Photovoltaics - end of EEG subsidies in 2020

What changes are operators now facing?

Author: Leonard Höcht Date: December 2018

In 2000, the old Electricity Feed Act was replaced by the Renewable Energy Sources Act (EEG). The aim was to promote the photovoltaic industry and the expansion of renewable energies. For 20 years, there is a guaranteed purchase of the solar electricity generated at a minimum price set in the starting year. This is intended to drive private and commercial plant construction. As early as 2020, the first PV systems will no longer receive any further feed-in tariff support under the current legal situation. What will change for operators? What are the possible solutions? Read more in this technical article.

In2020, the first PV systems will thus no longer receive any further feed-in tariff support under the current legal situation. Plants that are still built until 2020 will continue to receive a 20-year guaranteed feed-in price. The reduction in the subsidy will ensure that the EEG levy stagnates at almost €11 billion per year. Per kWh, this amounts to approximately 7 cents (excluding tax), which is due for the end consumer when he or she is connected to the grid. If only part of the self-generated electricity is consumed and the electricity comes from only one plant, then only 40% of the EEG levy must be paid.

What changes are coming for operators?

In general, the entitlement to grid connection and feed-in according to the EEG remains, only the minimum price guaranteed by the EEG no longer applies. This means that the electricity produced, which is to be fed into the grid, must be traded freely with the elimination of the EEG allowance. The electricity producer then legally becomes a power plant operator and must fulfill the technical requirements of a power plant operator under the EEG. This includes balancing and finding buyers for his produced electricity. Due to the planning uncertainty that solar power entails (mainly usable during the day, weather only imprecisely predictable), the purchase price will be below the price traded on the stock exchange. In 2017, the offtake price reached a low of 2.5 cents per kWh. In the future, negative prices are also conceivable on very sunny or windy days. Whether this electricity can then still be fed into the grid economically is questionable for operators of smaller plants. After all, they also have to take into account the wear and tear on the electronics (e.g. inverters or repair and dismantling costs) when calculating operating costs. Large-scale plant operators, on the other hand, can remain profitable even with lower electricity prices due to economies of scale.

Solution approaches for operators

So it depends on the plant size which options arise. Currently, only plants with 300 kW capacity are technically feasible for grid operators to manage. Those who want to market their electricity directly should keep the costs of distribution and marketing small and have them handled by a service provider.

Battery storage with self-consumption

Independently of the feed-in current, the generated electricity should be consumed by the operator himself as much as possible. The cumulative cost of the solar power generated is only about one-third of the grid price. If you apply the storage costs (depreciation, storage losses, etc.) to the electricity generation costs, you end up with just over 10 cents/kWh, and the trend is downward. Operators can, if overcapacity is large, negotiate directly with the grid operator or look for a trader. Overproduction can also be captured by storage systems (e.g., battery storage) and consumed when little or no electricity is produced. As prices fall and storage system capacities increase, this scenario becomes more lucrative. Used batteries that are technically sound but have only 80% of their original capacity left are considered "worn out" in the automotive industry. However, they are still ideal as inexpensive storage for PV systems.

Pooling

Another option is to have smaller systems "pooled" or moved to larger systems by a service provider in order to remain competitive as a larger system.

Selling PV modules

Those who do not want to worry about all this can sell their modules on the used market. Companies such as Secondsol GmbH offers an online platform here. Learn more here!

Further sales fields

If one considers PV systems in the overall system, one often speaks here of sector coupling. New business models such as direct marketing to neighbors or electricity storage as a service, could continue to make the private PV system with excess capacity lucrative. The "greenness" of the electricity generated can also be priced in. Corresponding certificates have existed for some time. Furthermore, a "regional" certificate could bring a better price, so that the purchase price would not be too low. The emergence of e-mobility (mobile energy storage) brings new uses for overproduced electricity. In the medium term, it is conceivable that the surplus could be stored in the operator's own electric car or in electric fleets. An operator could assemble a large plant from many small used plants that can be operated economically again. Those who go off the grid as self-consumers also do not have to pay an EEG surcharge.

In the future, island grids can ensure that the feed-in remains profitable. For this, supply and demand must be much closer together in the future. A feared grid instability due to the mass removal of PV systems is unlikely. The elimination of feeders that become self-consumers would increase the purchase price through the self-regulation of the market. Especially since the last nuclear power plants in Germany are also scheduled to come off the grid in 2022. The introduction of "smart meters" will make it easy to market surplus electricity in the future when flexible electricity tariffs are used. These smart metering systems, combined with smart appliances, can ensure in the medium and long term that the peak electricity produced is consumed when it is produced. The digitization of power generation is also necessary for smart decentralized supply networks. Installation of the devices has already begun in 2017 with generators between 7 and 100 kW of installed capacity.

For new business models, however, the EEG must be revised, as currently the EEG levy also applies to privately sold electricity. Bureaucratic hurdles must be dismantled. Here, the associations have a duty to exert pressure on politicians and to inform the plant operators.

Opportunities through new business models

The EEG feed-in tariff has achieved that today, at constant subsidy costs, electricity from renewable energies continues to increase - but probably not fast enough to achieve the expansion targets. Even the construction of new plants is still worthwhile. Although the discontinuation of EEG subsidies in 2020 will reduce counter-financing, technological progress, economies of scale and learning effects have reduced the price of 10 kWp to 100 kWp rooftop systems from 4600 €/kWp (2006) to 1100€/kWp (2017).

After the expiry of EEG subsidies, the development of new business models offers great opportunities. New service models or technical solutions will be the first of their kind worldwide. Newly constructed large-scale PV plants can also continue to bring good returns as a financial investment. This ensures the further expansion of PV production. Large rooftop systems make particular sense in the case of a constant consumption profile, e.g. for cold stores, department stores, hospitals or server centers. Plant operators on third-party roofs in a power range between 100 kWp and 300 kWp must consider a new concept due to the low feed-in tariff, which may not cover running costs.

In the case of self-consumption, however, plant operators need not fear. They continue to benefit particularly effectively if they install a storage system. Ever more favorably becoming storage system make this scenario most probable. It is advisable to consume electricity oneself if possible, since the operating costs of the PV system with storage for self-consumers are only about one third of the price drawn from the grid. For those who become self-consumers, the operating costs of the PV system with battery storage are only about one-third of the price obtained from the grid.