I found this article about how Germany's government committment to extensive solar array building has now dramatically cut the cost of electricity during the daylight hours... Really exciting news! And this in spite of multiple assaults on solar by government shifting policies and reducing supports. Incidentally, every energy system rollout ever done-coal, oil etc. -has been supported by government assistance until it gets going...They are rapidly approaching direct parity to the cost of fossil fuels. What do you mean solar isn't viable?!
German solar juggernaut rolls on despite tariff cuts
An article in German photovoltaics magazine Photon last month has shed light on the dramatic effect that photovoltaics technology had on reducing the price of electricity over the last four years. But as the German solar juggernaut rolls on, domestic manufacturers are struggling. Some have blamed relentless cuts to feed-in tariffs—branding it as a backlash against the solar industry. What on earth is going?
PV's effect on the price of energy
Photon compared two graphs obtained from the European Power Exchange (EPEX) website, which publishes hourly electrical energy spot prices from the French, German/Austrian, and Swiss markets dating back to 2005. The two graphs compared show German prices for Wednesday, March 7, 2012 and Wednesday, March 12, 2008.
Though both graphs demonstrate a sharp rise in the price of electricity at about 7am and a drop-off after about 11pm, there is a stark difference in the price profiles during daylight hours. On March 12, 2008, prices maintained a high plateau throughout the day, peaking at just over 60 €/MWh at noon, but never falling below 50 €/MWh between 8am and 11pm.
In contrast, the data from March 7, 2012 shows two distinct peaks, at 9am and 7pm, but between these times there is a significant drop in the price of electricity, floating between 35 and 40 €/MWh between noon and 5pm. The twin-peaked feature of the graph is evident for all working week days during March 2012, though in some cases the morning peak appears to be much less pronounced than that of the evening.
The interpretation seized on by Photon (and subsequently restated in English by Renewables International Magazine) is that this dip in daytime electricity price is entirely thanks to Germany's photovoltaics infrastructure. That has rocketed from an installed capacity of 6GW in 2008 to 25GW in 2011—amounting to half the world's installed solar power, with 7.5GW installed in that year alone. Renewables International estimates that a further 2GW may have been installed already this year.
It makes intuitive sense that solar power would make electricity prices more competitive during daylight hours, but what's striking is the scale of the effect. As veteran business and environment journalist Giles Parkinson put it at Renew Economy, "solar PV is not just licking the cream off the profits of the fossil fuel generators—it is in fact eating their entire cake."
Parkinson explains the impact of solar upon German energy markets with respect to the merit order, which prioritizes—based on marginal cost—which sources of energy are utilized in the face of increasing live demand. By this metric, renewable energy sources like wind and solar power are extremely competitive because there is no fuel cost to factor in. Their marginal cost is zero.
A recent study by the Institute for Future Energy Systems (IZES) in Germany (conducted, it should be noted, on behalf of the German Solar Industry Association BSW-Solar) found that the effect of photovoltaics is a 40 percent reduction in midday electricity prices, with a mean 10 percent reduction overall. Interestingly, energy prices in the middle of the night have nearly doubled since 2008, which Renewables International attributes to power companies seeking to recoup the profits which they can no longer amass during daytime peak consumption.
Solar backlash?
A slashing of feed-in tariffs in Germany threatens to become a pan-European trend which some have interpreted as a backlash from utility companies against the threat posed by renewable energy sources. Feed-in tariffs are the rates paid to producers of renewable energy (who historically have often been home- and small business-owners) for the surplus renewable energy they can feed back into a national energy grid. With the added security of long-term contracts, feed-in tariffs were effectively a means to encourage the uptake of renewable energy technology. Photovoltaics have been a particularly popular choice among homes and small businesses with rooftops doing nothing but keeping the rain out. Were being the operative word.
As of 2011, 20 percent of Germany's electricity came from renewable sources, and 70 percent of that was supported by feed-in tariffs. But the prices paid for a kilowatt-hour of photovoltaic-derived energy under such schemes has fallen year-on-year. In Germany, for rooftop photovoltaic installations under 30kW, 57.4€-ct/kWh was the going rate in 2004, falling to 24.43€-ct/kWh by the first quarter of 2012. Rates for larger installations and ground-mounted installations chart similar declines over the same period—the rates being ostensibly lowered as an incentive to promote the efficiency of PV technology.
That was the case until April 1 anyway, when a new rate of 19.5€-ct/kWh was imposed upon rooftop installations up to 10kW in size. Less generous tariffs force owners and installers of photovoltaic equipment to be much more selective about their purchasing decisions. The result has been something of a shakeout of the solar industry, with disastrous consequences for Germany's manufacturers. Many are struggling to stay afloat, or are sinking altogether.
Green Tech Media has been keeping a close eye on what it has described as the "death rattle" of the German solar manufacturing industry, reporting on the "failures" of Solar Millennium and Solon last December, and Odersun's bankruptcy last week. Earlier this week Q-Cells filed for insolvency and Phoenix Solar announced a restructuring since the latest tariff cut this week. Q-Cells was once the globe's largest solar manufacturer.
And yet Germany's solar expansion continues apace. To achieve its aim of 52GW of installed PV capacity by 2020 it only needs to install 3GW per year—about half the rate at which it's currently trundling along. Clearly German solar expansion is looking beyond domestic suppliers to provide cheap, efficient equipment—in many cases to China and the US, where manufacturers have more nimbly adapted to efficiency-boosting and price-cutting advances.
It's likely that feed-in tariffs will be abolished outright long before 2020, and the consensus in the German solar industry appears to be that this will make very little difference to progress. As photovoltaic power fast approaches grid parity—i.e. a cost level with that of purchasing from the grid—the idea of financial incentives for solar installations appears increasingly redundant. If the cutting of feed-in tariffs is a strategy to undermine the march of photovoltaic solar power (as has been theorized), it doesn't seem to be working. Rather, the effect seems to be that, by making installers more cost-conscious, the least competitive manufacturers are weeded out. If the upshot of reducing feed-in tariffs is to keep the solar industry honest, how bad is that, really?
Thanks