Solar Costing a Third of Retail Power Emerges in Germany

Solar Panels Sit on Rooftops in Walldorf
A construction crane stands on a residential building site as solar panels sit on the rooftops of houses in Walldorf. Germany’s planned decade-long, 120 billion-euro ($127 billion) shift to cleaner energy from fossil fuels has made the nation the biggest economy in the world to rely so heavily on renewable power. Photographer: Krisztian Bocsi/Bloomberg

Germany’s cost of producing solar energy has shrunk to about a third of the price households pay for power after the nation made developers compete for subsidies.

Most bids to build large ground-mounted solar plants in the first solar auction came in at 9 euro cents (9.7 U.S. cents) to 10 euro cents a kilowatt-hour, Deputy Economy Minister Rainer Baake said. German retail consumers are paying on average 29.8 cents a kWh, according to Eurostat.

“The auctions were very well received,” Baake said at an energy conference Thursday in Berlin. The previous “feed-in tariffs were wonderful to introduce the technology. That era is over.” He didn’t say which bids were accepted, and there’s no guarantee all of them will result in projects.

Germany introduced auctions to try to lower the cost of solar installations as it seeks to more than triple the share of its power consumption coming from renewables by the middle of the century. The Bundesnetzagentur regulator received 170 bids for more than the 150 megawatts it offered. It will auction off a further 350 megawatts this year, 400 megawatts next year and 300 megawatts in 2017.

Coal-fired plants still generate power cheaper than solar in Germany, which has less sunshine than Italy and Spain in the south. That didn’t stop the country from jumpstarting a photovoltaic installation boom when it introduced above-market subsidies to developers more than a decade ago.

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