European Commission approves German renewable energy law

The European Commission has rubber-stamped Germany's new Renewable Energy Act (EEG) after finding it to be in accordance with EU state aid rules.

The revamped law, which will regulate support to renewable electricity through 2016, provides support for production of electricity from renewable energy sources as well as from mining gas. It also reduces the financial burden on energy-intensive users and certain auto-generators by reducing their level of payment of the renewable energy law surcharge.

The EC found that the act provides that “aid will be progressively allocated through tenders, which will gradually be opened to operators located in other member states.

"The Commission has concluded that the EEG 2014 will further EU environmental and energy objectives without unduly distorting competition in the single market," the Commission said in a statement.

Joaquín Almunia, the Commission vice president in charge of competition policy, added: "The EEG 2014 paves the way for more market integration of renewables. In the medium term this should lead to lower costs for consumers. Also, the progressive opening up of tenders to operators located in other Member States is a very positive development for the internal energy market."

The government of Chancellor Angela Merkel presented the draft law in April. It will now go into effect August 1.

Germany's annual yearly budget for the support of renewable electricity is estimated at some €20 billion.

Producers of renewable electricity will now have to sell on the market and they will receive support in the form of market premiums paid on top of the market price for electricity. Market premiums will be determined by reference to "administratively set reference values" through 2016. The law also calls for a pilot tender program for ground-mounted solar installations that will determine the level of the premiums and allocation of aid to tender participants. As of 2017, tenders are to be generalized but a new law will be required to introduce them.

Small installations (below 100 kW) will continue to benefit from feed-in tariffs for the next 10 years and are not obliged to sell on the market.

Germany's renewable energy subsidy program is financed by the EEG-surcharge that is to be paid by suppliers in respect of the electricity supplied to end consumers in Germany and by auto-generators (i.e. electricity producers for self-consumption). The law provides reductions for energy-intensive users in sectors that meet certain criteria in an effort to maintain competitiveness in German industrry.

Reductions are also granted under the EEG 2014 to certain auto-generators. Reductions for auto-generators using small installations are allowed as they are below the so-called "de minimis threshold." Reductions for auto-generators using renewable energy sources are also allowed since they are in line with the logic of the EEG-surcharge system. Auto-generators that are energy-intensive will also be eligible for reductions.

The Germany government is to review the possibility of reductions for other types of installations "in due time" and and eventually amend the law if need be.

The yearly cost of the reductions is estimated at around €5 billion.

In addition, instaallations located in EU member states that have concluded a cooperation agreement with Germany will be able to bid for up to 5% of the tendered capacity as part of the planned tender program.

The Commission noted that such cooperation agreements ensure that electricity produced in another member state that would obtain German subsidy support would count towards Germany's renewable energy targets.

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Australia: Major push toward third party ownership Down Under

Clean Energy Week continues in Sydney this week and announcements have come thick and fast from renewable energy bodies the CEFC and the Australian Renewable Energy Agency. The CEFC in particular has injected $120 million into third party ownership of PV Down Under. The cleantech finance corporation said that PPAs or leases would help Australians to install solar, in situations where the upfront capital required may be problematic.

“Our new offerings are an important development in solar PV financing in Australia because they include both power purchase agreements (PPAs) and solar leasing,” said the CEFC’s CEO Oliver Yates today in Sydney. “While relatively new here, these products are well established overseas and make it easier for householders and businesses to access solar power because they don’t have to source the upfront capital needed for equipment and installation.”

However, some in the Australian cleantech community question remain as to whether the solar leasing model will serve the Australian solar industry and consumers well. Last month GTM Research published data it said indicated that third-party ownership, either through PPA or under lease, will reach its peak in the U.S. this year. Third party ownership is predicted by GTM Research to account for 68% of residential market share in 2014 before declining.

“It is an exciting time for solar and it’s a great announcement and it’s going to bring on the next wave of solar and bring the investment community into solar in Australia, which hasn’t happened to date,” said Sungevity Australia’s managing director Nick Lake, in an interview with pv magazine. “Until now it’s mainly been mum and dads financing their own solar generation on their roofs and now we’re going to get institutional money coming in.”

