Solar Power in Germany - Overview

Overview

The German solar PV industry installed 7.6 GW in 2012 and 7.5 GW in 2011, and solar PV provided 18 TWh of electricity in 2011, about 3% of total electricity. On midday of Saturday May 26, 2012, solar energy provided over 40% of total electricity consumption in Germany, and 20% for the 24h-day. The federal government has set a target of 66 GW of installed solar PV capacity by 2030, to be reached with an annual increase of 2.5–3.5 GW, and a goal of 80% of electricity from renewable sources by 2050. From 3.5 GW to 4 GW are expected to be installed in 2013. Solar power in Germany has been growing considerably due to the country's feed-in tariffs for renewable energy which were introduced by the German Renewable Energy Act. Prices of PV systems have decreased more than 50% in 5 years since 2006.

As of 2012, the FiT costs about 14 billion euros (US$18 billion) per year for wind and solar installations. The cost is spread across all rate-payers in a surcharge of 3.6 €ct (4.6 ¢) per kWh (approximately 15% of the total domestic cost of electricity). On the other hand, as expensive peak power plants are displaced, the price at the power exchange is reduced due to the so-called merit order effect.

Germany set a world record for solar power production with 22 GW produced at midday on Friday 25 and Saturday 26 May 2012. This was a third of peak electricity needs on Friday and almost half on Saturday.

A feed-in tariff is the most effective means of developing solar power. It is the same as a power purchase agreement, but is at a much higher rate. As the industry matures, it is reduced and becomes the same as a power purchase agreement. A feed-in tariff allows investors a guaranteed return on investment - a requirement for development. A primary difference between a tax credit and a feed-in tariff is that the cost is born the year of installation with a tax credit, and is spread out over many years with a feed-in tariff. In both cases the incentive cost is distributed over all consumers. This means that the initial cost is very low for a feed-in tariff and very high for a tax credit. In both cases the learning curve reduces the cost of installation, but is not a large contribution to growth, as grid parity is still always reached.