Germany Administrative Process Associated with PV Projects

1. Germany Administrative Process Associated with PV Projects By: Arnold X. Irizarry Rosas Dr. Eduardo I. Ortiz-Rivera Version: 8/21/2012

2. Solar Irradiation World Map Sun irradiation: Puerto Rico 2,000 kWh /(m2) to 2,100 kWh / (m2) Germany 1,000 kWh /(m2) to 1,100 kWh / (m2)

3. Germany is the most developed market in Europe throughout all market segments. Germany has more annual revenue from exports than any other country, including China and Japan. Its experience in developing PV systems allowing a clear analysis of the situation regarding legal-administrative barriers. [2]

4. Since 2006 PV system prices have been decreasing making it more comfortable to customers to purchase this type of system. The average upfront cost of a residential system in Germany is 4,500€ (US$6,500). 40,000 people were employed in PV manufacturing in Germany in 2007.

5. German Utility Market • Germany has full retail competition, applicable to both publicly owned and privately owned utilities. Both types of companies continue to own generation and buy from wholesale markets. • Wholesale and retail prices are both high by US standards – 15-20 US cents/kWh for wholesale and 25-40 US cents/kWh at retail. • In Germany there are 4 transmission organizations and over 900 distribution organizations, but approximately 4 distribution utilities sell to 80% of the German market. • The vast majority of distribution (and some transmission) lines are buried – there very few overhead wires. • In Germany residential meters are only read once a year (or when a customer begins or ends service) but customers pay a fixed bill each month based on an initial year estimate. Bills are then trued up for under- or over-payment once annually.

6. In Germany, the PV market is 10% large ground mounted field systems, 40% residential, and 50% commercial.

7. The German Planning Process • Feed-in-Tariffs: The German Renewable Energy Sources Act (EEG) assures a fixed feed-in-tariff for grid-connected solar electricity over a time span of 20 years. Via the feed-in-tariff (currently ca. 46 cent/kWh, depending on the kind of system) the investment in a PV-system can be recovered during its lifetime with a reasonable return on investment. • Urban planning: There is a legal basis for local authorities to define urban areas where solar energy should be used which is given in the following legal framework: • EU-Directive: Plan-UP, 2001 - demand of environmental audit concerning town planning • EAG Bau, Europarechtsanpassungsgesetz, 2004 - environmental audit and report as new instruments for urban planning • AmendmentBauGB, 2004: - Possibility to define areas with specified use of renewable energies. • It is up to the local authorities to use these legal possibilities and realize urban planning with a focus on a solar development. Themainelementsare: 1) Solar gradingfactors, 2) Solar urbanareapotential per cityquarter, 3) Total solar urbanpotential. These can lead to the development of a solar urban master plan.

8. Renewable Energy Feed-in Tariff • Feed-in-Tariffs: The German Renewable Energy Sources Act (EEG) assures a fixed feed-in-tariff for grid-connected solar electricity over a time span of 20 years. Via the feed-in-tariff (currently ca. 46 cent/kWh, depending on the kind of system) the investment in a PV-system can be recovered during its lifetime with a reasonable return on investment. • Germany’s justification for the feed-in tariff (referred to as the EEG) is fundamentally based on the emergence of the solar and wind industry as an economic development tool for providing high tech goods and services to the future energy sector. • The notion is that a feed-in tariff for renewables helps meet carbon targets and electricity demand while building industrial capacity in a key export industry that does not require cheap labor, land, or materials to grow. • With the structure of the feed-in tariff in Germany, solar electricity is exclusively fed into the grid on the utility side of the meter rather than in a net metering arrangement.

9. Residential Scale Interconnection The interconnection process in Germany follows the same general process as in California. But one significant difference is that in Germany no interconnection agreement or contract is required of the customer. Germany Interconnection Process: 1) Application, 2) Utility Review, 3) Commissioning, (Contract are recommended, but PV system may connect to the grid with out a contract) German municipal utilities and investor owned revealed that even with high solar penetration (commonly 20%, and as high as 30%), grid integration issues have not been a problem for utilities in Germany. In addition, there are very clear rules in place about what is required of the utilities, thus eliminating many of the “utility barriers” put up in the US (such as complex interconnection agreements, interconnection fees, external disconnect switches, etc). In fact, the German utilities have realized that solar electricity can provide grid stability and therefore there is movement toward PV providing grid stabilization services during grid events (VAR support, ride-through, delayed trip, etc) – similar to the evolution that has happened with wind energy in the US.

