FIT debate in Germany

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Re: FIT debate in Germany

Postby eleh » 20.02.2012, 01:35

I'm glad you like the ideas. People have been thinking about these concepts for ages but it is only recently with the massive expansion of computing and communications abilities that we can finally implement them cost effectively.

I emailed Mr. Fell the section of text you quoted in your last post.
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Re: FIT debate in Germany

Postby eleh » 20.02.2012, 05:51

In the previous post I mentioned that these load control ideas have been around for ages. This is true but PV adds a completely new spin on things. Never before has there been a widely available and cost competitive power source like PV. Nearly all the research into these load control ideas has been focused on utility controlled loads and/or indirect utility control via time-of-use rates that encourage consumers to shift load to accommodate running utility owned generators.

I recently read about the smart start button in this paper. I got the Smart Start terminology from them.

http://www.sciencedirect.com/science/ar ... 1511008007

They previously had a draft copy available for download but it has been pulled from the original location and I can no longer find it. If you find the paper you'll see that the researchers (German researchers mind you) have a utility-centric point of view. I contacted one of the authors to ask about his computer code and suggest how they could build a similar code focused on PV. The author was engaging but he didn't find the PV angle very interesting. I think this is a problem. To me, the economics suggest that PV owners have a stronger incentive to adopt these load control strategies than the utility. This brings me back to my original point - most of the research is focused on utilities rather than customers. This needs to change. It especially needs to change in Germany where the cost effectiveness of PV is stronger than anywhere else.

If you happen to forward my smart appliance message or your own smart appliance message up the chain of command in Germany please post about it here.
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Re: FIT debate in Germany

Postby _Asker_ » 20.02.2012, 09:58

hello

i like the posted ideas - especially from eleh - too... It would be interesting to know what not only the governement but the industry - that will be forced to implement these green buttons at their own cost... sure,... in the end the customer will have to pay for it. And therefore the customers has to been told and explained, why it is good to invest in appliances with the green buttons ... or ... in another cenario... why the government forces the customers to buy such appliances... Could this be a problem? ... What do people in Germany think? In Austria I expect people to have an negative attitude in the beginning and it could be hard to persuade them...

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Re: FIT debate in Germany

Postby valentino » 21.02.2012, 10:14

Hi

_Asker_ wrote:why the government forces the customers to buy such appliances... Could this be a problem? ... What do people in Germany think?


This is hard to say and depends on the final definition of "forcing people".

At the first glance I would say, that people will decline it. On a second look I guess they will notice the benefits that come with such solutions.

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Re: FIT debate in Germany

Postby valentino » 23.02.2012, 14:24

News from the federal governement:
Link to the official press release (german)
Link to a table where the degressions are listet

Additional FIT Cuts come with March 9th as follows
< 10 KW: 19.50 Cents (20.2% cut)
10 - 1,000 KW: 16.50 Cents (24.9% - 29.0% cut)
> 1,000 KW and open area: 13.50 Cents (24.7% - 26.4% cut)

In addition to that, the FIT will be automatically reduced by another 0.15 Cents monthly, no matter what size...
And all new built systems will only receive a feed in tariff for 85% (small systems) or 90% of total produced electricity. The rest can be brought into market at the electricity exchange.

Pretty tough months coming along for the industry... :?
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Re: FIT debate in Germany

Postby eleh » 23.02.2012, 23:55

If I had been the architect I would have built something similar. This fellow seems to think it's the end of the world but I rather think he's being dramatic.

http://www.photovoltaik.eu/blog/blogdet ... 100007250/

I like the fact that they've eliminated the annual degression. To me the monthly cuts of .015 are nice and gradual.

I like the fact that they eliminated the loophole that farmers were using to build large sheds. The sheds were interesting but this was a bogus way to install PV and bad for system voltage in some cases.

I like that they've replaced the self-consumption bonus with the 15 and 10% consumption rules. This is the best rule of all. I think they will tweak this rule in the future to force operators to consume a higher percentage of production. This will force people to build sensibly sized systems in the first place and/or implement onsite energy management. In the future planning a PV system will involve more load monitoring and forecasting. This is a good thing.

I don't think this is the end of PV in Germany. We should still see a few GW of PV after the March cuts. We'll see.
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Re: FIT debate in Germany

Postby wieso » 24.02.2012, 00:10

I guess , they were not able to cope with the fast increase of PV development.
So there is not much i like about their decision , cause they -the politicians - were too slow to act and find ideas :wink:
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Re: FIT debate in Germany

Postby eleh » 24.02.2012, 10:40

Here's a price breakdown for a 12.3 kWp System in Germany (March 2010). This price breakdown comes off the German board: www.photovoltaikforum.com. The total price is average for the first quarter of 2010.