Sungevity is one of the leading solar lease providers in the U.S. market, and was cofounded by Australian Danny Kennedy. The firm launched in Australia in 2012 and has since expanded its Australian workforce to 30 people, based in Sydney. Sungevity uses an online platform, tools and satellite imagery to identify suitable solar rooftops and cut down on customer acquisition costs. Sungevity’s Lake said that he was not worried the entrance of competitors such as SunEdison, assisted by the CEFC, will challenge Sungevity’s position in the market.

“We actually like that the third party model is gaining some traction here,” said Lake. “So it will be good to see broader consumer awareness around third party ownership.”

Sungevity Australia is set to launch a solar PPA product next week with Lake saying it has the potential to further unlock the commercial rooftop space.

“We certainly see an opportunity in the small and medium enterprise (SME) market,” said Lake. “Larger corporate customers have the ability to access low costs funds, but in the SME space we see a good opportunity for the PPA model.”

CEFC investment

The CEFC’s move to kick start third-party ownership is divided across three investments. U.S. PPA pioneer SunEdison will enter the Australian market on the back of a $70 million investment by the CEFC, to offer both leases and PPAs to Australian consumers. Local module producer Tindo Solar picked up a AUD$20 million investment to offer a PPA product in partnership with the Solaire Income Fund. And Kudos Energy got a $30 million investment, to roll out PPAs to commercial properties and apartment or multi-dwelling residences. This latest CEFC round of investment brings its total funding of solar in Australia to AUD$200 million.

Kudos Energy’s David Jones recently told Australian renewable energy website RenewEconomy that the third-party ownership market segment in Australia could grow to be worth tens or even AUD$100 billion. 

“With the depth of the capital markets in Australia, and the size of the super [superannuation or retirement] funds and their search for quality investments, we see this market genuinely taking off,” Jones told RenewEconomy. “We think this is the start of something substantial.”

Unlocking institutional investment

One of the key drivers of solar in the U.S., which is the most mature solar leasing market, has been funds flowing into the industry from institutional investors and companies looking for tax equity. The solar Investment Tax Credit has played a large role in securing this flow of investment, however Yieldcos are now providing an additional driver. 

Australia’s CEFC is looking to facilitate similar institutional investment into renewables and this week announced an AUD$80 million cornerstone investment to create the Australian Clean Energy Infrastructure Fund. The fund seeks to raise a further AUD$300 to $AUD500 million over the next three to five years. The CEFC hopes that the fund will provide a vehicle for large institutional investors, such as superannuation funds, to investment in clean technology projects, including solar.

“Australian superannuation funds have been increasing their investment in infrastructure over the last decade and have an estimated AUD$40 to $65 billion now invested in the sector,” said CEFC CEO Oliver Yates. “At the same time, a growing number of these funds and their members want to invest in the clean energy and new energy efficient technology sectors... The establishment of Australia's first clean-energy focused wholesale infrastructure platform will meet this need and help develop this market for the benefit of existing investors and attract new institutions to the sector,” he said.

 

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UK renewables sector cheers carbon budget decision

Efforts by the U.K. chancellor George Osborne to remove a legally binding pledge to lower carbon emissions have today been dealt a blow by the Liberal Democrat energy secretary Ed Davey.

Announcing that the target will not be changed, Davey said that the so-called fourth carbon budget, which covers the period between 2023 and 2027, will go ahead as originally planned three years ago when Lib Dem politicians faced down Conservative pressure to remove the emissions cap.

Coalition Prime Minister David Cameron, himself in favor of the target, intervened against fellow Conservative Osborne but did set a review date for the carbon budget in an effort to appease his right-hand man.

That date was today, but the review body rejected Osborne's assertion that the pledge to lower emissions to 80% of their 1990 levels was a burden on business.

"The fourth carbon budget, which caps the U.K.'s emissions, will not change," said Davey in a statement issued today. "It covers 2023 to 2027, and will cement the U.K. as a global leader in combating climate change in an affordable way. We are increasingly seeing other countries recognize our shared responsibility to tackle climate change join us in ambitious action."

Chancellor Osborne had argued that the U.K. was too far out in front of other countries on this matter, and as a result was suffering financially. But his concerns were thrown out by the Committee on Climate Change (CCC), which advised the government's statutory advisors on the matter.

Decision receives industry backing
Nina Skorupska, chief executive of the Renewable Energy Association (REA), welcomed today's announcement.

