German econ min considers phasing out subsidies for new small-scale solar PV

Germany’s economy minister, Katherina Reiche, is considering to phase out the subsidy system currently in place for small-scale photovoltaic (PV) installations which feed electricity into the grid. “New, small PV systems are already profitable on the market today and do not require subsidies,” Reiche told newspaper Augsburger Allgemeine in an interview. She replied to a question about private PV installations, such as on homeowners' rooftops, and did not further define their size. 

So far, homeowners with a solar rooftop system have been guaranteed a fixed remuneration per kilowatt-hour of electricity fed into the grid for a period of 20 years, depending on the size of their systems and when they were commissioned. This feed-in guarantee has gradually gone down in recent years. It is credited with powering Germany’s renewables growth. Without such a mechanism, renewables would have had a hard time competing with other sources, such as coal. Existing solar installations would continue to receive the agreed remuneration, Reiche said.

Solar industry association BSW said such a plan would "jeopardise climate targets and severely damage the industry". The group called for the government to tackle tasks such as the rapid expansion of photovoltaics across all market segments, as well as storage and grids, "instead of engaging in harmful debates about slowing down the pace of the energy transition in photovoltaics".

The government parties had said in their coalition agreement that they wanted to ensure that renewable electricity installations could fully finance themselves on the market in the long term. The further expansion and the installation of adequate storage capacity likewise should be achieved through “a greater use of market instruments”.

Minister Reiche wants to change the regulatory framework so that renewables feed their electricity into the grid in a controlled way. This would mean, for example, equipping even small PV systems with storage units, and requiring them to market their electricity. Many small rooftop systems currently feed their electricity into the grid in an uncontrolled manner, putting the network under pressure.

“Onshore wind and solar power plants will have to contribute more to the costs of grid expansion in the future,” Reiche told Augsburger Allgemeine. Moreover, the expansion of renewables should be aligned with grid expansion, as not accounting for this “makes our electricity system unnecessarily expensive,” the minister said.

To this end, the economy ministry commissioned a “reality check” meant to put cost-efficiency and energy security at the centre of Germany’s energy policy. However, a growing number of critics have voiced concerns over the report and its conclusions, worrying that the government might plan to slow down renewables expansion.