Panels - 2.02 Euro/Watt
Inverters - .33 Euro/Watt
Racking - .156 Euro/Watt
Cabling - .038 Euro/Watt
Mechanical installation labor - .195 Euro/Watt
Electrical installation labor - .068 Euro/Watt
Surge Protector - .012 Euro/Watt
Total - 2.819 Euro/Watt

A price breakdown for 2012 could potentially factor in .75 Euro/Watt panels and .25 Euro/Watt inverters. This gives a revised total of 1.469 Euro/Watt.

If prices can reach 1.469 Euro/Watt there shouldn't be a problem absorbing these latest FiT cuts. Judging from this old price breakdown vs. new panel and inverter prices it seems like this is possible. This is why I'm surprised by by all the push back from the industry over the new plan. Well.. I'm not completely surprised by the push back. The industry has had a hard time lately and this cut will make it harder. You'd have to expect the industry to fight back. But at the same time you have to be reasonable. If anyone can deliver these low prices Germany can. And if they do PV is survive and Germany will show the whole world how competitive PV can become. I think this is exciting.
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Re: FIT debate in Germany

Postby valentino » 24.02.2012, 11:20

Hi,

no doubt, the FIT had to be cut. eleh named several reasons why these cuts were needed and I agree with them. Problem is the range. 20% / 30% + 0.15 cent (from may) + 85% / 90% is pretty high.

Biggest problem is the date. March 9th. Several investors are in the middle of the planning process and have signed the financial agreements and contracts with their partners but it is not possible for them to install the system befor March 9th. For these things are a financial desaster.

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Re: FIT debate in Germany

Postby eleh » 24.02.2012, 23:01

The cuts are lightning quick - I agree. As far as papers being signed goes I think this is a force majeure situation... The polite and proper thing to do is to cancel those contracts. This is what fair businessmen would do. I don't see why this can't be done in Germany.

The March 9th cut date may only be a ploy to scare people away from rushing projects. Fell had commented earlier in the year that it would not be possible to get the FiT legislation revised overnight. The lower and upper houses will need to take some time with this new bill. Roesler and Rottgen may know the revisions won't be ready until mid-April but they don't want to see another multi-GW rush. This is a reasonable desire... So they are pulling a UK and pushing forward the cuts (by threat only) to scare off the last minute rush to install.

There is a good chance of the industry shooting themselves in the foot between now and March 9th. I think there may be a massive GW plus rush. This big rush over a short time period will give Roesler that much more ammunition to point out that this market needs additional cuts. This rush will be heavily reported and it will put pressure on the politicians to accept the new FiT plan without major revisions.

My hope is that they add a provision such that the 10% that isn't covered by the full FiT is covered by a reduced FiT - the reduced FiT could be based on the average daytime electricity rates (Contract + Wholesale). Maybe this feature is already included in the legislation somewhere but I haven't heard it mentioned.

Ask yourself... If you were to set new cuts how would you do it? What process would you use? Would it not be based on IRRs? The way I approach the problem is to work it backwards and ask myself how much a system should cost today on a tile roof that will get 850 kWh/kWp. Add in 4% financing and a self-consumption rate of 30%. I am sure this is more or less how the ministers approached the problem of setting the FiT rates. If there's another way to work the problem I would like to hear about it. Do the math and what do you find? There is a quote today in PV Magazine:

"For larger systems, if we assume a ROI rate of 10 percent on the equity capital – where we assume 20 percent of the total investment is equity – then we see [system] prices dropping … down to €1,400, €1,250 and even €1,000 for ground installations per kilowatt (kW) installed." Costs are currently said to be between €1,600 to €1,800."

"the business case for residential projects is still feasible. "We calculated system prices of €1,850 per kW for a rooftop system, which has a self-consumption of about one third –… and these prices are feasible."

So large systems need to be installed for 1000 to 1400 but residential systems have room up to 1800 per kW. Why is this? The difference in self-consumption obviously. The larger projects simply need to figure out how to have a portion of their production consumed on site. Ideally the electricity consumers are building the projects themselves and figuring out their self-consumption rates ahead of time. This is not rocket science. The writing has been on the wall for years.

We all want PV to become competitive and to have the FiT be replaced by a market based price. The idea is to use gradual steps to make this transition. Surely the .015 ct/month steps are gradual. If this is true then it's only the one-off cut that we are arguing over. But the one off cut was set to be 15% in July so these cuts are really only 5 to 10% extra for most system sizes. So aren't we really only arguing over an extra 5 to 10% cut? This does not seem extreme to me. The drop in panels prices justifies this cut.

We'll see how it goes. I'm not against a compromise but I think most of the industry will be able to pull through these cuts.
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