"The decision to keep the fourth carbon budget in line with the CCC's advice is very good news for the U.K.'s green economy and the pursuit of a sustainable future," Skorupska said. "This decision puts independent expertise and long-term thinking ahead of the possible lure of political point-scoring.

"Across renewable power, heating and transport fuels, investors need certainty that when it comes to the low carbon economy, the government is in it for the long-term." The U.K.'s Solar Trade Association (STA) also supported the campaign to back the fourth carbon budget, and was joined by more than 100 interested businesses and organizations across the U.K.

Ed Davey also revealed that the EU is close to agreeing a new climate deal that would pledge a 40% emissions cut across Europe by 2030 – a situation that should, he argued, offer a level-playing field for British business and industry, and would therefore hopefully appease the disgruntled chancellor Osborne.

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India's national solar mission back on track

India's ambitious solar plans have received a much needed boost from the government of Prime Minister Narendra Modi following disruptions caused by delays and trade diputes.

The Ministry of New and Renewable Energy (MNRE) last week issued guidelines for the installation of 1.5 GW of solar power plants -- the biggest tender to date, according to India's Business Standard.

In addition, the government has tapped state-owned company NTPC Vidyut Vyapar Nigam (NVVN) – the trading arm of the state-owned electricity giant NTPC -- to accelerate the solar rollout and help meet the targets set by the solar mission, Business-Standard.com added.

The news website said NVVN, which assists in meeting the country’s expected rise in energy trading, would package generated solar power with cheaper conventional power and sell at an average rate.

According to the renewable energy ministry's guidelines, the NVVN will select the grid-connected PV projects of 1.5 GW total capacity through a transparent, tariff-based reverse bidding process. "NVVN will purchase the power from the successful developers at their bid tariff and sell bundled power to distribution companies/utilities/other bulk consumers," the guidelines say.

The MNRE said the 1,500 MW of grid-connected solar projects would be developed under the bundling scheme, which would provide for deployment of only PV projects. However, it added that the selection of projects would be "technology agnostic" and that "crystalline silicon or thin film or CPV, with or without trackers," could be installed.

The bundling scheme will be carried out in a phased manner. According to the MNRE guidelines, the first tranche of PV project selection will include 750 MW of capacity between 2014 and 2015, followed by the remaining 750 MW selected in the second tranche between 2015 and 2016.

NVVN oversaw country’s solar tender in 2010, which led to solar power rates dropping from INR 17 ($0.28) a unit to INR 10-12 a unit. The price has continued to drop to its current range between INR 6.5 and INR 7 a unit – a decline of 60% in three years, according to the Business Standard.

Tarun Kapoor, the MNRE’s joint secretary, said the government was hopeful that the rate would come down further to at least INR 5 a unit during the latest bidding, quoted by the Business Standard. Kapoor added that there were now "serious players in the sector" who were expected to bid "aggressively."

India's government is aiming to achieve grid parity by 2017, earlier than the original target of 2022.

The new tender process is expected to begin by the end of August.

The mission has set a goal of 20 GW of grid-connected solar power capacity by 2022 in three phases (1000 MW in the first phase up to 2012-13; 9000 MW in the second phase from 2013 to 2017; and 10,000 MW in the third phase from 2017 to 2022). 

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Electricity generation from France's solar PV increases in the first six months of 2014

Solar PV installations in France generated a total of 2.97 terawatt-hours (TWh) of electricity in the first six months of 2014, according to an analysis by renewable energy consultant Bernard Chabot based on grid operator data. This is a 39% increase over the 2.13 TWh generated in the first six months of 2013, and enough to meet 1.24% of the nation's electricity demand.

Though it has not been a leading PV market in Europe, France is one of only 15 nations globally to meet more than 1% of its electricity demand with solar PV at the end of 2013.

And while the capacity of installed PV has increased, the nation's PV plants have also generated more electricity for their rated capacity so far in 2014. The average capacity factor of French PV was 14.7% over the first six months of 2014, compared to 12.9% in the first six months of 2013.

Within this average, France's PV output is highly variable on a seasonal basis, with capacity factors ranging from 5.3% in January 2014 to 20.4% in June.

The nation's PV market has slowed dramatically since 2011, largely due to policy changes. France installed only 743 MW in 2013, less than half the market peak of 1.69 GW in 2011. According to the nation's Ministry of Ecology, Energy and Sustainable Development another 168 MW was installed in the first quarter of 2014, bringing France to a cumulative total of 4.80 GW of installedPV.

