Promoting Solar Energy In

Germany
Any Lessons for San Diego?
Chris Gadomski
www.smidirect.net
What’s going on in Germany?
Because of
renewable energy
law passed in
2000 the 12.5
percent quota set
for 2010 already
met.
New targets…
by 2020: generate
20% of electricity
with renewables
by 2030--45%
Environment Minister
Sigmar Gabriel
Source:
Renewable energy sources Act progre
 Reasons for growth
• Renewable Energy Sources Act (EEG)
of 2000, revised July 2004
– Established ambitious goals:
• 12.5% share of renewable electricity
generation by 2010
• 20% share by 2020
• High feed-in tariff is key--many different
tariffs, all however are high
 High feed-in tariff--
a solar company’s dream
• Introduced in 2000 at a rate of
Euro cents (Ec) 50.6 per kWh
• Developers lock in rate for 20 years
• low interest financing also available
• Planned annual decrease of 6.5% for
“open space” systems
Impact of New Feed-In Tariff
 Feed-in tariff under EEG 2004 (Ec/kWh)

Year 2004 2005 2006 2007

Roof 57.4 54.53 51.8 49.71
+30 kw 54.6 51.87 49.28 46.82
+100 kw 54 51.3 48.74 46.30
Facade bonus 5 5 5 5
Open space 45.7 43.42 40.6 37.96

Rates reduce by 5% a year, 6.5% for open space

Source: Lehman Brothers report citing Greenpeace

 Also important to remember…
• Annual “degression” does not apply to
installed projects…only to new projects
coming online--once you lock in, rate good
for 20 years
• Euro is at all time high against the US$…
On October 19, 2007, Euro hit $1.43
• So 2007 feed-in rate for residential rooftop
installation is equivalent to $.71 kWh
• How does that compare with your net
metering rate?
 German IRRs appear attractive
• Hours 700 1000
• Size 3000 w 3000w
• Cost (e/w) 5.05 5.05
• Total cost 15,150 15,150
• Output kWh 2,100 3000
• 2005 Tariff .5435 .5435
• Annual income 1,145 1,636
• IRR 4.3% 8.8%
Source: Lehman Brothers Report July 2006
So, no wonder
then, Germany
Leads in
Global PV
Installations--
2006 capacity
reached nearly
1,800 MWp
PV Booming
• solar electricity
generation increased
from 64 million kWh in
2000 to 2 billion kWh in 2006
• pv now produces 0.3 % of Germany’s
electricity supply.
Yet insolation levels are comparably low
 Other social benefits
• Billions of euros invested in new production capacity
• Jobs created for skilled workers, primarily in
Germany's new federal states.
• R&D has led to unexpected substantial advances
in production leading to costs falling substantially.
• A progressive increase in the annual degression
for new plants of 2 % from 2009 and a further 1 %
from 2011 is consequently being recommended.
• The fees paid for photovoltaic power will thus move
far more quickly towards matching the "plug-in" price
for conventional electricity.
 Key aspects besides feed-in tariffs
• Precarious energy situation
• Utilities are “partnering” with solar
developers
• Electricity prices are going up
• pv viewed as a good long-term
investment
• Big success with other renewables, ie.,
wind
 Precarious Energy Situation
• Energy security--Germany imports 76% of its
natural gas, 44% of which comes from
Russia
• Environmental pressure to move away from
the use of heavily polluting lignite for 25% of
electrical power generation
• 17 nuclear plants provides 25% of electricity,
federal commitment to shut them down by
2022 still on the books
 Utilities are “partnering” with
solar developers
• Solar developers and homeowners get
feed-in tariff for all electricity produced,
not just “net metered” surplus
• This becomes an incentive to develop
larger installations
• No minimum payments to utilty--an
incentive to site smaller installations.
 Thank you!
• I would like to acknowledge and thank the research
efforts of my graduate students at NYU:
Andres Castellanos, Doug Horn, Matt McDermott,
Abha Singh, Warren Wilczewski,

Chris Gadomski
SMIdirect
7825 Fay Avenue, Suite 200,
La Jolla, CA 92037
858.605.0688

chris@smidirect.net
 Feed-In Tariff described
• The electricity that is generated is 
bought by the utility at above market 
prices. For example, if the retail price of 
electricity is 10 ｢ /kWh then the rate for 
green power might be 40 ｢ /kWh. The 
difference is spread over all of the 
customers of the utility.