BMU Defends Solar Feed-in Tariffs in View of Renewed Discussion

Reacting to a renewed discussion about solar feed-in tariffs, the Federal Ministry for the Environment, Nature Protection and Nuclear Safety (BMU) has defended the EEG solar feed-in scheme and its recent amendments, saying they were already proving effective in cutting costs.

The effects of the latest EEG amendment that will into force on 1 January 2012 should be monitored, the ministry says, promising to react if the new law does not prove effective.

In reaction to the recent EEG surcharge forecast for 2013 and the medium term prognosis by the German transmission system operators, Dr. Michael Fuchs, vice chairman of Chancellor Angela Merkel’s CDU parliamentary group, and the spokesperson for economic matters of the CDU/CSU parliamentary group, Dr. Joachim Pfeiffer, had called on the government to limit the increase. In the past EEG tariffs had mainly risen due to the solar boom in Germany, namely in 2010. The magazine Focus reported that the Economics and the Environment Ministry were examining ways of limiting solar expansion to 1,000 MW per year.

To emphasize its point BMU said that

  • The government cut solar feed-in tariffs considerably with the three EEG amendments of 2010, 2011 and 2012. While small rooftop mounted installations received 46.75 ct/kWh at the beginning of 2008, the tariff would decrease to 24.43 ct/kWh as of 2012. Free-standing installations received 35.49/kWh at the beginning of 2008. As of 2012 the tariff only amounts to 17.94 ct/kWh. BMU stressed that no other industry sector had seen such large subsidy cut. These decreases put a heavy strain on the solar industry, but also showed the innovation and cost cutting potential of solar power, BMU said.
  • The so-called “breathing cap” (the volume-based feed-in tariff reduction pursuant to Section 20 para. 3 and 4 EEG) had the desired effect. New capacity in 2011 (including September) amounted to 3,400 MW. In comparison 2010 saw new capacities of 7,400 MW (for the whole year).
  • Another reduction of solar tariffs by 15% will take place on 1 January 2012. In addition, the EEG 2012 provides for another reduction as of 1 June 2012, which depends on the expansion from October 2011 to April 2012. It expected the degression to range from 6 to 9% given the current expansion, BMU said. The ministry said this meant considerable cost cutting efforts by the German solar companies were necessary at a time were many of them were already posting losing. The photovoltaics industry should not be strangled, but conditions amended in a way that solar companies could adapt.
  • The volume-based degression of feed-in tariffs pursuant to the EEG 2012 (that is modeled on Section 20 para. 3 and 4 EEG 2009) will in the medium-term lead to the expansion rate envisaged by the EEG of 2,500 to 3,500 MW. Hence, costs will decrease in the following years due to the degression. Privileges for the industry, particularly the special equalisation provisions (Sections 41 and 42 EEG) and the self-consumption of electricity (Section 33 para. 2 EEG) increased EEG costs by 0.9 ct/kWh. Costs would rise to 1.0 ct/kWh, as of 1 January 2012, BMU predicted.
  • Unlike the volume-based “breathing cap” a definitive cap results in a stop of funding once the cap is reached. This would have negative consequences for the planning and investment security of consumers as well as the industry, BMU pointed out.

BMU therefore advocated in favor of monitoring the effects of the implementation of the EEG 2012.

Source: Federal Ministry for the Environment, Nature Protection and Nuclear Safety; Focus

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