Sunday, January 26, 2014

Germany Tax on Own Use of Renewables: Battling Regressive Impacts

Bloomberg seems to have kicked off the commiseration amongst the solar over proposals dealing with self-generation in Germany

Germany Tax on Own Use of Renewables Is First in Europe - Bloomberg:
Germany is set to become the first nation in Europe to charge owners of renewable energy plants for their own use of electricity, part of Chancellor Angela Merkel’s effort to contain rising power bills.
Merkel’s Cabinet backed proposals to charge operators of new clean-energy plants 70 percent of the so-called EEG-Umlage, a fee paid by power consumers that they’re currently exempt from, according to an economy ministry document. That would translate into 4.4 euro cents (6 cents) a kilowatt-hour.
The solar industry says such a payment would curb investments in the technology in the nation that has the most installations of photovoltaics in the world.
“The fee will make the environmentally friendly self-consumption of solar power unattractive, especially for the Mittelstand, farmers and companies,” David Wedepohl, a spokesman for the BSW-Solar lobby, said today by e-mail. Developers that consume their own solar power already lower the costs of Merkel’s energy program by not selling their power to the grid at above-market rates, he said."
So much wrong here..
There appears to be a need amongst the solar industry to be regressive - if it isn't in pushing for astronomical rates being paid to those with the land, or the housing, to have panels then it's advocating for solar generators on the grid to avoid paying a proportional share of common costs.

Changes in Spain (image source)
The fair share of cost assumes, most places, a need to remain grid-connected.  Many utilities have recovered the fixed costs of infrastructure through per unit of consumption rates - and in some jurisdictions (particularly in California) the price per unit jumped rapidly as households consumed more (ie. a 4000 sq. ft. home likely paid far more per unit than a poor household).
The social challenge in many jurisdictions is that the richer, larger, households/houses have been subsidized to install panels, which, combined with other programs, has driven the price of electricity up for all, while the price of solar panels dropped.

Related: Who Pays for Grid Expansions When Homeowners Generate Their Own Electricity? | IEEE Spectrum

A report from October 31, 2013 noted that, in Germany:
On average, about a third of self-generated solar power from newly installed photovoltaic systems is self-consumed by the home or business, according to BSW-Solar.
“Private electricity prices are now almost twice as high as the cost of self-generated solar electricity from the roof of a house,” said BSW-Solar CEO Carsten K├Ârnig.
I think that's probably a little misleading in that very little of installed photovoltaic is "newly" installed -  I'd think most (90%'ish) solar generation is fed to the grid - but there's the core of the issue.

It's pretty silly to spin it as a first in Europe.  It may be the first time this exact method was employed but retroactive changes to contracts, particularly feed-in tariffs, is commonplace, having occurred in Greece and, particularly, Spain.

An informative April 2013 article on the situation with retroactive changes to energy agreements in Spain (the source of the graphic included here), concluded:
...the dramatic changes that have shaken Spain’s electricity industry in recent years could be the catalyst for a deeper shift: faced with rising electricity rates, and historically low solar PV prices, those who seek to develop RE projects may start doing so on a stand-alone basis, thereby reducing their exposure to unpredictable government decrees. Beyond lacking transparency, these decrees are exceedingly difficult to challenge in court. If projects can be developed on a stand-alone basis, without relying on increasingly unreliable rules, this could inaugurate a new era in Spain’s renewable energy sector, one where self-consumption gradually becomes the norm, rather than the exception.
 By August 2013 that possible new era had a problematic new obstacle:
(Reuters) - Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.
Alonso, an architect who specializes in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.
Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between 6 million and 30 million euros ($8 million-$40 million).
"The new law makes it unviable to produce my own clean energy," Alonso said.
Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.

Imposed by decree, the reform aims to raise money for tackling a 26 billion euro debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.
Germany's 70% of the 6.2 euro cent/kWh EEG to be charged on self-generation may not be a first;
It may be a trend.


Just noticed this from an article on the German changes:
The charge would not be applied to new units sized 10 kilowatts or smaller, according to the document. Operators of new fossil-fired plants who consume the power themselves would have to pay 90 percent of the charge, according to the document.
That would exclude, I think, most residential solar - and it would include some very non-renewable generation (see Volkwagen's German facilities consume more power than Jamaica)
I suspect 70% of the EEG will not be charged for self-generation by industrial customers excluded from paying the EEG.

1 comment:

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