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Former east Germany gains solar boost
Feature article
The consequences of Germany’s rapid growth in PV are the solar companies themselves, which have in recent years established themselves in a “Solar Valley”, located in what used to be a vastly polluted region of east Germany, the Bitterfeld GDR chemical industry site.
Former east Germany gains solar boost TWENTY YEARS AGO, AFTER THE FALL OF THE BERLIN WALL, THE PROSPECTS FOR THE ECONOMY OF WHAT PREVIOUSLY WAS EAST GERMANY WERE BLEAK. BUT THE FEDERAL STATES OF SAXONY, THURINGIA AND SAXONYANHALT HAVE EMERGED AS EUROPE’S PRIME SOLAR INDUSTRY REGION. THE KEY TO SUCCESS HAS BEEN GERMANY’S FEEDINTARIFF FIT LEGISLATION, AND WELLCOORDINATED EFFORTS BETWEEN GOVERNMENT DEPARTMENTS, REGIONS AND INDUSTRY. 842 MW of PV cells, and 659 MW of PV modules were produced in Germany in 2007. Production capacities along the solar value chain continue to grow at high rates, with over 15 factories currently under construction. In total, 1.7 billion was invested in capacity expansion in 2007. The export quota of Germany’s PV industry is 43%, having reached 2.4bn in 2007, and is expected to more than double by 2010. Production capacity for cells and modules is concentrated in the eastern and central areas of Germany – where over 75% of crystalline modules, and over 90% of thin film modules are manufactured. “This success is largely based on consistent policies and the [FiT] legislation, which allows [consumers and businesses] to sell [PV]-generated electricity at a long-term, guaranteed premium price”, says Hans-Josef Fell, a prominent MP who tabled the FiT law in 1999. Despite the success of the FiT system, Carsten Körnig, managing director of the Solar Industry Federation BSW, still has to fight off criticism from Germany and
68
renewable energy focus
May/June 2008
Ralph Kappler
beyond, designed to undermine the FiT system in general. “To a certain extent the national debate on feed-in legislation is dominated by a discussion of the costs of solar electricity”, he says. “And some comparisons neglect the welldocumented benefits of solar energy.”
Getting the costs down FiT is still widely accepted in Germany by most political groups. Those in the PV industry realise that PV can’t survive on subsidies forever, meaning that cost reduction leading to grid parity are key industry objectives. Many are optimistic on this front, including Hans-Josef Fell, who says that rising oil (and other fuel) prices means that the cost of renewables is getting ever closer to the current market price for fossil fuel-derived sources. And he anticipates that the cost of PV will go down “very rapidly, perhaps halving by 2015”.
PV/Germany
In brief: Germany’s feed-in-tariff ■ Depending on the project, the fixed premium rate currently stands at between 42 and 52 cents. ■ There is no subsidy in Germany for renewable electricity as tax money is not overtly involved, however utilities are allowed to redistribute these extra costs to consumers who pay slightly higher electricity bills. ■ However, some argue that the higher cost for renewables on the electricity price (about 3bn per year) is compensated for by the so called “merit order effect”, which reportedly lowers the electricity price by about 5bn. ■ This effect kicks in at the stock exchange, as wind energy has no fuel cost (which saves 1bn), and using it (rather than fossil fuels) avoids external environmental costs of about 2bn per year.
And according to Körnig, “the German PV industry has accomplished cost reductions for PV installations of about 50% over the last 10 years. Within the last year the industry reduced its costs by about 6%. The goal is to reach grid parity within the shortest time possible. The association expects annual cost reductions for solar PV electricity of 6%-7% in the years to come. With an expected moderate 3% increase of conventional electricity [prices], grid parity of solar [PV] energy will be achieved in Germany within the next 7 to 8 years.”
Solar valley in central Germany The consequences of Germany’s rapid growth in PV are a growing number of solar companies, which have in recent years established
70
renewable energy focus
May/June 2008
themselves in a “Solar Valley”, located in what used to be a vastly polluted region of east Germany, the Bitterfeld GDR chemical industry site (see image). In fact, the PV sector in the east of Germany employs over 13,000 people along the solar value chain. Amongst the new factories here is Q-Cells’, whose annual PV production of about 390 Megawatt peak in 2007 secured it a worldwide top ranking. Last year Q-Cells increased its turnover by 50%, to almost 860 million (see ‘QCells: PV at the sharp end’, page 56). And at the beginning of 2009, PV Crystalox Solar plc will also open a plant in the Bitterfeld Park, which will produce 900 tonnes of silicon wafers in the first year. The solar boom is also spreading to other parts of the State. A joint venture of Schüco International – one of the leading manufacturers of window and solar systems – along with the Düsseldorf energy supply company E.ON, will see the set up of a 100 million production plant for thin stratum solar modules for BIPV.
Job machine for a deprived area More than 3,000 jobs have been created in this Solar Valley. By 2012 around 10,000 people will be working in the region’s solar energy industry. The solar industry is increasingly becoming a growth generator in the former East Germany, and important industrial growth clusters are evolving: “Today, one in a hundred workers employed in the industrial sector in the east of Germany works in the PV industry“, concludes Carsten Körnig.
