Global challenges for solar feed-in tariffs

Posted: April 27, 2012

Living case update:

Germany has imposed severe degression schedules on its solar photovoltaic (PV) feed-in tariff (FiT), making some projects no longer economically viable. It has also set limits on the amount of power that can be sold to the grid. 

 

On top of this, the former champion of PV is also cutting down the number of new PV installations to half of last year’s 7.5 GW. Ironically, all these had to be done because the demand for PV had been too good, and subsidies towards the FiT are no longer sustainable.

 

Its new degression schedules issued on March 29th has hit the big producers. For example, a 7.5 GW/year system now faces a monthly base degression of 2.8% that adds up to 29% a year although the smallest system (1 GW/year) is unaffected.

 

However, the limits-decree penalises small players like farmers and homeowners. For instance, a 10 kW rooftop installation with a tariff of 0.195 euro/kWh can sell only 80% of its power to the grid.

 

Installing solar PV: Subsidies in Germany towards the FiT are no longer sustainable (photo credit: istockphoto)

Overall, the solar PV industry is in hard times. On April 2nd, Q-Cells, once the biggest solar cell company in the world, announced that it would file for bankruptcy, having lost US$1.1 billion last year. Solarhybrid AG also just filed for bankruptcy, several months after Solon, Germany’s first publicly traded solar company, did so. Others who went bust last year include Evergreen Solar and SpectraWatt.

 

First Solar is closing its Frankfurt facility by year end and will shut four lines in Malaysia from May 1st, where most of the thin film PV giant’s manufacturing is carried out.

 

Situation in Malaysia

Malaysia – which used Germany as its model for FiT – is mulling over whether it should raise its degression rate for solar PV. Sustainable Energy Development Authority (SEDA) Malaysia chief executive officer Badriyah Abdul Malek (pic) says the authority will study whether the current FiT for solar is too lucrative, and whether the 8% annual degression should be raised.

 

(photo credit: GPA Photo)

If Malaysia’s solar tariff were to be degressed more sharply, more funds would be available for other renewable sources. Alternatively, more people would be able to get into the solar playing field. There are complaints that quotas for solar PV are snatched up as soon as they are released.

 

 

Other Living Cases in this issue

 

 


 

  • Smart grids & power management