German Power Generators to lose 12 billion Euros until 2020 after decision on PV support schemes

Hamburg/ Stuttgart, 29. April 2010

Last week the final decision was taken on the amendments of the feed-in tariff for PV in Germany. While cuts have been agreed upon, the total expected PV capacity is still at least 42 GW in 2020 and about 75 GW in 2030. Consequently massive drops in the wholesale power prices must be expected. Turnover on the German power market (incl. RWE, Eon, Vattenfall Europe, EnBW etc.) is to decrease by 12 billion Euros until 2020 compared to PV capacities foreseen last year. These are the results of a new study by Hamburg-based arrhenius Institute for Energy and Climate Policy.

During the last months, the discussion on feed-in tariffs (FiT) for photovoltaic (PV) installations in Germany gained new momentum. On the one hand, the issue of over-subsidisation due the fact that module prices were decreasing faster than feed-in tariffs was discussed. On the other hand, increasing costs fow power consumers were put on the agenda after the unprecedented increase of more than 3 GW in new PV capacity in 2009. After the general election in September 2009 the discussion lead to different proposals for adjusting the FiT scheme. On March 23, the parliamentary groups of the governing parties CDU/CSU and FDP presented a new bill. In April, the top lobbying association of the PV industry in Germany addressed Chancellor Merkel, all parliamentarians and others in full page advertisements in major newspapers to reconsider their plans.

“Both, in the discussion and in the draft bill, an important aspect has been neglected so far: The impact of the massively increasing PV capacities on the economics of conventional power plants,” says Helmuth Groscurth, co-author of the study. The regulatory impact assessment of the draft bill, for example, only considers costs for the public budget, for the business sector (device manufacturers and operators as well as industrial power consumers) and for the citizens (private households). Utilities are not mentioned.

Against this background, an analysis on this issue was now carried out. A quantitative analysis of the German power market is provided. Six different scenarios for the build-up of PV capacities ranging from an immediate stop of new PV installations to an additional 50 GW of PV until 2020 are studied. The effects of different PV capacities on the whole sale power price and the total revenues (i.e., price multiplied by quantity) of all conventional power plants are calculated. For an incumbent operator of a coal-fired power plant, the contribution margin may decrease by more than 25% and for a new, yet to build gas-fired combined cycle power plant it may drop by more the 30%. One reason for this massive impact is the fact that PV installations produce power around noon when load and, thus, power prices as well as revenues are usually the highest in Germany. “We expect massive drops in the wholesale power prices. Turnover on the German power market (incl. RWE, Eon, Vattenfall Europe, EnBW etc.) is to decrease by 12 billion Euros until 2020 compared to PV capacities foreseen last year,” says Sven Bode, also co-author of the study. As a consequence the discussion on feed-in tariffs in Germany might be re-opened in the near future again.

The results are presented today in the context of the Photon 4th Solar Electric Utility Conference, Stuttgart (http://www.photon-expo.com/en/pts_2010_europe/seuc_2010.htm).

More information on the study is available on http://www.arrhenius.de/38.0.html

About the arrhenius institute:

Today's energy and climate policy determines the world in which we will live tomorrow. For making sustainable decisions, it is inevitable to know the relevant parameters and to understand how they interact. At precisely this point, the arrhenius Institute for Energy and Climate Policy offers independent expertise for decision makers in politics, enterprises and administrations: scientifically sound, clear and understandable. We focus on analyses and model calculations concerning, liberalised energy markets, emissions trading and trading of green certificates, renewable energy sources, carbon capture and storage (CCS), and decentralised energy systems.

Contact information:

arrhenius Institut für Energie- und Klimapolitik
arrhenius consult gmbh

Dr. Sven Bode
Head of Research
Parkstr. 1a
22605 Hamburg
Germany Tel: +49 (0)40 4126 8215
Mob: +49 (0)177 69 47 80 7

This release was published on openPR.