Impact of Abolishing Feed-in Tariffs for Household Solar in Germany
Households reap financial benefits from solar energy installations without the need for a feed-in tariff
The decision to set the feed-in tariff for photovoltaic (PV) systems in Germany to zero could have far-reaching economic consequences, particularly for households with low electricity consumption.
Economic Implications
- Reduced Incentives for New Installations: The removal of feed-in tariffs could make installing new PV systems less financially appealing for households. The guaranteed fixed remuneration per kilowatt-hour of electricity fed into the grid has been a significant incentive for many homeowners.
- Impact on Renewable Energy Targets: The solar industry has warned that ending subsidies might hinder Germany's goal of sourcing 80% of its electricity from renewable sources by 2030. This could jeopardize national climate targets.
- Increased Burden on Households: For households with low electricity consumption that depend on selling excess energy to the grid, the loss of subsidies could lead to higher costs or reduced savings. This might disproportionately affect smaller households or those who rely on solar power to offset their energy bills.
- Shift to Storage and Batteries: The economic strain could accelerate the shift towards storage solutions, such as batteries. Households might need to store excess energy locally rather than relying on the grid for financial return.
- Potential for Increased Costs for Consumers: The removal of subsidies could lead to increased costs for consumers if the grid is unable to efficiently integrate the excess energy from solar installations. This inefficiency, coupled with the need for more storage, could raise electricity prices.
- Industry Reactions and Economic Contraction: The solar industry has expressed concerns about these changes, which could exacerbate economic challenges in Germany, a country already facing economic contraction. This could lead to broader economic impacts beyond the household level.
Analysis and Expert Opinions
Finanztip, a company of the Finanztip Foundation, has analysed the costs associated with PV systems, including purchase price, operating costs, smart meters, tax boxes, and subsidies under §14a EnWG. They note that a large portion of the generated electricity can be used directly in the household with a storage system, saving high electricity costs. However, without feed-in tariffs, a PV system is only worthwhile with a storage system and high self-consumption.
Federal Minister of Economics Katherina Reiche (CDU) has questioned the need for promotion for new, small PV systems, stating they already pay off in the market today. However, small PV systems on single-family homes often lack the technical prerequisites and suitable service providers to sell fed-in electricity on the electricity market.
Conclusion
The complete abolition of feed-in tariffs for PV systems on single-family homes could significantly worsen their economic viability. For a household with low electricity consumption, the time it takes for a PV system with a storage system to amortize increases from 17 to over 31 years. This highlights the importance of careful consideration when making decisions about subsidies for renewable energy sources.
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