On Thursday, 29 March 2012, the German parliament passed the latest amendment of the Renewable Energy Act (EEG). This law implements drastic funding cuts from April 1, followed by monthly tariff reductions in addition to other market restrictions.
Small roof systems will be mainly hit by the abolition of the self-consumption bonus and the introduction of the so called ‘market integration model’ that restricts the feed-in tariff (FIT) payments to a certain share of the annual PV production (with the remainder either self-consumed or sold to the free market).
Systems below 10 kW will receive the FIT funding for just 80% of the production output, and for systems between 10 kW and 1 MW the payment is limited to 90%.
A major blow for the ground-mounted segment is the exemption of FIT funding for new projects above 10 MW. This segment has historically benefitted from increased tariffs if the plants were built on reclaimed land. In fact, a large proportion of them have been located on former military airports: areas however that can readily accommodate solar parks comprising multiples of the new size limitation.
Transition phases implemented by the new EEG for projects already in the pipeline are proving too short in many cases. Before the law was even passed through parliament, some PV project developers had already started to file for bankruptcy.
It should be recalled that the main objective of the new legislation in Germany was to curb PV market demand, after it had again exceeded most observers’ expectations in 2011. This objective, however, may not be achieved during 2012.
The unprecedented 3-GW-market in Germany during December 2011 led to considerable ‘sabre-rattling’ from some politicians seeking to propose the implementation of a 1 GW annual cap. And during Q1’12, the prospects of drastic measures being imposed upon the PV industry remained a great concern. Particularly threatening was the government’s ‘plan’ to grant responsible ministers the right to implement additional funding cuts without the need for parliamentary approval.
Ultimately, the tariff cuts were postponed to April 1, the plan to give ministers the power to cut the funding was discarded, and transition phases were implemented. However, the panic stirred during Q1’12 has already led to an installation volume that amounts to as much as half of the total 2011 market in Germany!
It can only be hoped that the Italian government – which is also preparing a new funding scheme – will take note of the effects that cobbled-together draft laws can have on the PV industry.