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Germany the case of solar PV

By the end of August 2013, a total of 34,800 MWp of solar PV systems had been installed in Germany,
almost one third of all PV capacity in operation worldwide. It is expected that those systems will
provide more than 5% (roughly 30 TWh) of the total gross electricity consumption in 2013.1 Almost
50% of the capacity installed in 2012 is shared by systems with more than 500 kWp each. At peak times
on sunny weekend days, solar electricity now contributes with up to about 40% to the total capacity
demand (Figure 1). Installations range in size from a few kWp on single-family homes to more than 100
MWp ground-mounted systems, operated by now more than 1.3 million individual owners.



Figure 1: Solar and wind contribution to electricity generation in Germany on October 3, 2013 (national holiday)

The success of the German solar electricity market is to a large extent based on the introduction of a
feed-in tariff (FIT) and took place mainly in the last nine years since early 2004.2 As can be seen from
Figure 2, the FITs for PV electricity make a differentiation between systems of varying sizes and
between the place of installation (rooftop or ground-mounted). They have been adjusted downwards
over time, either through a regular degression rate (formerly on an annual basis, now monthly3) or
through direct adjustments of the law, which determines the FIT levels, at certain intervals. The
downward trend reflects mainly the falling PV system costs, caused by a higher production volume of
solar cells and panels and auxiliary equipment, reduced installation efforts and the increase of
competition among PV system suppliers. FIT rates have fallen below 10 -ct/kWh (US-ct 13,3/kWh) for
large PV systems of 1 to 10 MW being commissioned after September 2013.


The average annual energy yield in the case of Germany is in the range of 1,000 kWh per kWp.
Preceded by a 100,000 roofs program for small-scale PV applications, among others.
Since 2009, a floating degression rate applies that is dependent on the installation rate of PV systems within
a defined period.

Germany the case of solar PV

Figure 2: FITs for PV installations in Germany

(Source: Bernard Chabot, Diversity in PV Systems Sizes and Market Deployment Management from Prices: Two Strategic
Lessons from the German PV Policy and Measures, August 2013)

FITs are paid over a period of 20 years without any adjustment to inflation (which is low in Germany)
and are kept stable from the time of system commissioning. It is therefore easy to calculate the
expected rate of return on investment. The differential costs between FIT rates and electricity market
prices are recovered at equal shares through a levy from most electricity consumers. Only energyintensive industries (with consumptions of more than 1 million kWh/a) can almost completely or partly
be exempted from the payment (representing about 20% of the total net electricity consumption).
For private households, the cost share in the electricity bill for all RE electricity eligible for the fixed
remuneration is almost 20% in 2013. It has increased considerably within a few years, due to a falling
electricity market price (stock exchange price, which forms the reference baseline), an increased
number of payment exemptions and reductions for energy-intensive industries and a stormy growth
in PV installations, which received the highest FIT levels among all RE sources until late 2012.4 In the
meantime, PV FITs have fallen to a level far below the usual household tariff (about 29 -ct/kWh on
average), stimulating the ambition for self-consumption of the produced electricity as far as possible.

Nowadays, offshore wind energy has the highest remuneration rate of all RE sources.

Germany the case of solar PV

Figure 3: Average prices in per kWp installed for PV systems of up to 100 kWp in Germany

This increased interest in self-consumption is also driven by the fact that since the FIT amendment of
April 2012, PV installations with up to 10 kWp receive the remuneration only for a maximum of 80% of
the total generated electricity. For an installed capacity of between 10 kWp and 1 MWp the threshold
of non-payment through FIT rates is 10% The balance has either to be consumed on the site of
production or can be directly marketed, be it on the spot market or through retailers. Own
consumption or direct marketing. Only large installations with more than 1 MWp receive the legal
remuneration for 100% of the produced electricity. In any case it is always possible to sell all electricity
on the market and earn a so-called marketing premium.5 As mentioned, on-site self consumption is
now becoming increasingly popular and raised through appropriate energy management (having
electrical equipment run at times of high solar irradiation) and storage facilities for shifting electricity
into off-sunshine periods.
On the other hand, PV installation prices have fallen significantly in recent years, being now the lowest
worldwide, due to the high amount of installations and very low lead and implementation times (see
Figure 3). In September 2013, prices fell to historical low of 1,480 (US$ 1,970) per kWp installed. Of
course, prices for smaller family house systems with up to 10 kWp are somewhat higher, but still well
below 2,000 (US$ 2,660) per kWp.
Technical conditions for the connection of PV and other power generation systems to low or medium
voltage lines are governed by norms set up by the German Association of Electrical, Electronic and
Information Technologies (VDE).6 Those norms are targeted mainly at manufacturers of inverters.
Producers of mounting systems are addressed by technical norms for building constructions.
The bureaucratic process for connecting PV systems to the grid is relatively lean. An interconnection
can only be denied by the grid operator in very exceptional cases (e.g. low grid capacity). Applications
for grid connection, including technical specifications, are in most cases filled out by the installing

This marketing premium is calculated monthly as the difference between the average stock market price and
the actual FIT remuneration. In total, the amount received can exceed the comparable FIT remuneration, if
the generated electricity has been marketed at favourable price conditions in times of high power demand.
In addition operators receive a management premium of 1.2 -ct/kWh which compensates for the extra
efforts in direct marketing, among others an exact day-to-day energy yield prognosis.
In fact, the norms are being discussed and approved in a forum of VDE that comprises German grid operators.
The current version of the norm for connection to the low voltage network, in force since January 2012, is
also available in English: Power generation systems connected to the low voltage distribution network
Technical minimum requirements for the connection and parallel operation with low voltage distribution
networks (VDE-AR-N 4105:2011-08).

Germany the case of solar PV

company and directed at the grid operator. Normally a contract will be signed between plant and grid
operators, but this is not essential as the basic conditions are laid down in the law. While the
Installation of PV panels can be done by anybody, the grid connection may only be done by a certified
installer, who has also to guarantee that all work has been executed in accordance with the technical
For all RE electricity priority dispatch is mandatory. Only in emergency cases, grid operators are
allowed to intervene by reducing the capacity intake into the grid and shutting down plants completely.
For such purpose, all PV systems above 30 kW are required to allow for remote control by the grid

Detlef Loy, Loy Energy Consulting, Berlin/Germany, October 2013