The consequences of Germany’s rapid growth in PV are the solar companies themselves, which have in recent years established themselves in a “Solar Valley”, located in what used to be a vastly polluted region of east Germany, the Bitterfeld GDR chemical industry site.
Former east Germany gains solar boost TWENTY YEARS AGO, AFTER THE FALL OF THE BERLIN WALL, THE PROSPECTS FOR THE ECONOMY OF WHAT PREVIOUSLY WAS EAST GERMANY WERE BLEAK. BUT THE FEDERAL STATES OF SAXONY, THURINGIA AND SAXONYANHALT HAVE EMERGED AS EUROPE’S PRIME SOLAR INDUSTRY REGION. THE KEY TO SUCCESS HAS BEEN GERMANY’S FEEDINTARIFF FIT LEGISLATION, AND WELLCOORDINATED EFFORTS BETWEEN GOVERNMENT DEPARTMENTS, REGIONS AND INDUSTRY. 842 MW of PV cells, and 659 MW of PV modules were produced in Germany in 2007. Production capacities along the solar value chain continue to grow at high rates, with over 15 factories currently under construction. In total, 1.7 billion was invested in capacity expansion in 2007. The export quota of Germany’s PV industry is 43%, having reached 2.4bn in 2007, and is expected to more than double by 2010. Production capacity for cells and modules is concentrated in the eastern and central areas of Germany – where over 75% of crystalline modules, and over 90% of thin film modules are manufactured. “This success is largely based on consistent policies and the [FiT] legislation, which allows [consumers and businesses] to sell [PV]-generated electricity at a long-term, guaranteed premium price”, says Hans-Josef Fell, a prominent MP who tabled the FiT law in 1999. Despite the success of the FiT system, Carsten Körnig, managing director of the Solar Industry Federation BSW, still has to fight off criticism from Germany and
68
renewable energy focus
May/June 2008
Ralph Kappler
beyond, designed to undermine the FiT system in general. “To a certain extent the national debate on feed-in legislation is dominated by a discussion of the costs of solar electricity”, he says. “And some comparisons neglect the welldocumented benefits of solar energy.”
Getting the costs down FiT is still widely accepted in Germany by most political groups. Those in the PV industry realise that PV can’t survive on subsidies forever, meaning that cost reduction leading to grid parity are key industry objectives. Many are optimistic on this front, including Hans-Josef Fell, who says that rising oil (and other fuel) prices means that the cost of renewables is getting ever closer to the current market price for fossil fuel-derived sources. And he anticipates that the cost of PV will go down “very rapidly, perhaps halving by 2015”.
PV/Germany
In brief: Germany’s feed-in-tariff ■ Depending on the project, the fixed premium rate currently stands at between 42 and 52 cents. ■ There is no subsidy in Germany for renewable electricity as tax money is not overtly involved, however utilities are allowed to redistribute these extra costs to consumers who pay slightly higher electricity bills. ■ However, some argue that the higher cost for renewables on the electricity price (about 3bn per year) is compensated for by the so called “merit order effect”, which reportedly lowers the electricity price by about 5bn. ■ This effect kicks in at the stock exchange, as wind energy has no fuel cost (which saves 1bn), and using it (rather than fossil fuels) avoids external environmental costs of about 2bn per year.
And according to Körnig, “the German PV industry has accomplished cost reductions for PV installations of about 50% over the last 10 years. Within the last year the industry reduced its costs by about 6%. The goal is to reach grid parity within the shortest time possible. The association expects annual cost reductions for solar PV electricity of 6%-7% in the years to come. With an expected moderate 3% increase of conventional electricity [prices], grid parity of solar [PV] energy will be achieved in Germany within the next 7 to 8 years.”
Solar valley in central Germany The consequences of Germany’s rapid growth in PV are a growing number of solar companies, which have in recent years established
70
renewable energy focus
May/June 2008
themselves in a “Solar Valley”, located in what used to be a vastly polluted region of east Germany, the Bitterfeld GDR chemical industry site (see image). In fact, the PV sector in the east of Germany employs over 13,000 people along the solar value chain. Amongst the new factories here is Q-Cells’, whose annual PV production of about 390 Megawatt peak in 2007 secured it a worldwide top ranking. Last year Q-Cells increased its turnover by 50%, to almost 860 million (see ‘QCells: PV at the sharp end’, page 56). And at the beginning of 2009, PV Crystalox Solar plc will also open a plant in the Bitterfeld Park, which will produce 900 tonnes of silicon wafers in the first year. The solar boom is also spreading to other parts of the State. A joint venture of Schüco International – one of the leading manufacturers of window and solar systems – along with the Düsseldorf energy supply company E.ON, will see the set up of a 100 million production plant for thin stratum solar modules for BIPV.
Job machine for a deprived area More than 3,000 jobs have been created in this Solar Valley. By 2012 around 10,000 people will be working in the region’s solar energy industry. The solar industry is increasingly becoming a growth generator in the former East Germany, and important industrial growth clusters are evolving: “Today, one in a hundred workers employed in the industrial sector in the east of Germany works in the PV industry“, concludes Carsten Körnig.