Germany’s solar industry has been given a boost after the government said it would scale back the feed-in tariff for solar electricity by only 9-10 percent each year until 2011 much less than the 30 percent scale-back that some industry experts had predicted.
Solar power in Germany is set to generate 4.134 gigawatt-hours (GWh) or 0.83 percent of the country’s total electricity consumption in 2008; wind power generates 41.143 GWh or 8.26 percent of the country’s electricity.
Employing around 60,000 people, mainly in eastern Germany, the country’s solar industry is set to have a turnover of around €7 billion [US $9.9 billion] in 2008.
Though PV electricity will continue to cost between €0.40 to 0.50 per KW/h [US $0.56 to 0.70 per kWh] even after the feed-in tariffs are lowered, experts from the German solar industry association, Bundesverband Solarwirtschaft (BSW), predict that the cost will fall to grid parity sometime in the next decade.
The BSW says the industry is taking advantage of economies of scale to push down the costs of manufacturing solar panels.
Installed solar electricity costs €2,900 per KW [US $4,100], but this is expected to fall to as little as €2,100 [US $2,970] by 2010, according to one study. As a result, the cost of solar electricity could fall by as much as 40 percent to €0.15 per KW/h [US $0.21 per kWh] in sunnier southern Germany in the next few years.
The push to lower manufacturing costs of rooftop PV panels — which make up 95 percent of Germany’s installed PV capacity — should also be helped by an expansion in the number of producers of silicon.
A shortage of silicon has been driving up the price of solar panels, industry experts say.
Thin-film PV
Today, 13 percent of the solar cells manufactured by Germany are thin-film solar cells: these use only 1/100th of the amount of silicon as the silicon wafer-based solar cells that make up the remaining 87 percent of the solar cells manufactured in Germany.
In spite of the spectacular growth of the Germany’s solar industry and the impressive investment in production facilities, some experts argue that the high tariffs for solar electricity have failed to produce an efficient and competitive solar industry with a strong innovative technology base to sustain future exports.
According to the German solar magazine Photon, solar power could end up costing Germans €77 billion [US $209 billion] in higher tariffs by 2010 assuming that solar electricity generates 2 percent of the country’s total electricity by then, and some critics have said the costs are not in relation to the performance.
The higher solar electricity tariffs are financed by all electricity consumers under the Renewable Energy Law (EEG).
In 1999, the extra costs to consumers were €19 million; in 2005, €506 million; and in 2008, the cost is expected to €1 billion [US $26.8 million, $715.3 million, and $1.41 billion, respectively]. The costs could grow even higher in the coming decade because households with solar panels are guaranteed a fixed income for 20 years for surplus electricity sold to the national grid.
According to the Rheinisch Westfälischen Instituts für Wirtschaftsforschung (RWI), every job created in the solar industry costs €128,900 [US $182,200] in subsidies and every ton less of carbon emissions costs €900 [US $1,272], indicating that solar electricity might be the least efficient and most expensive way of tackling climate change.
In 2006, the feed-in tariff for a kWh of solar electricity was €0.518.
“That makes the tariffs for solar electricity about ten times higher than that paid for the generation of conventional electricity and five times higher than that for wind energy, which had tariffs of 8.7 cents in 2006,” according to a Handelsblatt report on an RWI study.
Experts warn that Germany needs to invest more into research to develop the next wave of solar technology if the industry is going to be able to compete with thin-film companies such as US-based First Solar and Nanosolar.
Knut Kübler von Matterhorn, a government energy research expert, notes that government spending on energy research — currently €538 million [US $760 million] — is less in real terms than in 1969.
The German solar industry will invest €175 million [US $247 million] in solar cell research in 2008; a number that will rise to about €225 million [US $318 million] in 2010, according to the BSW August 2008 statistical figures of the German solar PV branch.
Experts fear that with so little investment in new solar technology, Germany’s solar industry could find itself overtaken by more nimble competitors, who are forging ahead with developing innovative cheap and efficient solar technology that could soon capture a larger share of the market.
Although Germany is still the third largest producer of solar cells in the world after China and Japan, with a 20 percent market share, recent studies predict that Germany’s share of the world’s newly installed capacity will fall to 28 percent in 2010, from 58 percent in 2006.
Ref.: Jane Burgermeister from RenewableEnergyWorld.com
