Solar Feed-in Tariffs Could Be The New Clean Energy

Tuesday | Filed in: Solar Commentary

A Feed-in tariff or FIT is a program largely accredited to and made popular in Germany driving their solar and renewable installations. The energy policy is designed to encourage installation of solar and wind renewable energy driving the technology closer to grid parity. Grid parity is an energy term that relates to the point at which renewable energy electricity is equivalent in cost or cheaper than grid power.

In the policy, electrical utilities are required to buy renewable electricity from all residential and commercial solar, wind and other renewable participants at a fair market price. Since power companies have a monopoly that was built on the back of local citizens, it only seems fair they be forced to level the playing field. This FIT policy is the driving force behind some Europeans huge leaps in locally produce clean energy.

Feed-in tariffs are a great idea when coupled with installation of better insulation and energy-efficient windows. Solar, wind energy and other forms of clean renewable technologies are the answer to localizing our energy demands and reducing our dependency on foreign oil. Reducing our dependency on foreign oil improves our national security.

In Germany, the program is wildly successful, but now threatens to overwhelm the countries grid. Sounds like a nice problem to have if you asked me. Read More –

Until the recent reduction of its feed-in tariff, Germany provided some of the most generous solar incentives in the world reports Geoffrey Styles of the Energy Collective. However, is German solar too much of a good thing? Based on a statement last week by the head of the German energy agency, the rapid solar buildup threatens to overwhelm the country’s power grid. Stephan Kohler proposed capping the amount of new solar that could be added each year at 1,000 MW, or around 10% of the capacity in place as of the end of 2009, in contrast to the 3,800 MW added last year, and as much as 6,000 MW expected to be added this year. Germany’s solar incentives are often held up as a model for others to follow, but that rarely takes into account a growing list of unintended consequences that now appears to include grid congestion at high solar penetration.

The problem that Herr Kohler identified is rooted in the large disparity between the average and peak output of solar panels installed in high latitudes and under Germany’s notoriously cloudy skies. The principal result of this disparity has been economic: it takes a lot more megawatts of solar capacity to produce the same output in Germany as in a sunnier place such as Spain, North Africa, or the US Southwest.

The German government has overcome this impediment by throwing money at the problem. Until recently Germany had some of the most generous solar incentives in the world generous enough that Germany accounted for more than half of all new solar installations last year. Even after several rounds of cuts this year, the owner of a new building-mounted solar array can still collect up to .33/kWh, equating to $0.46/kWh at the current exchange rate. Under the feed-in tariff system, utilities pass on the extra cost of buying renewable power to ratepayers, and as reported by the German Energy Blog recently, that will add .035/kWh (USD $0.049/kWh) to the average consumer’s bill next year. Nearly half of that premium is attributable to solar power, even though it apparently accounted for only about 7% of all renewable power generated in Germany in 2009, because the country is such a poor place for solar power.

On average, every MW of solar capacity installed in Germany generates only about 100 kW over the course of the year. If that were a constant, it would be a lot easier for grid managers to accommodate. But of course that capacity generates nothing at night, while still putting 1 MW into the grid at noon on a bright summer day. That’s more than twice the peak-to-average output ratio for solar in a good site in Southern California, Arizona or Nevada.

The difference affects how much backup capacity must be available to the grid and likewise how much other electrical capacity must be taken off grid as solar output ramps up daily and seasonally. It also determines the nature of that swing capacity. While in a sunny place it might suffice to keep a few “peaking” gas turbines on standby a role that might even be filled by electricity storage in the future in a place as un-sunny as Germany it requires substantial capacity capable of running economically for many hours a day, week after week. That doesn’t sound like a recipe for replacing German coal-fired power plants (or nukes) with solar photovoltaic.

Everyone knows solar power is consistent. However, while I’ve tended in the past to ignore peak output and focus on the average output of solar in a given location, because that’s what determines how much energy is actually delivered over time, the implication of Herr Kohler’s comments is that the low capacity utilization inherent in solar installations in northern, cloudy regions amplifies the impact of solar’s cyclicality.

It’s starting to look like the German feed-in tariffs, which were certainly effective as a solar policy in maximizing solar installation, despite Germany’s disadvantages of climate and geography, weren’t a very smart energy policy. They’ve placed too much emphasis on a technology that under German conditions only yields a third as much energy, on average, as the same amount of wind capacity, while still being capable of swamping the grid when the sun does shine.

Editors Note: We disagree with Mr. Styles editorial bling. Every advancement in civilization has come from governments pushing technology to new heights. Germany is cutting new territory with its push on solar installation and renewable energy and will spend less hand wringing and the lives of its solders depending having to depend on middle east oil when the inevitable energy crisis of the 70’s returns. Solar energy is forward thinking. Solar installations are mean local jobs with money into local economies. Wouldn’t that be refreshing government action.