WIND + SUN = POWER: Trends and developments in the electricity sector

Development of RE expansion 

PV systems continue to be added steadily. PV installations in the first quarter of 2024 totalled around 4,039 MW and were therefore at a similar level to the last two quarters. The total gross installed PV capacity in May 2024 was around 88.9 GW. The expansion of onshore wind in the 1st quarter of 2024 was around 561 MW and thus at a significantly lower level compared to the 3rd and 4th quarters of 2023. The total gross installed capacity of onshore wind in May 2024 was around 61.8 GW. 

The continued or increasing expansion of renewable energy systems is also reflected in the development of investments for the installation of renewable energy systems. According to a brief documentation entitled 'Economic impetus from renewable energies' by the Centre for Solar Energy and Hydrogen Research Baden-Württemberg, which was published on the BMWK website, a total of EUR 36.6 billion was invested in the construction of renewable energy systems in Germany in 2023 (2022: EUR 22.27 billion). This represents a new record figure. Investments in PV technology in particular have risen sharply compared to the previous year (2022: €7.94 billion) at €17.14 billion alone. ​

Overview of the electricity market

^{The average spot market price as well as the market value of solar and the market value of onshore wind continue to show a downward trend for the period under review (see Figure 1). However, while the average spot market price and the market value of onshore wind have remained largely constant since February 2024 and have developed similarly, the market value of solar has continued to fall. In May 2024, the average spot market price was 6.721 ct/kWh, the market value of onshore wind was 5.608 ct/kWh and the market value of solar was 3.161 ct/kWh.}

In addition to the electricity prices, the chart also shows the development of hours with negative prices categorised according to the time of occurrence. The graph shows a certain correlation between the price level and the number of negative hours. The development of the number of negative hours and the market value of solar in the months of March 2024 to May 2024 is particularly striking. While the market value of solar has fallen continuously, the number of hours with negative prices has increased. In May, there were 78 hours with negative prices. The hours with negative prices in May occurred in particular at midday and in the afternoon - times when PV technology usually generates electricity. 

The number of hours with negative prices is also relevant in the context of the EEG remuneration entitlement. According to the EEG, the system operator is not paid a market premium for the corresponding period after a certain number of consecutive hours with negative prices.  An increase in negative spot market prices can or will therefore also have an impact on the revenue of a plant operator.​

Overview of Federal Network Agency tenders

Solar package 1​

As the previous bonuses in connection with special solar installations did not create the desired incentive, these were abolished and instead a sub-segment for special installations (agri-PV, floating PV, moorland PV, car park PV) was established as part of the tenders for ground-mounted PV installations. The maximum value for this sub-segment for 2024 is 9.5 ct/kWh. The tender volume for special solar installations will be 300 MW in 2024 and is set to increase continuously to 2,075 MW in 2029. However, this regulation is not accompanied by an increase in the tender volume for ground-mounted PV systems. In the event that the bid volume for special solar installations in a tendering round is lower than the planned capacity, more conventional ground-mounted PV installations will be awarded a corresponding amount. The introduction of this new mechanism is intended to help special solar installations 'grow out of their niche'.  

Furthermore, points relating to nature conservation have been amended. Five minimum nature conservation criteria have been defined, three of which must be fulfilled by the operator of a subsidised ground-mounted PV system. In addition, further PV installations on agricultural land will be limited to an upper limit of 80 GW by 2030.  Finally, the scope of areas has been expanded to include disadvantaged areas, including in connection with an opt-out option for the federal states.  

In the context of storage facilities, the solar package provides for more flexible utilisation. Under certain conditions, storage system operators can change the operating mode (intermediate storage of exclusively renewable electricity vs. intermediate storage of non-exclusively renewable electricity (e.g. electricity from the grid)) of a storage system during the year without losing the EEG subsidy entitlement for the electricity from an EEG system. By utilising storage systems in different ways, they can make a contribution to the electricity system (by withdrawing and temporarily storing electricity from the grid at times of high electricity supply) or to the market and grid integration of renewable energies (by shifting the time between the generation of renewable electricity and feeding it into the grid).  Mixed utilisation also opens up interesting new business cases for storage systems in combination with an EEG system.

Other points in the solar package relate to commercial and industrial rooftop PV systems. These include regulations to increase the subsidy and tendering volume for large PV rooftop systems as well as simplifications in the context of system certificates and system aggregation. Innovations were also adopted in the context of rooftop PV systems on residential buildings. These include the introduction of the shared building supply model, which is intended to simplify the supply of PV electricity to end consumers in the same building, or adjustments in the context of the tenant electricity model, so that under certain conditions, tenant electricity will also be eligible for funding on commercially used buildings and ancillary facilities in future.  

And what else has happened?

On 6 June, the Bundestag passed the amendment to the Federal Immission Control Act, which was confirmed by the Bundesrat on 14 June. This 'acceleration package' is intended, among other things, to help increase the speed of expansion of onshore wind turbines. The measures include, for example, the simplification of repowering projects, the facilitation of preliminary decisions and the debureaucratisation and acceleration of approval procedures.

In mid-May, the Federal Network Agency published a draft specification '[...] on the distribution of additional costs [...] that arise in distribution grids with particularly high levels of renewable electricity generation' . The Federal Network Agency intends to adopt the specification in the third quarter of 2024 so that it will apply from 1 January 2025.

The Net Zero Industry Act (NZIA) and the electricity market reform were also adopted at EU level.  Both projects were also reported on in previous articles (in February and April).

In summary, the electricity sector continues to be characterised by a high level of dynamism. As a result of Solar Package 1, the political framework conditions for subsidising PV systems are being adapted in order to accelerate expansion, among other things. In the near future, it will therefore be interesting to see how the various market players react to the changes and whether the measures achieve their desired goal. An update on developments in the electricity sector will follow in the next issue of E|nEws.