Germany Sets PV Feed-in Tariff Rates, Fuels Boom

On July 9, 2010, Germanys Bundesrat (federal council) approved reductions to the PV Feed-in-tariff (FIT) under the Renewable Energy Sources Act (EEG 2009). Under the revised scheme, PV plants operating by July 1, 2010 are subject to tariff reductions of 8% to 12% depending on system capacity.

The tariff reductions rates are valid until September 30, 2010, when rates will be cut an additional 3% to bring the final cut to between 11% and 16% of the former EEG 2009 tariffs. PV on arable land will no longer be eligible for a FiT, but projects permitted prior to March 25, 2010 are eligible and have until December 31, 2010 to begin operations.

Germany aims to maintain 3 GW of annual additions through a degression mechanism, which will deduct 8% to 15%, depending on the level of the previous year? additions. The percentage will be estimated assuming that total annual build-out will be three times the PV added between June and September.

Germany’s regulatory policy carries surging market forward. The July 1, 2010 FiT reductions sparked an estimated 3 GW of PV installations during the first half of 2010, along with a growth trend that is expected to continue through the end of the year. Underlying the build-out is PV technology’s rapid installation timeline and PV developers’s and investors’s drive to capture the higher tariff rates before they are reduced. These factors will continue to drive an additional 2 GW of PV additions before year-end. The impeding September 30, 2010 deadline, which will reduce tariff rates by another 3%, will be followed by an end-of-year surge before the 2011 degression. The 2011 degression--the rate of which depends on installed 2010 capacity--is likely to be in the range of 12% to 15%.

EEG Clearing House clarification mitigates inverter shortage and grid connection bottlenecks. The EEG Clearing House ruling on July 25, 2010 circumvents the inverter supply shortage and grid connection backlogs currently hobbling the PV industry. As ruled by the EEG Clearing House (the legal advisory service for EEG disputes), PV systems are not required to be grid-connected by the deadline. Rather, they are only required to demonstrate DC electrical production. By eliminating the requirement, PV developers will find it easier to be tariff-eligible and system demand will not falter in the near term.

Arable land restrictions redirect large-scale project pipelines to conversion land. The July 9, 2010 decision puts an end to all PV projects on arable land as of June 30, 2010, except for those permitted prior to March 25, 2010. The revised policy has driven PV developers to compete for conversion land sites to continue large-scale PV build-out in 2011. solarhybrid is planning a 100 MW expansion of the recently finished 25 MW FinowTower plant; relatio PV GmbH & Co. KG plans to build a 53 MW plant in Treeneland; and German Solar is preparing a 27 MW plant in Mixdorf. Concurrently, there is an increasing number of large arable land project cancellations. Stalled projects include the Thurn & Taxi 65 MW plant in Bavaria, and juwi solar’s 42 MW Cottbus II plant in Brandenburg.

Further Information: IHS Emerging Energy Research (http://www.emerging-energy.com/)

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