Fraunhofer Examines Facts and Future Trends in German PV Solar Deployment

PV Photovoltaikanlage in Dingolfing, Bayern auf BMW Montagehallendach


Deployment of renewable energies technologies —especially solar PV —is advancing rapidly. As the world leader in installed solar PV capacity, Germany continues to offer an interesting role model to clean energy advocates and policymakers. In 2011, solar PV accounted for 3.2% of Germany’s overall energy generation, a number that’s expected to increase significantly in coming years. With this in mind, Fraunhofer  recently published a report highlighting current trends in Germany’s solar PV sector. Five particularly interesting facts:

Fact 1: The price of solar energy has dropped significantly.

The total cost of small, newly-installed PV power systems has decreased over time, and is already reaching cost parity with conventional power sources. Assuming average system lifetimes of 20 years, Fraunhofer estimates that solar energy is the least expensive energy source currently available.  In addition, capital costs for medium and large PV plants have dropped by 10% per year on average, mainly due to the decreasing cost of PV modules. This trend has been accelerated by two factors: rapid technological progress in the solar sector and government subsidies. As the report notes, German government has invested aggressively in renewable energies, spending approximately $270 million in 2010 alone as part of its 5th Energy Research Program.

In addition to direct investment, the German government also subsidizes PV power plant operators, offering them about €0.18 to 0.24  per kilowatt-hour to feed solar energy into the grid. Any difference between the actual price of generation and what’s covered by the subsidy is balanced out by the so-called “EEG surcharge,” which is budgeted into consumers’ end prices (an obligation energy-intensive industries are exempt from). By Fraunhofer’s estimation, this helps make PV power plants a low-risk, attractive investment opportunity that provides a return on investment (ROI) between 4.5 and 8.7%.


Fact 2: PV power plants are highly efficient and eco-friendly.

In Germany, solar PV power plants now have the lowest CO2 footprint of all available energy options, significantly outpacing traditional power sources such as brown coal–every kWh of solar energy generated saves about 3 kWh of primary energy. As of the end of 2011, the potential primary energy savings accumulated by Germany’s power plants since 2001 tallied up to approximately 150 TWh.

Based on Germany’s average annual solar irradiation—1000 kWh/m2—Fraunhofer estimates that the energy returned on energy investment (EROEI) for PV power plants is about 2 years.  Since these plants have a lifetime of about 20 to 30 years, a PV power plant will ultimately produce at least 10 times more energy than was consumed during its construction and operation. And the best news is that as manufacturing processes improve, this number will only get higher.

Fact 3: Most solar energy is distributed by a decentralized infrastructure.

In Germany, more than 98% of all PV power plants are decentralized, generating power close to the end consumer. This has the added advantage of keeping transmission losses to a minimum.  Combined with increasingly reliable weather forecasts, this makes solar power outputs predictable and projectable. It also means that there’s a significant opportunity to increase consumers’ access to PV power through further developments to Germany’s distribution infrastructure, especially in urban centers.  Fraunhofer notes that expanding the existing grid structure to accommodate solar power could ultimately help bring Germany’s overall installed PV capacity to an estimated 30 to 40 GW in the near term.

Fact 4: PV helps create new employment opportunities.

As a whole, the German PV solar industry employs 130,000, generating an added value of $13 billion. Germany is also a net exporter of solar cells and modules, and a global market leader for many other PV products. As the report notes, in 2010, German manufacturers produced 13.3 GW worth of power inverters, giving them a global market share of about 45%.

Fact 5: By 2050, 30% of Germany’s energy consumption may be covered by solar energy.

In the coming decades, increased resource scarcity will eventually give way to a large scale phase-out of traditional fossil-nuclear fuels. All major scenarios for the coming decades stress the increased importance of renewable energies. In Germany, recent studies have assumed an installed PV output of 50 GW by 2020; Fraunhofer predicts an output of 120 GW by 2050.  By then, Germany’s power needs could be entirely covered by renewable energy sources, with solar energy accounting for 30% of the total.

For those who are interested, the German language version of the report is currently available at Fraunhofer ISE’s website. What are your thoughts?

[Special thanks to Gerrit Strack for her assistance in compiling this post.]

About author
I'm Fraunhofer CSE's former Marketing Specialist, having worked at the Center from its founding in 2008 until 2013. In late 2013, I left the clean energy industry to pursue a career in enterprise software.
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