Solar-Generated Electricity in Germany
With jobs and investment falling in Germany, how does the future look for the solar industry?
Germany has long led the world in promoting solar energy, in particular photovoltaic electricity generation. However, in 2015 China overtook Germany’s 39.7 GW with its 43.6 GW.
There were 1.58 million solar power systems in Germany by the end of 2016, for a total capacity of 41.75 GW (1.53 GW newly installed in 2016), generating 37.5 TWh (6.9%) of Germany’s total electricity consumption. Despite 1.58 billion euro invested in new solar systems, generation fell by 0.8% compared to 2015.
There is a clear correlation between the FiT (feed-in tariff, designed to subsidise solar energy producers) and direct solar investment. From 5.3 bn euro direct investment (DI) in 2007 and 49.2c FiT (per kWh for a medium-sized rooftop solar installation), DI rose to its peak of 19.5 bn euro with a FiT level of 35.4c in 2010. By 2013, DI had fallen drastically to 4.3 bn euro at 14c FiT. Since then DI has fallen consistently further to 1.58 bn euro at a FiT of 12.7c in 2016.
With falling investment and the solar panel production industry in Germany in crisis due to competition from cheap Chinese imports, jobs have fallen from the peak in 2011 of 110,900 to 31,500 in 2015, below the 2007 level of 38,600. Nearly 50% of jobs were lost in 2013 alone (100,300 → 56,000).
2016 German electricity generation
|Source||Net installed (2017) /GW||Power generated /TWh||Power generated /% of total 2016|
|Lignite (brown coal)||20.9||134.9||24.9%|
|Anthracite (hard coal)||28.32||99.4||18.3%|
|Solar||41.75||37.5 (grid supply)||6.9%|
Note: the figures for solar are for electricity supplied to the public grid. Own consumption by owners of rooftop solar panels is not included.
The German government launched the “1000 roofs program” in 1991 – the world’s first major solar photovoltaic (PV) initiative. Under this programme, the government subsidised the installation of solar panels to generate electricity. Thanks to this programme, Germany gained valuable experience with solar installations, the housing industry began to experiment with means to meet the challenge of integrating renewable electricity generation, and consumers were introduced to the concept of small-scale solar power. By the mid 1990s, 2,000 grid-connected PV systems had been installed on German rooftops.
Due to the success of this pilot programme, the German government ramped up the target to ‘The Hundred Thousand Roof’ programme, launched in 1999. This ambition prompted the mass production of photovoltaic panels. The programme ended in July 2003 having supported 55,000 installations and 261 MW of additional capacity.
Solar potential in Germany
Germany currently has an electricity generating capacity of over 600 GW. If one-third could be met by PV, then Germany would need 200 GWp. This would require 1% of Germany’s land surface to be covered in solar panels. For comparison, developed settlement and traffic areas occupy 47,000 km2 or 13.4% of the land area. Current rates of additional capacity would meet this level by 2035. This calculation will vary as two factors come into play:
Some analysts suggest that the dependency on electricity to meet total energy needs will rise from 18.5% in 2017 to over 90% by the 2030s. In such a case, the German electricity demand will likely increase above 600 GW capacity, despite huge improvements in efficiency and load distribution. It should be noted that in the 600 GW capacity there is as much as 50% unused most of the time, since capacity in an inflexible distribution grid needs to be able to cover peak demand. This lies at twice the baseload. Decentralisation of the distribution system into local small-scale renewable power generators will reduce this wastage considerably.
In Europe the household consumption varies between 4-6.5 MWh per annum. The US consumes 11.7 MWh per household and China 1.3 MWh per household. The global average electricity consumption is 3.5 MWh per household. Germany has an estimated 2,300 km2 of roof and facade area on existing buildings (0.66% of the total land area) which are suitable for PV systems. A house in central Germany can typically expect 900 hours of full-load equivalent hours of sunshine, and mediterranean Europe 1000-1500 hours. The average single house installation, 40-50m2 inclined to optimal solar radiation exposure, can generate 4-5 MWh per year in Germany, and over 7 MWh in southern Europe.
These are current figures, assuming 20% efficiency in electricity output compared to solar irradiation. As solar panels become more efficient and installations cheaper, appliances become less energy-hungry, households become regulated by smart systems, storage systems become more affordable and efficient, and houses better insulated and even carbon neutral, it is clear that in the next 10 years any investment in household solar systems will not only make homeowners energy independent, but also net power producers. With electric vehicles becoming cash-back assets, there will be a rapid transition to carbon-free households and mobility. Even in less-solar intensive Germany the transition makes good economic sense for individual investors.
An important goal of the energy transition is the elimination of subsidies for the dirty industries. If fossil fuels were not subsidised, clean energies would under-price them in a genuine free-market competition. Worldwide government direct subsidies to the fossil fuel industries exceed those to the renewable industries by many factors. The removal of unfair tax concessions alone would price any fossil or nuclear industry out of the energy market overnight. The internalisation of environmental and social costs would instantly turn fossil fuels into sad historic curiosities, and symbols of by-gone social injustice.
To compensate for this huge market distortion in favour of the dirty industries, most governments provide some form of subsidy system to level the playing-field a little. These subsidies are very visible to consumers, while the fossil and nuclear subsidies remain largely hidden from view, a factor that the dirty industries exploit fully in their PR campaigns to obstruct the energy transition.
An important instrument for the development of both solar and wind energies has been the FiT (feed-in tariff). This guarantees a price for renewable energy, such as solar power generated by homeowners, who sell their surplus power to grid operators. Since the price of solar power has been higher than the market price per kWh (kilowatt-hour), but falling as economies of scale and improved technology take effect, there has been a policy of gradually reducing the level of the FiT for new installations over the years. This is regulated by the German renewable energy law (EEG). The German FiT model has been so successful it has been adopted in many countries around the world.
The Solar Age has arrived
In 2016, 37.5 TWh (down 3.3% on 2015) was fed into the grid from photovoltaic arrays, from a total installed capacity of 40.85 GW PV at the end of 2016. At 1.00 pm on 8 May 2016, 47% of Germany’s electricity grid demand was covered by PV, with a peak production of 28.5 GW. In the summer months, output of all PV systems often approaches or even exceeds that of all Germany’s nuclear power stations combined. Note that these figures refer to PV electricity fed into the national grid. Much more solar power is used directly by homeowners in situ, such as for water heating.
In March 2011, the first solar gas plant in Germany went into operation in the Morbach power plant (30.7 MW, 50 GWh p.a.). Solar energy is converted into synthetic natural gas and stored in gas form.