alt Hacker News> He noted that the term “solar subsidy” can be misleading, as it implies that every kilowatt-hour of solar electricity fed into the grid is fully funded by public money.
> The IWR explained that Germany’s Renewable Energy Sources Act (EEG) operates on a differential cost model for new photovoltaic systems. Under the mechanism, electricity generated by solar installations is first sold on the power exchange, with the resulting market revenues credited to the EEG account. Only the difference between the market price and the statutory feed-in tariff is compensated through the EEG account.
Wait, this is still being subsidized by taxpayers? And Germany has some of the highest energy prices in Europe?
I feel like I'm taking crazy pills. On the one hand folks are happy to tout solar and wind as "the cheapest energy you can get" and on the other we have the market realities of what consumers and taxpayers are paying. There's a policy failure somewhere if the cheapness to produce energy this way is not being reflected in the market and subsidy structure. Does anyone have an analysis of wtf is going on?
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I'm a consumer in Germany, and I pay 250€ for 1.200 kWh (my yearly consumption). I don't know anyone who is paying those high prices mentioned in the articles. There are many electricity providers in Germany, and that creates competition; therefore, you get a lot of cash back by switching providers.
Pretty much. Average household doesn't see this though, not directly. The industry on the other hand does, very much so.
> There's a policy failure somewhere if the cheapness to produce energy this way is not being reflected in the market and subsidy structure. Does anyone have an analysis of wtf is going on?
We are still paying for renewable energy projects agreed in say 2016 for ten years or indeed 2006 for twenty years. The "cheapest to produce" is a fact about new energy not about what it still costs us for things we agreed to in the past.
I don't look at German data but I do stare at UK data a lot and the model isn't so different. In 2015 this country finished "Allocation Round One" of the current mechanism for these subsidies. Offshore wind farms got about £120 per MWh [in 2012 prices] in that auction and by 2016 the first of these wind farms was running. £120 per MWh isn't a good price by today's standards even if it wasn't in 2012 money, but we have to keep paying that price for those wind farms because that's how deals work (unless you're Donald Trump)
This year, in "Allocation Round Seven" offshore wind auctioned for about £65 [still in 2012 prices]. That's still not a great price today, the Solar farms are significantly cheaper, but given that the afore-mentioned Tangerine Palpatine caused gas prices to shoot up this price is actually not uncompetitive. However, that power doesn't actually exist today, the auction was for rights those wind farms will get built over the next year or three and the £65 per MWh power won't be lighting my home until about 2028.
The "subsidy" (Einspeisevergütung) is a fixed price paid for power sold to electricity providers, for those who don't want the complexity of taking part in the energy market. It was supposed to accelerate the transition to renewable electricity production by making financing more predictable.
And it worked very well, as it started the global solar boom. Because it's not necessary anymore as an incentive, it's slowly getting phased out.
The Einspeisevergütung is not the reason why consumer electricity is expensive in Germany, though. That's more related to our grid.