Post-German Renewable Energy Act repowering perspectives

When the German Renewable Energy Act (EEG) subsidies for photovoltaic systems come to an end, the term 'repowering' is readily dropped as the ultimate solution. However, does it make sense to install a higher-powered system in the same space or should the existing system continue to be operated?

Photovoltaic (PV) has become the most cost-effective form of energy; a full-cost analysis* shows that it is less expensive than both fossil energies and wind power. This is why the current situation in the PV business is different from  ten years ago and the correct post-EEG strategy for agricultural PV systems is dependent on the individual case and a number of factors.

Two answers - many questions

There are basically two answers to the question of what happens to an agricultural PV system once the EEG subsidies come to an end: firstly, the system can continue to be operated or secondly, the old modules can be replaced with higher-output ones. You do not have to be an expert on the topic to arrive at these two possibilities. Things become interesting when the consequences of the respective  variants are thought through.

The sun will continue shining on every roof even when the subsidy period ends!

A great deal has changed in the world of energy over the past six years. Photovoltaic modules are inexpensive. High-performance battery storage systems enabling e agriculture and industry to use self-produced solar power after a time lag are now available. Marketing models are also already in place outside  the EEG world, and the technical requirements are additionally available; only the legal framework conditions still form a  barrier.

Nowadays, photovoltaic lowers electricity consumption, reduces the electricity bill and ensures planning security in terms of electricity costs. With the right power storage system, a photovoltaic system is not only a good source for self-supply, but is also  a reliable and easy to apply  emergency power supply in the event of a power failure. 

Today, it is technically possible for individual producers to supply their green electricity to individual consumers, meaning that a single farm can supply electricity to private households and commercial enterprises. This would be an interesting post-EEG marketing scenario for old systems. According to the latest calculations from Heidelberg-based green electricity company Stromdao GmbH, producers could be paid around nine cents per kilowatt hour in such a marketing model. The rule:  the shorter the supply distance the higher the profit, applies in this case. But let us take a look at the fundamental possibilities individually.

Continued operation of the existing system

PV modules are tough characters. Once they have survived the changing of the seasons out in the open for 15 years, it is highly likely that they will continue to reliably supply electricity for another ten or more years. So from a technical point of view, there is therefore nothing to stop old systems from continuing to convert sunlight into electrical energy. The systems are paid for, have generated profit and can be used in the future to produce electricity for the farm's own requirements or to feed green electricity into the grid, for example. However, there are a few legal and market-related catches to feeding electricity into the grid.

Grid operation hurdles in the post-EEG scenario

As the law currently stands in October 2019, photovoltaic systems in Germany will lose all  their privileges when their EEG subsidies come to an end. This means that each photovoltaic system will be treated as a major power plant. While grid operators are obliged to accept the system technically, they are under no obligation to do so in commercial terms. Each system operator must therefore demonstrate a direct marketer in the post-EEG scenario. Finding a direct marketer is likely to prove difficult for small systems up to 100 kilowatts peak, because the marketing effort for a small system is equally as high as for a large one but the sales are low. Here, the Federal Network Agency is recommending that politicians allow old systems that are no longer part of the EEG to remain on the grid without a lot of bureaucracy and to compensate the electricity that is fed-in at the current electricity exchange price minus a flat-rate charge for support.

Consequences for system operators

Whoever has a system that drops out of the EEG and does not take any steps is feeding-in electricity unlawfully and runs the risk of trouble, up to and including shutting down the domestic connection depending on which grid operator is involved. According to the Federal Network Agency, an EEG amendment is scheduled to take place in 2020. This could rectify the problem of the old systems. There are still 14 months to go before the first PV systems drop out of the subsidy scheme in 2021. Operators should keep an eye on the legal situation. DLG and EnergyDecentral will also be monitoring this topic.

Continued operation for self-produced electricity

Application to generate self-produced electricity for one's own agricultural operation could prove to be economically more interesting. Depending on system output and the load profile, an existing system can be used to reduce energy costs once the subsidy period comes to an end. If the load profile and PV production do not match, a power storage system can significantly increase self-consumption, usually from 30 to 70 percent. It must be ensured that the capacity, charging and discharge capacity, of the storage system are accordingly high in order to actually use the self-produced solar power internally and not constantly have to purchase additional energy from the grid. The current legal situation must also be monitored in this case. Once the EEG subsidies come to an end, photovoltaic systems will lose their privilege of exemption from the EEG charge for using self-produced electricity. This means that the charge will have to be priced into the kilowatt hour price in the cost-effectiveness analysis. In 2019, this totals  6.5 cents per kilowatt hour. On continued operation of a 30 kilowatt peak PV system over a period of 15 years, electricity costs of over 50,000 euros could nevertheless be avoided with 30 percent self-consumption and 70 percent grid feed-in via direct marketers.

The farm requires more energy than the old system can supply

In this case, the old system can be supplemented with a new one so that both supply sufficient PV output to meet  requirements, or the old modules are replaced with new, higher-performance ones so that the farm's energy requirements can be covered. Incidentally, the old modules are purchased by companies such as SecondSol, which are specialised in the sale of used modules.

Individual preference is also crucial

Whether 'repowering' appears sensible is also a matter of personal preference. A new, modern photovoltaic system enables system operators to secure their electricity costs in the long term and achieve a high level of independence from power  utility companies. A power storage system additionally offers convenient protection against a power failure. A needs analysis, i.e. a performance profile indicating how much energy is consumed when in the operation and what impact the photovoltaic system and power store have on the energy balance, is also important. Is  only self-consumption to be covered in the agricultural operation? Or should supplying energy become a new business model for the farm?  This option is certainly possible.

Business model: direct marketing of green electricity

We have already mentioned the technical options available for directly marketing agriculturally generated green electricity. The extended direct marketing of farm products surrounding green electricity could certainly become a business model in the future. 'Repowering' is highly attractive from this perspective, because more solar power is better than less when marketing electricity due simply to the expenditure involved. Service providers will shoulder the administrative effort such as forwarding the electricity, reading meters, assuming accounting grid responsibility** and issuing invoices. However, the agricultural operation will remain responsible for marketing the farm's electricity and customer acquisition, at least if profits from the sale of electricity are to be maximised. Unlike direct marketing according to the EEG, the producer price in this model is oriented towards the selling price to the end customer rather than the electricity exchange price. At present, 9 to 12 cents per kilowatt hour can be paid to producers. This is less than the 20 cents per kilowatt hour that are saved through self-consumption in agriculture, but is still not to be sniffed at.

The right model

Which model functions for a specific farm as a successful post-EEG scenario must be determined individually. The continued operation of existing systems in a post-EEG scenario is a sustainable model but will be dependent on the political structure of the post-EEG scenario. The solutions will be as individual as the farms themselves. What is important is that, if a new system is purchased, the components are flexible. For instance, power storage systems should be equipped with open interfaces so that they can also be used as an area-wide solution or part of virtual power plants. What is certain is that the sun will continue to shine on each and every roof in the future and that photovoltaic is now the most inexpensive form of energy and also that there will be plenty of options for using it. The energy revolution needs more power on German roofs. Agriculture has roof surfaces and the energy industry has solutions for earning money with this.

The energy of the future is green, regional and decentralised, and the agricultural industry can call the tune here. EnergyDecentral 2020 will dedicate  a special to the topic  'repowering' and the continued operation of existing systems once the EEG subsidies come to an end. By November 2020, politicians ought to have come to a decision regarding the post-EEG scenario.