 

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US federal government tips solar for leading energy role

A new report published by the U.S. Energy Information Administration (EIA), which maps out the country's new energy generation needs until 2040, predicts that solar will cement itself as the second-most important energy source after natural gas.

Despite diminishing demand for new electric generating additions between now and 2040 – the EIA forecasts an average of just 16 GW of new power capacity annually in the near-term, and just 9 GW of new capacity between 2016 and 2022 – solar power will come to play an increasingly important role in the country's energy mix.

Natural gas and oil will remain the dominant driver of new power capacity, but the EIA expect renewable energy generation to expand its share of the energy mix, with solar leading the way.

Of the 351 GW of energy capacity additions expected to be added between now and 2040, 73% (255 GW) will come from natural gas-fired plants. However, 83 GW of the total figure will be generated by renewable energy, of which 39 GW will be derived from solar power. And of that 39 GW figure, 60% will come from rooftop installations as the U.S. solar PV industry matures and gains wider acceptance among the American public.

Commenting on the report, Solar Energy Industries Association CEO and president Rhone Resch said: "Solar is the fastest-growing source of renewable energy today and, as this report bears out, it will continue to be for years and years to come. The continued, rapid deployment of solar nationwide will create thousands of new American jobs, pump hundreds of billions of dollars into the U.S. economy and help to significantly reduce pollution.

"Just as importantly, it will also provide Americans with the freedom to decide how to power their homes, businesses, schools and government facilities in the future. With 60% of all new PV installations in the years ahead to be rooftop solar, significant savings will be generated when it comes to future energy costs."

Resch did warn, however, that solar's progress could be jeopardized if current support schemes such as the solar Investment Tax Credit (ITC), net metering system and renewable portfolio standards (RPS) continue to come under attack by entrenched fossil fuel interests. "Of immediate concern," he added, "we are strongly urging Congress to adopt 'commence construction' language this year, allowing project developers to take full advantage of highly successful solar ITC and giving Americans access to new, affordable clean energy sources."

The report, titled Annual Energy Outlook 2014, found that the U.S. will require reduced capacities of new energy annually until at least 2040, citing the post-millennium boom years as a bonanza period for energy capacity additions that have resulted in surplus capacity relative to required reserve energy margins in many regions of the country.

The report also drafted a snapshot 'certain-case scenarios' of which one – the No Sunset case – assumes that existing federal energy policies, such as the solar ITC, are extended. In such a scenario, new renewable energy capacity additions until 2040 would amount to 265 GW. An unlikely, but nonetheless encouraging, scenario.
 

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Tata launches Indian finance plan for solar customers

One of India's leading solar power developers has announced the introduction of a scheme designed to make solar PV installations more attractive to the average consumer.

In partnering with Bajaj Finance, Tata Power Solar will provide interest-free loan options for solar products provided the cost of the item in question is below Rs 2.5 lakh, which equates to US$4,000.

The loan option, known as an EMI (equated monthly installment) will be applicable to Tata Power Solar’s products, which include solar panels, solar water heaters and solar lighting products. Rolled out initially in 20 of India’s largest cities, the scheme is designed to make funding a private residential solar PV installation more affordable for the average Indian consumer.

Should the initial roll-out prove successful, Tata will expand the scheme nationally in a move that could seriously augment India’s residential PV sector.

"We have ensured that the offer is simple and without any hidden cost," said Tata Power Solar VP Gagan Pal. "There are a number of people who are hesitant to invest in solar due to the initial upfront cost. We are sure that this offer, with its strong financial incentive, will help people find our products very affordable."

Bajaj Finance Ltd, which will underwrite the loans, added that it has developed credit policies to ensure the customer enjoys hassle-free service. "This life event should be about buying the desired solar device without having to worry about the money," said Bajaj Finance president for consumer finance, Devang Mody.

Tata Power Solar is adamant that such solar installations can help soothe many Indians’ exposure to the power outages that regularly hit the nation's largest cities, while also stripping away the large upfront costs that have deterred millions of residents from adopting solar PV as an energy solution.

Thus far, Tata Power Solar has been a key mover in India's utility scale solar sector, commissioning a series of large-scale solar plants across the country and boasting more than 70 MW of cumulative installed PV capacity nationwide.

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