German Institute for Economic Research (DIW Berlin): Solar energy booming in Germany
The expansion of photovoltaics is currently exceeding the German government's targets. This is according to the German Institute for Economic Research (DIW Berlin), which also points out the challenges involved, such as the need for integration into the electricity system and dependence on China.
The expansion of photovoltaics (PV) in Germany has picked up speed and is currently exceeding the growth target set by the German government. Just under 91 gigawatts are currently installed, compared with the target of 88 gigawatts for the whole of 2024. Rooftop installations are the main driver. Although the number of ground-mounted PV systems is also growing, there is still plenty of potential for further expansion in this segment. A disproportionate number of PV systems are being installed in southern Germany. These are the key findings of the latest Energy Transition Traffic Light Monitor from the German Institute for Economic Research (DIW Berlin). The traffic light monitor presents key energy transition targets set by the German government and compares their achievement with current trends.
Accelerating the energy transition is the declared goal of the traffic light coalition. One key technology is solar energy, which is currently experiencing a real boom - also worldwide. "While smaller PV systems on buildings are in high demand, mainly due to the advantages of self-consumption, there is still a lot of potential for ground-mounted systems in Germany," reports study author Wolf-Peter Schill, who designed and continuously updates the Traffic Light Monitor together with Alexander Roth. The expansion of ground-mounted solar installations is progressing more slowly than that of building-mounted installations. "The German government should consider once again increasing the tender volumes in the ground-mounted segment. This could also help to keep expansion costs down, as ground-mounted systems are cheaper than rooftop systems," adds study author Felix Schmidt.
"One challenge is to efficiently integrate solar power volumes, which fluctuate greatly over the course of the day and year, into the electricity market.
Although the number of rooftop power plants, which have recently received a lot of media attention, has risen sharply over the past two years to a current total of around 600,000 systems, the small module sizes mean that all rooftop systems account for only 0.5 per cent of total PV capacity in Germany. Regionally, the installed PV capacity is very unevenly distributed across the federal states. Bavaria leads the way with a quarter of Germany's installed capacity. PV capacity is lowest in the three city states.
PV power needs to be efficiently integrated into the electricity system
As PV grows, so do the challenges for the electricity system. In parallel with the expansion of solar installations, the prices achievable on the wholesale market for solar electricity have fallen. This indicates that the flexibility of the electricity sector has grown more slowly than PV capacity. Pronounced periods of low prices during the hours of highest solar power input show that existing storage facilities are not sufficient or are not operated in such a way that they smooth out price differences. "One challenge is to efficiently integrate the highly variable amounts of solar power into the electricity market over the course of the day and the year. Better price incentives are needed to ensure that storage systems are operated in a way that benefits the system in the area of self-consumption," explains study author Alexander Roth.
In addition to the growing challenges of grid and market integration, there is another downside to the expansion of PV. The growth of photovoltaics in Germany is now heavily dependent on imports from China. One way to hedge against possible bottlenecks in the supply of solar modules from China would be to build up a module reserve. This could involve buying modules on the world market and storing them for the planned expansion of one to two years, for example. "However, further expansion is also possible as long as the global market is literally flooded with modules," explains DIW economist Wolf-Peter Schill. "This is because every panel installed today reduces the need for future imports."
Source: DIW Berlin
Caption: As PV grows, so do the challenges for the electricity system. In parallel with the expansion of solar installations, the prices achievable on the wholesale market for solar electricity have fallen. This indicates that the flexibility of the electricity sector has grown more slowly than PV capacity. (Image source: Unsplash/Evgeniy Alyoshin)