German installation boom triggers support payment cuts

GERMANY: Increased installation rates in Germany have triggered the maximum percentage reduction in support payment of 2.4% for the three-month period beginning 1 January 2018, reported the federal energy agency Bundesnetzagentur (BNA) at the end of August.

The high installation rate in Germany is forcing support payments down
The high installation rate in Germany is forcing support payments down

A previous 2.4% drop was set for the quarter beginning 1 October 2017.

As the boom to beat the deadline continues, the industry also likely faces a 2.4% support payment drop in each of the quarters starting 1 April, 1 July and 1 October 2018.

As a result of the latest cut, the feed-in tariff (FIT) rate payable to eligible turbines commissioned from 1 January 2018 will be €0.0749/kWh for the first five years of operation.

This applies to wind projects at very good wind sites, but is payable for longer periods for turbines sited at locations with lower wind speeds.

After the initial five years, the FIT drops to a "base rate" of €0.0417/kWh for the remaining period to the total 20 years of support.

The 2.4% percentage drop per quarter is set by the renewable energy act EEG 2017 and applies when installations exceed the German cap on onshore growth of 2.5W per year by more the 1GW.

Once the German FIT payment system expires at the end of 2018, payments will no longer be fixed by regulation but rather by an auction system.

The first auction, held on 1 May this year, with 807MW of successful capacity, resulted in a maximum rate payable for 20 years of €0.0578/kWh.

A second auction on 1 August 2017, awarding 1,013MW of capacity, saw a sharp 26% drop to a maximum of €0.0429/kWh.

From 2018, the maximum bid allowed at auction will be 108% of the highest sucessful bids at the three auctions in 2017 — after two auctions this equates to €0.0543/kWh.

From the beginning of 2019, installations will dramatically fall as the auction system mechanism restricts gross installations to 2.5GW per year.

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