Renewable Energies and PV in Germany and other countries ...

transcript

Bundesverband Solarwirtschaft e.V. (BSW-Solar)

Renewable Energies and PV in Germany and

other countries

Critical factors for building up sustainable

markets

Buenos Aires, 15. Dec. 2015

Jan Knaack

International Affairs

Market deployment barriers for

renewable energy sector: structures

Energy market is dominated by very large actors,

small and medium RES actors are disadvantaged

– Investment risks has to be reduced for RES actors

– Grid access for RES has to be regulated

The conventional energy system is centralized

and discriminates decentralized power generation

– Change of the energy system must be actively supported

– New players (independent power producer) must become the

chance to enter the energy market

Need to create a “Level playing field”

=> Policy support necessary to open opportunities for PV and RES

– Priority grid access

– Financial incentives to kick-start market development

Market deployment barrier: costs

• Especially in the case of PV, initial investment has to be financed

upfront

– High upfront investment, low running costs

– Comparison of costs is difficult

• External costs of conventional energy generation are not

included in the retail price

– higher investments cost require high trust in PV technology

– Cost of capital (financing) becomes important

• RES becoming increasingly cheaper by technological development

and economy of scale effects

• Conventional energy massively receives state subsidies in many

countries

RES/PV support policies aims…

… to reduce barriers for RES deployment

… to provide for a level playing field

… to kick start a RES industry development

… to build up RES market capacities

… to make RES cost competitive

… to mitigate climate change

… to increase energy independency

1. Producer-oriented support policies

Target group Investors in power systems

Aim: Generate profits

Utilities

Aim: Comply with law

Electricity Consumers

Aim: Reduce consumption /

Savings

Concept Investment in PV becomes

financially attractive

Obligations to purchase a

certain share of RES-E

Create incentives to produce

electricity for own

consumption an reduce the

Scheme Feed-in-Tariff, PPA Quotas / certificates Grants and tax incentives, Net

Metering

Funding Cost-redistribution,

Earnings by sale of electricity

State – Budget / all taxpayers

Producer-oriented support: FIT / PPA

Policy FIT (Feed-in-tariff) PPA (Power purchase agreement)

Popularity Dominant policy for many years

For RES since a few years more and more popular

Risk Depends on rating of off-taker (usually national institution – rather high)

Off-takers are often private

Tariff level / duration

Set by legislator for 15 – 25 years

Set by legislator or negotiated for 15 – 25 years

Off-taker Public or private utility Public or Private (utilityy)

Financing Levy / Surcharge Energy sales to off-taker

Public costs

Dep. on setting of FIT Usually privately covered

Positive Highly accepted by banks

Price is set by negociation – both parties can win

Negative Difficulty to set tariff Negotiation increases costs

FIT/PPA – schematic flowchart

Regulation / Law / neg. process

Utility

Electricity consumer

RES-E Producer

+ FIT surcharge

Electricity rates

renewable electricity

Feed-in tariff

Provides for grid access, sets Tariff

conventional electricity

free market

Government

Off-taker

Negociates PPA

FIT / PPA success factors

• Priority connection for all PV systems must be granted by the

Government

• Each solar kWh must be purchased by the utility

• Fixed (feed-in tariff) payments have to be guaranteed

(generally) for 15 - 25 years

• FIT: Annual reduction of the feed-in tariff for newly installed

PV systems (Degression) / PPA: Negotiations per project

• If costs are redistributed to the rate payer, Feed-in tariffs are

not a state subsidy /

• PPA usually only realized if the RES is a competitive form of

energy production

Current FIT & adaption mechanism in

Germany

Utilities

Savings

financially attractive

electricity for own

Scheme Feed-in-Tariff, PPA, Net-

Metering

Quotas / certificates Grants and tax incentives

2. Utility-oriented support policies

17/01/2010

Quota & certificate systems (e.g. RPS)

• Quotas are set by the government in order to reach certain RES-E

targets (22 states in the US have an RPS with solar energy)

– Specific carve-outs for solar may exist

– many states in the US have such carve-outs (16)

• Utilities (consumers) are obliged to proof a certain percentage of RES-

E production (consumption)

• Quotas can be met either by trading or producing green certificates

– whatever is more economic to the obligor

• Electricity produced by RE producers is traded at the spot market

• Penalty payments for non-compliance are transferred to the

government or RE R&D funds

Quota/certificates – schematic flowchart

free market

Certificate & power payments

Regulation / Law

Utility

RES-E Producer

+ Quota surcharge

Electricity rates

sets quota

allocates Certificates

Government Certificates

Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions

Renewable Portfolio Standard with solar/distributed

generation (DG) provision

Renewable Portfolio Goal with solar/DG provision

www.dsireusa.org / August 2015

WA: 2 MW

DG (M)

OR: 20 MW PV

x 2020

2 for PV (M)

NV: 1.5% (E)

x 2025 2.4 +

for PV (M)

UT: 2.4 (M)

for (E)

