Solar energy:
Prospects, policy and experience
The case of Germany
RFF/IETA Side Event
COP-16
Dr. Felix Chr. Matthes
Cancun, 6 December 2010
Structure of the presentation
•
•
A numerical overview
– Renewables in the German power system
– PV in the German Feed-in tariff scheme (FiT)
– PV (FiT) costs compared to wholesale and retail
market prices
– Who carries the costs?
Some analytical remarks
– The policy and politics framework
– The recent challenges
– The emerging challenges
– The (unexpected) distributional effects
Power generation from
renewable energies in Germany
200
20%
Geothermal
180
Projection
18%
Waste (biogenic)
Landfill gas
160
16%
Biomass
Photovoltaics
140
14%
Wind - offshore
Wind - onshore
120
12%
TWh
Hydro
Share in electricitysupply
100
10%
80
8%
60
6%
40
4%
20
2%
0
0%
1990
1995
2000
2005
2010
2015
BMU 2010, IE (2010
Blueprint Germany project (w/o CCS)
Solar dynamics underestimated?!
600
Geothermal
Biomass
500
Photovoltaics
Wind offshore
Wind onshore
400
TWh
Hydro
Storage
300
Oil & others
Natural gas
200
Lignite /w CCS
Lignite
Hard coal /w CCS
100
Hard coal
Nuclear
0
2005
History
2020
2030
2040
Reference scenario
2050
2020
2030
2040
2050
Innovation scenario
Prognos/Öko-Institut for WWF 2009
Blueprint Germany project (/w CCS)
Solar dynamics underestimated?!
600
Geothermal
Biomass
500
Photovoltaics
Wind offshore
Wind onshore
400
TWh
Hydro
Storage
300
Oil & others
Natural gas
200
Lignite /w CCS
Lignite
Hard coal /w CCS
100
Hard coal
Nuclear
0
2005
History
2020
2030
2040
Reference scenario
2050
2020
2030
2040
2050
Innovation scenario
Prognos/Öko-Institut for WWF 2009
Power generation from
PV in Germany
100
StrEG
90
1,000 roof
Program
80
Municipal
FiTs
EEG 2000
EEG 2004
100,000 roof
Program
EEG 2009 EEG 2010
Feed-in tariff (roof top 30 kW)
70
ct/kWh
60
50
40
30
20
10
0
1990
1995
2000
2005
2010
2015
Bruns et al. 2009, BMU 2010
Wholesale market price
for electricity in Germany
100
100
Spot contract
for power (base)
Short-term marginal costs
hard coal power plant
80
€ / MWh
60
80
Future contract for CO2 allowances
(year+1, until 09/2005 Spot)
70
90
70
60
Future contract for power
(year+1, base)
50
50
40
40
Future contract hard coal
(year+1, cif ARA)
30
30
20
20
10
10
0
01.01.2003
€ / EUA
90
0
01.01.2004
01.01.2005
01.01.2006
01.01.2007
01.01.2008
01.01.2009
01.01.2010
Öko-Institut 2010
Retail market price (household 3.5 MWh)
for electricity in Germany
80
25
Generation
Network fees & sales
RES-FiT
CHP support
Municipal tax
Electrity tax
VAT
Electricity price
20
60
ct/kWh
€(2005)/M
15
40
10
20
5
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
BMU 2010, Öko-Institut 2010
Solar energy (PV) in Germany
Some analysis (1)
•
The policy and politics framework
– Ambitious targets (Energy Concept 2010)
• GHG emissions: -40% by 2020 (compared to 1990),
-80…95% by 2050
• power production from RES: 35% by 2020, 80% by 2050
– PV is highly prestigious
• for politics
• for investors
– PV plays an scientific and economic role
• strong research sector (epistemic community)
• strong regional interests (industrial cores in Eastern
Germany)
• critical mass for strong industrial lobbying
• major cost reductions (could have been more?)
Solar energy (PV) in Germany
Some analysis (2)
•
The recent challenges
– PV support ran out of control
• Significant capacity additions: 2,000 (2008), 3,000 (2009),
6,000…8,000 (2010e), 6.000…8,500 MW (2011e)
• stop and go policy created a ‘run for the higher FiT’
• 50% of total FiT-payments for PV (<20% of FiT supported
power generation)
– Adjustments of FiT-legislation
• sharp decrease of FiT
• elements of quantity control in an instrument of price
control (if capacity additions exceed X MW, the FiT
decreases by Y%)
Solar energy (PV) in Germany
Some analysis (3)
•
The emerging challenges
– PV and regional distribution networks
• management of large intermitting capacities at the low and
medium voltage level
• potentially perverse effects from own-use incentives in the
recent FiT legislation
– PV and the grid parity
• grid-parity could be achieved during the next ears
• Can recent infrastructure pricing survive if PV reaches the
grid-parity, what does this mean for the economics of PV?
• What does this mean for public budgets (tax income)?
– PV and wind and it’s effects on conventional investments
• wind pushs out base-load, PV shaves peak prices
• optimal mix of renewables and market design emerge as
serious issues
Solar energy (PV) in Germany
Some analysis (4)
•
The (unexpected) distributional dimension
– FiT-costs are carried by non-privileged consumers
(househoulds, SMEs, some industries with low
energy/electricity costs)
– FiT-supported wind power and PV create significant merit
order effects in the wholesale (spot) markets
– privileged consumers benefit from wholesale (spot) market
effects but don’t contribute to the FiT costs …
Thank you
very much
Dr. Felix Chr. Matthes
Energy & Climate Division
Berlin branch
Schicklerstraße 5-7
D-10179 Berlin
f.matthes@oeko.de
www.oeko.de