10. Commercial- and Utility-Scale Interconnection • In Germany, commercial- and utility-scale projects follow essentially the same interconnection procedures as residential-scale projects. But we are going to divide this portion of the market into two groups: • commercial and industrial roof mounted systems (up to 50 kilowatt peak) • ground-mounted systems (up to 5 megawatt peak)

11. Commercial and Industrial Roof Mounted Systems • The commercial segment is the largest segment in Germany. The main obstacle here is the grid connection process. Long waiting times and unreasonable connection fees are important concerns for project developers. In addition it is not always clearly defined by law whether a PV system requires a planning permission. Installing a PV system in monument protection areas can be difficult. [2]

12. Ground Mounted Systems • Ground-mounted systems (up to 5 MWp) follow the same process as residential-scale systems, except for two additional steps. Prior to submitting a grid connection application, system operators submit a “preliminary request for grid connection” in order to determine the capacity of the existing infrastructure to support the project.

14. Legal-Administrative Labor Requirements to Complete Interconnection Application Process in Germany (number of man-hours) [3] PV Legal’s survey found that residential systems (up to 5 kWp) and roof-mounted commercial and industrial systems (up to 50 kWp) averaged 2 and 4 man-hours of legal-administrative labor, respectively, to complete the grid connection process. Ground-mounted systems (up to 5 MWp) averaged 25 man-hours of legal-administrative labor to complete the grid connection process. Source: PV Legal 2011b, PV Legal 2011g, PV Legal 2011h

15. German Grid Connection Process Duration (Weeks) [3] In Germany, commercial- and utility-scale projects follow essentially the same interconnection procedures as residential-scale projects! Source: PV Legal 2011b, PV Legal 2011g, PV Legal 2011h

16. German Interconnection Process Diagram

17. German InterconnectionProcessDiagramUnique

18. Key findings: German Utilities • Germans have a very different mindset from us. They ask “where will we get our energy?” We ask “can renewable ever meet our energy needs?” Renewable portfolio standards are goals. Feed-in tariffs are mechanisms. • Renewable electricity output has priority in grid management – the system operator manages non-renewable units around the integration of renewable electricity, which has priority in the system integration. • All German utilities are deregulated, including municipalities. Because of the competitive marketplace, customer satisfaction is important and “customers want them to embrace renewables, not just accept them.” • German utilities must interconnect all renewables to the grid and the rules are very clear. Therefore, external disconnects and system inspections are not necessary. Some of the ease of integration is inherent to the less litigious nature of Germany and the assignment of no-fault as long as the specific rules were followed. • What Germans likes most about the feed-in tariff is the clarity and transparency – there are no surprises or uncertainly and therefore they can plan accordingly.

19. More Key findings: German Utilities • German utilities used to require external disconnect switches but do not any longer. Since there are so many PV systems on their grid, it would be a burden to the utility to utilize and manage them all. • German utilities want PV to stay on the grid during disturbances to provide grid support, rather than trip-off and exacerbate the situation. • Large ground mount systems are a relatively small and decreasing part of the overall German solar market. • Studies at the Solar Estate of the grid impacts of 400+ kW of PV indicate that only voltage levels are affected within power quality but it is within certified tolerances. • In order to have a PV system installed, integrators require that roofs are less than 5 years old. • Most PV installations on municipal land in Germany are owned by multiple investors (combination of individuals and companies) rather than by the municipality. The feed-in tariff payments are split amongst the investors. • Theft of panels has become a problem in Europe. All new large ground mounted systems require the installation of cameras, security systems, and local on-call security personnel options by the insuring agents.

20. Conclusions • In Germany, systems under a specified installed capacity are exempted from in-depth reviews and studies, though there are some exceptions. • In Germany, utilities take an average of 4 weeks to respond to interconnection requests (by providing connection-point proposals) for residential PV systems 5 kWp or smaller. • In Germany, utilities are required to connect any system to the grid and pay for any required studies. Additionally, in Germany, no interconnection agreement is legally required (for any size system), further reducing the obstacles to establishing interconnection. • In Germany, interconnection of renewable energy projects is guaranteed by law, making the interconnection paperwork more of a request than an application. Further, in Germany, utilities cannot legally require PV project owners to enter into interconnection agreements or contracts.

21. Reference • BSW-Solar/www.solarwirtschaft.de • PV Legal/www.pvlegal.eu • A. Tweedie and E. Doris. "Comparing Germany’s and California’s Interconnection Processes for PV Systems." Http://www.nrel.gov/. National Renewable Energy Laboratory, July 2011. Web. 1 Aug. 2012. <www.nrel.gov/docs/fy11osti/51814.pdf>.

22. Thank You