSW Solar also cited figures that showed 1.2GW of solar farms were completed in 2013 and 0.6GW in 2014 as evidence that the new measures would limit, rather than nurture growth of installed solar capacity.

BSW Solar has taken issue with a number aspects of the German coalition government's energy policies, not least over controversial exemptions on a renewable energy surcharge applicable to “heavy industrial users” of power.

Frauke Thies of EPIA, based in Belgium, reiterated BSW Solar’s price-versus-deployment argument and added a wish that the German government would reconsider.

“As I don’t work in Germany I can’t say anything very detailed, but one thing that I think is very obvious would be to say it doesn’t make sense to reduce market volumes over a time when prices are becoming ever more attractive and I think the opposite would make sense,” Thies said.

“I hope that the German government will foresee adjustments accordingly and increase the envisioned caps.”

BSW Solar chief executive Carsten Körnig also said that while solar farms appear to have the approval of the German public, solar farm development is restricted to a very limited number of geographical areas, excluding some of the most suitable areas and thereby driving up prices. This includes the difficulty of building on agricultural land, something which has been an issue in other countries including the UK recently. BSW Solar also called for flexibility on the 10MW size cap for projects, in particular arguing that projects on “contaminated land” should be allowed to go up to 25MW generation capacity.

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