Higher market price for power reduces renewables support to zero for first time

The increase in the wholesale market price for electricity in 2018 has led to a reduction of the so-called “market premium” that renewable power suppliers like wind and solar PV installations receive as a guaranteed payment, the German Renewable Energy Federation (BEE) says. The BEE gave the example of a new solar PV installation in Wittstock which won an auction with 5.42 cent per kilowatt-hour (ct/kWh). As long as the wholesale power price is below this value, the installation receives the difference as the market premium. But since the wholesale price rose to over 5.5 ct/kWh in August, the Wittstock PV plant received its revenue entirely from the market price without the need for support. Marco Nicolosi, analyst at Connect Energy Economics said that if wholesale power prices increased further – which they are predicted to do because of higher EU ETS prices and the phase-out of nuclear and coal power – more and more new renewables installations would run without the need for premium payments. For the large share of older installations with much higher guaranteed feed-in remunerations, the premium would not be reduced as much, but the BEE still estimates that some 2 billion euros in renewables support could be saved due to the development in 2019.

Read the BEE press release in German here.

See the CLEW factsheet Germany ponders how to finance renewables expansion in the future for more information.