Navigant Research Blog

Germany Supports Solar + Storage

Anissa Dehamna — June 10, 2013

Currently, two markets have subsidies for distributed solar photovoltaic (PV) systems plus energy storage.  Germany and Japan are both trying to encourage distributed PV users to consume the electricity generated onsite, using energy storage systems (ESS).  Announced in early May, the German government program offers both a subsidy and a low-interest loan to encourage ESS.

In addition, the feed-in tariff for distributed solar has dropped below the retail price of electricity, in order to encourage self-consumption of PV energy.  Germany will spend up to $32.17 million (€25 million) in 2013 to support distributed PV+ESS, in an effort to defer upgrades to the distribution grid, which is overtaxed thanks to the successful campaign to encourage distributed PV adoption.  The subsidy increases the existing subsidy for systems that are only solar PV from €600 ($785) per kilowatt (kW) to €660 ($863) per kW if a battery system is also installed.  The maximum payment for the entire system is €3,000 ($3,926) total.

Financing Storage

Representatives from KfW – the German development bank – have stated that a similar amount of funds (€25 million, or $32.17) will be available for 2014.  All battery systems are eligible, but must have a 7-year warranty.  KfW is administering both the subsidy and low-interest loans.

Specifically, KfW, is offering low-interest loans to finance the capital expenditures associated with adding battery energy storage systems to PV systems in Germany.  KfW will finance up to 100% of the upfront cost for battery ESS and PV systems (not including VAT).  In addition, the battery portion of the system can qualify for a repayment bonus.

These loans are being offered to a cross-section of the market similar to the one served by the subsidy for residential storage plus PV.  The loans are available to ESS retrofits for PV installations that went into operation after December 31, 2012 and are targeted at solar PV systems as large as 30 kW.

If the German program succeeds, it will mean increased flexibility and resilience for the German distribution system with less investment on the part of DSOs. Germany is also a model for the rest of Europe; other markets with high PV penetration such as Italy, Spain, and France may adopt a similar scheme once the benefits to the grid and customers is better understood.

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