RWI Study: Solar Growth Costs Germany More Than EUR 110 Billion

According to the economic research institute Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), German electricity consumers will have to pay more than EUR 110 billion for solar power support until 2030, the newspaper Frankfurter Allgemeine Zeitung wrote with reference to a new RWI study. RWI is known to be critical of the German PV support system, and had been criticising solar costs in the past.

Costs of EUR 100 billion have been triggered by PV system installed in the past 12 years, FAZ says referring to RWI. Only EUR 15 billion have been paid so far, with EUR 85 remaining to be paid in the future. An additional EUR 11.8 billion will be triggered by future capacity additions before the 52 GW cap will be reached.

Under the Renewable Energy Sources Act (EEG), renewable energies like solar power receive fixed feed-in tariffs, which are mostly paid for a period of 20 calendar years plus the year in which the installation was commissioned (Section 20 para. 2 EEG).

By 2015 solar subsidies will have come down to a level that makes selling solar power at the energy exchanges more attractive, RWI says. The new 52 GW cap on solar subsidies introduced with the latest EEG amendment will never be reached, RWI believes.

The figures presented by RWI are net costs, i.e. feed-in tariffs adjusted by the expected revenue from the sale of renewable energy at the energy exchange, FAZ says. Yet they did not include indirect expenses for the necessary grid expansion and for the fact that the need to take wind turbines of the grid in order to balance it will grow with an increasing solar input. In that case wind power operators can still claim a remuneration, which will increase renewable power costs, FAZ quotes RWI researcher Manuel Frondel as saying. The paper points out that Frondel’s colleague Prof. Wolfgang Erdmann from the Technical University of Berlin recently calculated costs for the expansion of the transmission and distribution grids of EUR 85 billion. Mr Erdmann is a member of the expert commission that shall help monitor the energy policy shift.

Solar power producers currently receive almost half of the support paid under the EEG, although solar power accounts only for a fifth of the renewable power generation, FAZ says. The paper correlates data by Prof. Wolfgang Erdmann, who estimated the costs for all renewable energy forms at EUR 220 to 250 billion, with the RWI data, coming to the conclusion that solar power would always account for half the renewable power costs.

RWI also criticizes the EEG solar power support scheme in other respects, FAZ says. The high price private and industrial consumers pay under the EEG, “presumably prevents more attractive investments”, RWI scientists say. Besides, the majority of the jobs in the solar industry were created abroad, since a great number of solar power plants were imported. Although solar feed-in tariff cuts never matched the falling prices for PV modules, domestic manufacturers were often not competitive as the recent wave of insolvencies showed. In view of the low price for CO2 allowances of EUR 7 to 8 per ton, RWI scientists also criticise PV installations with their much higher CO2 avoidance costs.

RWI and Ruhr Universität Bochum have recently published a critical English language article on German PV support by Manuel Frondel, Christoph M. Schmidt and Colin Vance with the title “Germany’s Solar Cell Promotion: An Unfolding Disaster“, containing numerous further criticism and figures.

It remains to be seen what the corresponding figures of other research institutes will look like.

Source: Frankfurter Allgemeine Zeitung

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1 Response to “RWI Study: Solar Growth Costs Germany More Than EUR 110 Billion”

  • I’m not sure how the math works but I read a paper which described how to estimate the effect of the merit order effect on power prices. Presumably you could use this researchers math to estimate what the costs of power on the exchange would be without the solar and wind. We’re talking estimate only but even an estimate would probably show that billions are being saved at the wholesale level. Did RWI balance those savings against the costs of the EEG? It’s something to think about.

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