High Cost for Solar Energy Threatens to Split Renewables Alliance

The German Wind Energy Association (BWE) firmly asked Bundesverband Solarwirtschaft (BSW Solar) to make specific proposals to curb the skyrocketing solar costs, the magazine Spiegel writes. BSW Solar is the interest group of the German solar energy industry. The dispute may lead to a fracticidal war in the renewables camp, the magazine warns.

Solar energy, as well as other forms of renewable energy, is promoted pursuant to the Renewable Energy Sources Act (Erneuerbare Energien Gesetz – EEG). The EEG stipulates feed-in tariffs that grid operators must pay for renewable energy fed into the power grid. Besides, renewables are given priority in the German grid.

With feed-in tariffs for solar energy of on average EUR 0.31/ kWh, well above the spot market price for electricity of roughly 5 ct/kWh, solar installations have boomed in Germany. Some experts are expecting between 6 and 8 GW of new PV capacity in Germany this year. In July, the Federal Network Agency expected German additional installed photovoltaic capacity to exceed 3 GW. The additional capacity for the remainder of 2010 is particularly difficult to predict due to the recent July and the upcoming October reduction in solar feed-in tariffs.

Under the EEG, grid operators can pass on the feed-in costs to consumers. In view the current solar expansion rate, experts fear that reallocation fee will rise from currently 2.05 to 4 ct/kWh. 50% of these extra costs would be due to solar power, even though solar contributes only 3.5% to the electricity generation.

In addition, consumers will be faced with high costs for the necessary expansion of the grid to accommodate the growing amount of renewable energy. Spiegel quotes Holger Krawinkel of the Federal Association of Consumer Organisations as saying the expansion would cost EUR 40 billion until 2020.

In view of the solar cost explosion, wind power, Germany’s most important renewable energy form, fears to take some of the blame, too, Spiegel writes. Besides, the wind power industry is afraid that their plants will be shut down temporarily if there is an excess supply, Spiegel says. This already happens in Northern Germany from time to time, the paper says.

The criticism by the wind power industry may, however, be a double-edged sword, Spiegel warns. While modern onshore wind power plants in wind-swept areas produce electricity for roughly 5 ct/kwh, nuclear power from plants paid for long ago could produce electricity at an even better price. Besides, the new offshore technology would receive much higher feed-in tariffs pursuant to the EEG.

Source: Spiegel Online

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