GERMANY: Solar industry earmarked for big subsidy boost

A proposal to update Germany's renewable energy legislation includes provision to more than quadruple the subsidy paid out to homeowners installing solar energy systems.

“I think this law will pass the Bundestag,” a Deutsche Shell spokesperson told edie. “This is an important law for the people who voted for the Green party.” Deutsche Shell has launched a new marketing scheme to encourage German households to install its solar energy systems (see related story).

Currently, householders who install solar energy systems are paid 0.165Dm for every kW hour they add to Germany’s electricity grid. The proposed new law would increase the subsidy to 0.99Dm – the highest subsidy increase of all the forms of renewable energy covered by the proposed bill.

Conventional electricity producers and retailers, as well as the electricity consumer group VEA, have criticised the proposed law for undermining liberalisation of Germany’s electricity market. “We need to support renewables in a more competitive way,” Eckhard Schultz of VDEW, the association that represents German electricity retailers, distributors and producers, told edie.

VDEW believes the proposed law is flawed on several levels. For a start, VDEW argues that renewable energy subsidies should not be increasing, and that the aim to make electricity consumers share the cost of the subsidies evenly is a pipe dream. “It is not certain that industrial customers will be willing to pay more for electricity, so it may be paid by the utilities out of their margins,” explains Schultz. VDEW also wants to see renewables legislation include provision for a decrease in subsidy over time.

Environmentalists and companies investing in renewable energy defend the proposed legislation as the only way to develop renewable energies in an electricity market flooded with cheap nuclear energy. “The government spends a lot of money on nuclear power and it should also offer help to develop new energy sources,” says the Shell spokesperson. Electricity prices have plummeted in Germany over the last year, with renewables becoming an increasingly expensive option.

In addition to nuclear power imported from France, “I have heard that there are also companies selling nuclear-generated power from Eastern European companies,” says the Shell spokesperson. If the proposed 0.99Dm subsidy for solar power is passed, homeowners with solar energy will see their payments from government jump. “The gap between solar energy payment and [cheap, often nuclear-based energy packages] has been getting bigger and bigger. This increase would benefit normal people.”

Deutsche Shell markets its solar energy systems as a complete package that includes assistance for householders who need help making sense of the ‘jungle’ of government departments offering renewable subsidy payments. “We offer customers a total service, including financial information about how to receive payment from the government,” says the spokesperson.

The proposed law on renewable energy – that has passed its first reading in Germany’s lower parliamentary house, the Bundestag – also includes subsidies for electricity generated by wind, water, geothermal, landfill gas, sewage and biomass. The country’s controversial wind energy subsidy will remain at current levels, while subsidies for the remaining renewables (excluding solar electricity) will be set at between 0.14 and 0.20DM per kW hour. Hydropower, landfill and sewage gas plants with capacities above 5MW will not be provided with subsidies, neither will biomass plans generating more than 20MW.

VDEW’s Schultz is not overly confident that the changes sought by the conventional electricity market to the proposed law will materialise. “We believe that the rates [subsidies for renewables] are generally too high,” he says, but he also acknowledges that there is considerable determination on the part of many politicians to see the law pass in its current form.

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