Published on June 28th, 2012 | by Thomas Gerke8
Sol Invictus — German Government Cuts Solar FIT
June 28th, 2012 by Thomas Gerke
Sol Invictus, the Invincible Sun, was the roman sun god and patron of the late emperors. While the sun is without doubt invincible and, in human terms, a never-ending source of energy, the pro-solar energy policy of Germany has come under heavy attack this year. As a result, the German government has passed a law that will cut incentives for solar power, the solar feed-in tariff, by up to 20% today.
So, how is a massive cut for in incentives a win for the invincible sun? Well, here is my take on the events and why hearing “Germany decided to cut support for solar” is actually a victory in an ugly battle that might lead to global change… but that’s perhaps a bit too dramatic.
Once Upon a Time On a Battlefield
Attacks on the pro-solar policy framework of Germany are nothing new. They are actually more of a recurring event that happens every time the “Renewable Energy Act” gets reformed or whenever solar power installations break a record. All of this started with the stark opposition of the current government coalition against the “German Renewable Energy Act” back in the year 2000, when those parties weren’t in power. They especially disliked the concept of providing independent investors with a technology-specific feed-in tariff that was high enough to turn a profit if investors made wise choices when developing their project. Back then, Angela Merkel’s conservative party was basically fundamentally opposed to the the core principle behind the success of the “Renewable Energy Act.”
At the start and until 2003/04, this uncapped and guaranteed possibility to turn a profit with clean energy investments did not apply to solar power because it did still received subsidies in the form of a credit incentive program — the 100,000 roof program aiming for 350 MW of solar power. Disgruntled by the reality that the Renewable Energy Act has proven to be more successful and efficient than portfolio-standards/quota-systems, the opponents focused their criticism on the support of photovoltaic energy use in Germany… something that was a pure waste of money and would never accomplish anything according to their opinion. In 2009, the opposition parties of the early 2000s managed to win a majority in the federal election and form a government coalition. The parties are Angela Merkel’s conservative Christian Democrats and the free-market and business-friendly Liberal Democrats.
Here We Are Again
This February, things turned very ugly though, when the economics ministry (responsible for regulating conventional energy markets) and the environment ministry (responsible for renewable energy sources) proposed a rapidly drafted revision to the renewable energy act at a joint press conference. This draft was proposed just 6 weeks after another revision of the law went into force on January 1, 2012. The content of the proposal was so radical that it was soon dubbed “The Solar Phase-out Law,” or even the beginning of a rollback of the “Energiewende” and nuclear phase-out.
In the eyes of the economics minister Philipp Rösler (the head of the free-market oriented “Liberal Democratic Party” and the vice-chancellor), a rapid revision was necessary due to the “out of control” growth of solar power capacity in 2011. Soon the usual bunch of anti-renewable energy vultures within the conservative party joined the criticism and voiced their support for rapid cuts to “contain solar energy.” They are a relatively powerful group within Angela Merkel’s conservative party and have close ties to powerful industry groups and the conventional power and energy corporations. This anti-solar coalition of politicians within the government and vested economic interests in the private sector was also heavily disgruntled by the decision of its party leadership to speed up the phase-out of nuclear power a few months before. It’s safe to say that the situation was serious and more than dangerous for effective pro-renewable policy. Especially since pro-renewable supporters are a minority within the government, and the public was distracted by the looming European debt crisis.
The original “Solar Phase-Out Law” proposal included a wide range of changes that were officially focused on reducing incentives to install more solar power. In reality, it was the strongest attack on the fabric of the successful “German Renewable Energy Act” since it was passed into law in 2000. Among the gems of the ministries’ wish list were harsh 30-40% cuts to feed in tariff rates, the ability to further adjust feed-in-tariff rates by ministerial decree without consulting the parliament and exempting 10-20% of the generated electricity from receiving feed-in tariff payments. To make things even worse, the proposed changes should take effect retroactively* only 2 weeks after the proposal was made. (*Retroactively because it was obvious that the legislative process to pass the law would take longer than 2 weeks.)
From Proposal to Legislation
What followed was a legislative dispute that took more than 4 months and was accompanied by a massive anti-renewable/anti-solar campaign throughout many media outlets that aimed at reducing the popularity of solar power among the public. But there were also pro-renewable/pro-solar voices in the media and even mass demonstration by the solar industry together with unions and activists.
The legislative process and dispute already started within the administration then raged on among the government coalition within the parliament. An altered version was then debated on the floor of the Bundestag (the German parliament), and finally at the Bundesrat (the upper house of parliament), where representatives of the state governments had to vote on an already heavily altered and softened version of the original proposal. But despite massive pressure by the federal government on the states to adopt the law, the events took a decisive turn as the state representatives voted to block the anti-solar legislation with more than two-thirds of the votes in a united effort across party lines.
This massive “NO” by the states forced the federal government to discuss a resolution of the conflict with a so-called “Mediation Committee” in accordance to the German constitution. One month later, and after a new environment minister was appointed by Angela Merkel just days after the Bundesrat decision, the committee reached an agreement last night which was passed by the Bundestag today.
With the agreement between the states and the federal government, the political dispute that dragged on for four long months and kept the entire German solar industry with more than 100,000 employees in limbo has finally come to an end.
Here is an overview of the changes, cuts, and the new solar FiT rates:
- The law will take effect retroactively on April 1st. Projects that were already under development and received a permit before that date are exempt.
- Small photovoltaic plants of up to 10kW will receive 19.5 euro cents per kWh.
- Plants of 10-40kW will recive 18.5 euro cents per kWh.
- Plants of 40-1000kW will receive 16.5 euro cents per kWh.
- Plants of 1-10 MW will receive 13.5 eurocents per kWh.
- Plants larger than 10 MW will no longer receive FiT payments.
- FiT rates will decrease by 1% every month starting from July.
- After 15 monthly cuts, cuts of 1% per year will begin again in 2014.
- The federal government has pledged to draft a proposal to increase R&D for energy storage solutions as well as an incentive program aimed at the commercialization of decentralized storage solutions within the next 6 months.
- FiT support (guaranteed profitability if properly planed) of solar power will cease when 52 GW are reached.
- Photovoltaic power will continue to have priority on the grid beyond the 52 GW mark.
As you can see, the final results of this battle are not perfect, but they are world’s apart from what the anti-solar coalition had wished for. In fact, the most likely result will be a continuation of the solar power boom here in Germany for the years to come. Many analysts actually predict that the 52 GW mark could be reached as early as 2015/16, which would be a doubling of 40% of the solar capacity of the world within 3-4 years. While more solar power is awesome, there are too many ifs and hows to be really happy about the outcome. Furthermore, the discussion remains focused on how to integrate renewables into the “market” instead of the other way around. The big question is how to integrate the existing fossil power plants into a renewable-energy-dominated power system, not the other way around.
The Moral of the Story
Since the main purpose of this entire circus started by anti-solar members of the administration and government coalition was to prevent the further expansion of solar energy by rapid action and changing the rules in favor of the big energy corporations, this decision is more than a defeat for them.
Sol Invictus, the invincible sun, rules supreme but somewhat battered. All the gigawatts that will now be installed are important steps toward establishing a decentralized renewable energy system. Photovoltaic power is back on track to achieve the unthinkable in Germany. It could break the baseload-centric conventional fossil power system for the first time since the age of industrialization began.
Furthermore photovoltaic power might become the cheapest source of energy sooner than many people can imagine.
But before that day will come, there will most definatly be another attack on solar power… as it is tradition apparently. We’ll see when and how that inevitable next attack happens. 10 GW of new solar capacity might be a good reason to bring the circus back in down.