AZ: 4.5%

DG x 2025 NM: 4% (E)

x 2020

0.6% DG x

CO: 3.0% DG

x 2020

1.5% CST x

2020 (M)

MN: 1.5%

(E) x 2020

0.15% PV

DG x 2020 MI: 3.2

for (E)

0.3% (E)

x 2021

IL: 1.5%

PV x 2026

0.25% DG

x 2026

OH: 0.5%

SC: 0.25%

DG x 2021

Solar water heating counts toward

solar/DG provision

22 States + DC

have an RPS with

solar or DG

provisions

DC NC: 0.2% (E) x 2018

NH: 0.3% (E) x 2014

MA: 400 MW PV x 2020

NY: 0.58% customer -

sited x 2015

PA: 0.5% PV x 2021

NJ: 4.1% (E) x 2028

DE: 3.5% PV x 2026

3.0 (M) for PV

MD: 2% (E) x 2020

DC: 2.5% (E) x 2023

Delaware allows certain fuel cell systems

to qualify for the PV carve-out (E): Solar Electric

PV: Solar Photovoltaic

DG: Distributed Generation

(M): Multipliers

(CST): Customer - Sited

VT: 1% DG X 2017 + 3/5ths of

1%/year until 10% X 2032

3. Consumer-oriented support policies

Utilities

Savings

financially attractive,

electricity for own

Scheme Feed-in-Tariff, PPA, Quotas / certificates Grants and tax incentives,

Net-Metering

Consumer-oriented measures

• Aim at providing an incentive to produce electricity for own

consumption

– whereas the end-user is either a private individual or a commercial

user of the plant

• Policies reduce the burden of the investments for the consumers of

self-generated RES-E

• Eventually, the incentiviced investment reduce the electricity

consumption of the consumer

• Policy measures comprise

– Investment aids

• fiscal (tax) incentives

• grants and interest reduced loans

• Tax incentives

– Net-metering

Customer support –flowchart

Regulation / Law

Government

Utility

RES-E Producer

Incentivices

Provides for grid access

Electricity rates

Fiscal (tax) incentives

• Fiscal incentives, such as tax exemptions or

reductions, do mostly supplement other support

schemes

• RE producers are exempted from certain taxes (e.g.

carbon taxes) or tax credits are applied to reduce the

average tax load (very prominently in the US)

• Effectiveness of such fiscal incentives depends on

the applicable tax rate

• In those countries, which apply high energy taxes,

exemptions may be sufficient to stimulate the use of

RES, in countries with different tax structures, this

measure alone might not suffice

Investment aids (grants and loans)

• Grants are a classical means to reduce the investments load

for an investor in a PV system, ( provides up-front clarity)

• Grant programs are usually taken from the state budget

(classical subsidy)

• Such programs are usually capped to specify the amount of

money to be available ( cost control, selection of projects)

• Especially in the very first market phase of young RE

technologies grants have proven to be an effective means to

create first demand

• Attractive conditions for loans provide an incentive for investors

to specifically use available equity to finance PV systems

• Low interest loans that are offered by governments or state

bank are usually combined with other support instruments

• Usually, different conditions for private and commercial users

A good strategy is crucial…

• RES support policies are an instrument to provide for a

more level playing field in the energy sector

• However, support policies need to be embedded in more

comprehensive strategies in order to be successful

• Even if well-designed policies are in place, bureaucratic

procedures and administrative hurdles, as well as difficult

access to the electricity grid can prevent a rapid market

development

• Not only solar, all RE technologies should be considered

in such a strategy

• Therefore, continuous and comprehensive National

Renewable Energy Strategies should be established

and budgets for the market introduction of RES must be

defined

Market development strategy

1. PV (RES) targets determine the strategy

– Setting (mandatory) goals/targets establishes investment security

(political, technical, industrial)

2. Trigger first demand, support R&D activities

– Stimulating demand via grants and tax incentives, legal security

– R&D budgets to be defined to provide and maintain excellence

3. Establish support policies, training and awareness

– Grid-connection rules and adequate long-term support policies

need to be defined

– Installation capacities (HR) need to be build up (qualified)

– Awareness raising campaigns (aiming at general public)

4. Monitoring and improvements

– Continuous monitoring and evaluation and adaptation of tools -

where necessary – guarantee cost-efficient functioning of support

policies

Conclusion

• Successful and effective PV support policies must provide

stable long-term investment security

• Key precondition for renewables to develop is guaranteed (or

priority) grid access

• Stop-and-go approaches must be avoided to maintain the

credibility of the program

• Feed-in tariffs have proven to be an economically efficient way

to promote RES, however, tariffs need to be set correctly

(Germany)

• A combination of support policies (tax credits, net-metering,

RPS) in combination with PPA’s have produced considerable

results in the US

• Today, financing is the most pressing issue, since many RES

are cost competitive

24/01/2013

Source: Solarmarkt

Thank you for your attention…

Jan Knaack International Affairs

German Solar Association

knaack@bsw-solar.de

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