The dynamics underpinning households being able to consume the electricity produced on their roof from a PV array remains keenly contested. In territories where there is a relatively high levels of PV penetration and increasing PV grid parity, such as certain states of the US, Australia and Germany, the debate regarding this is heating up.
On face value it makes perfect sense that a household with a PV installation should be able to self consume its PV electricity, reduce its power bills, and therefore pay for the PV array over time. But when considered in context of the reality that electricity charges in a large part, per kWh, are comprised of grid charges and taxes, when households reduce their gross electricity through “self consumption”, then networks will want to pass on an increasing proportion of grid charges and taxes fall on those homes without PV.
In Australia, this debate has been playing out for some time, and the Australian Photovoltaic Association has proposed measures to allow for a “distributed energy market”. Utilities themselves, perhaps not deliberately, have begun a discussion of a potential utility death spiral and its consequences.
In Germany the debate has been a little slower to evolve. Almost all PV installations in Germany have been installed under federal renewable energy legislation, the EEG, which put in place the FITs. As digressions of the FITs continue and residential grid parity deepens, a debate as to how self consumption will operate under the EEG is becoming increasingly contentious.
A further dynamic feeding into the PV self-consumption debate in Germany is that the EEG itself is one of the things being debated in the grand coalition discussions, between Germany’s two major parties, the CDU and SPD. These discussions are widely expected to be finalized in the coming weeks, if not days.
Emerging government position
Last week in Berlin, this self consumption debate was discussed in detail at one of Germany’s largest PV conferences, the 14th Forum Solarpraxis. Speaking at the event, Karin Freier from the federal ministry for the environment, conservation and nuclear safety (BMU) said that the coalition negotiations are not intended to do away with the EEG, but that it must evolve, “in a meaningful way”.
“Self consumption for households is a sustainable market for PV in the future,” said BMU’s Freier, “but it must be designed in a way that is helpful to the network.” Freier said that in a system where up to two-thirds of the cost of electricity is taxes and network fees, that how to regulate self consumption is a big decision.
Freier suggested possible solutions whereby PV electricity that is consumed directly by a household could attract some of the fees grid electricity does, including the EEG itself – which is charged as a levy on residential consumer power bills. Speaking carefully because of the tense process of coalition negotiation underway, Freier also suggested that PV self consumption could be treated the same way as distributed electricity generation from fossil fuels – such as gas-powered fuel cells.
Tobias Schütt, from German integrated PV, storage and green energy provider DZ-4 disputed this. DZ-4 provides a service whereby households can install PV and maximise self consumption through demand side management and some battery storage. The household remains grid connected, can feed excess generation into the grid and receive the EEG and purchase power from its subsidiary certified green energy provider.
Schütt said that he was keenly invested in the self consumption debate as it is DZ-4’s core business. Schütt said that charging the EEG – which pays for renewable energy development – on households’ self consumption would be nonsensical and goes against the spirit of the legislation. He also said that many households that invest in a PV and storage solution do so for “emotional reasons”, representing an ideological decision to adopt clean energy.
“Customers who decide for storage do so for non-financial reasons, as they pay around €0.30 – €0.40/kWh for storage,” said Schütt. He added that these customers are willing to pay a premium for autonomy and should not be penalised.
Picking up on this, Carsten König, from the German solar industry association, the BSW, said that he couldn’t imagine the regulators charging an EEG surcharge on the very technologies it is subsidising. He did, however, acknowledge that in during the dark days of summer, households that largely consume electricity produced on their roofs would have to pick up some of the cost of the seasonal generation capacity required. “These consumers will have to pick up some of the cost, but just what that will be needs to be discussed.”
On the battery storage front, the German energy storage association’s Harald Binder said that the storage sector is not asking for increased subsidies, but that is requires “clear cut market conditions” for sustained growth and a rollout of storage technologies. Residential battery storage in Germany currently do receive some subsidy support, in the form of the KFW loan scheme. “We are now in a situation where we as a renewables industry requires a totally different electricity market system,” said Binder.
As the debate at the Forum Solarpraxis continued into a second day, the issue of a potential levy on the self consumption of PV electricity became a rallying cry amongst the 600-odd attendees. When the grand coalition negotiations are concluded it will become clear what exactly the German solar industry will be up against. What is clear is that industry is squaring up for another battle.