Support Policies for Photovoltaic Systems in Europe
Table 1: Financing Strategies for Photovoltaic Systems in the EU-274 Country
Austria
Belgiuma Bulgariab Cyprus
x x xx x
xx x
x
Czech Republic xc Denmark Estonia Finland France
Germany Greece
Hungary
Irelande Italy
Latviae Lithuaniae Luxembourg Malta
Netherlands
Polandf Portugal Romaniae
x x x x
x x x xg
Slovak Republic xi Slovenia Spain
Swedenj UK
xx x
xc,d x
x x x
x
x x
x x x x
x
x x x
x x x xa Green Certificates
FITs GCs Capital Subsidies Tax Credits Net-metering x
GCs are the property rights to the environmental benefits from generating electric energy from RES. GCs can be sold and traded and their owners can legally demonstrate that they have purchased renewable energy. Generally, an energy producer is credited with one GC for every MWh of electricity produced from RES. A certifying agency gives each GC a unique identification number to ensure that it is not double-counted. The energy is then injected into the electrical grid, and the accompanying GC is sold on the open market. The GCs system is a support policy that is active in only a few European countries to promote the production of electrical energy from PV plants. The main advantages of GCs are:
• reduced generation cost of renewable energies, favouring competition among producers; and
x xx xh x
xc x
x
xx x
x x
x
a) Energy subsidies for photovoltaic (PV) plants are implemented separately for the three regions of Belgium (Flanders, Brussels and Wallonia). Net-metering is available for PV plants below 10 kWp. b) A green certificate (GC) market has been planned by the government, but is not yet active. c) Producers of electricity from renewable energy sources (RES) can choose, every year, between a feed-in tariff (FIT) or a feed-in premium (‘green bonus’). d) The FIT value is the same for all the RES-based technologies, but is still too low for PV systems. e) A FIT plan is active, but PV is not included. The use of solar electricity is very low in this country. f) A green certificate market (quota system) has been planned by the government, but not specifically for PV energy. Electricity generated from PV is virtually not used in this country. g) Valid only for PV installations below 3.68 kWp (16A single-phase). h) Valid for PV installations below 5.25 kWp (25A single-phase). i) FIT values are decreased in percentage if capital subsidies are used to build a PV plant. j) A new support mechanism for installation of PV systems in Sweden in 2009 was announced by the government (valid for a three-year period).
by the government. With FITs, the extra cost does not fall on the taxpayer, but is distributed across the customer base of the utility. Different tariffs are defined for different countries, depending on resource conditions and socio-political situation. Historically, FITs have been the primary mechanism used to support PV development in Europe. At present, they are applied (specifically to PV energy) in 15 EU Member States.
Net-metering
Net-metering was developed to address the need for a simple standardised protocol for the exchange of the electric energy produced by residential customers who install renewable energy systems in their homes. With net-metering, the energy produced by the PV system and injected into the grid has the same economic value as the energy sold by the utility to the customer. With net-metering, customers can offset their electricity consumption with small-scale RES over an entire billing period, using it at a different time from when it was produced, without considering when the power is consumed or generated and storing their energy in the grid. To enable this, usually a bi-directional energy meter that measures the electricity flow in both directions is used. With this system, customers pay for the net electricity consumed over the billing period at the conventional rate. Providers may benefit from net-metering because when customers are producing electricity during peak periods, the system load factor is increased. At present, five EU countries have adopted net-metering as a support policy, usually together with capital subsidies or FITs.
1. Directive 2001/77/EC of the European Parliament and of the Council ‘On the promotion of electricity produced from renewable energy sources in the internal electricity market’, 27 September 2001.
70 Conclusion
Thanks to the financial measures described above, in 2008 the total PV power installed in EU countries has doubled with respect to the cumulative PV power installed in previous years. In effect, the total PV power installed in 2008 in the EU-27 was 4,592 MWp, bringing the total installed PV power in EU countries at the end of 2008 to 9,533 MWp. Spain accounted for almost half of the new installation in 2008, with almost 2.7 GW of new capacity, followed by Germany with more than 1.5 GW of additional PV connected power. The third largest market was the US, with 342 MW of PV installations in 2008 with an additional capacity of 62.9 % over the previous year. South Korea moved up to fourth place in the PV global market, followed by Japan which reached 230MW of new installations, 9% higher than in 2007.5
Italy connected
almost 260 MW, while France, Portugal, Belgium, Czech Republic and Bulgaria also made progress, demonstrating Europe’s global leadership in the deployment of solar PV energy.4
n
2. European Council, Act 7224/1/07 of the European Union, Revision 1.
3. Directive 2009/28/EC of the European Parliament and of the Council ‘On the promotion of the use of energy from
renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC’, 23 April 2009.
4. IEA, Photovoltaic Power Systems Programme – Annual Report, 2008.
MODERN ENERGY REVIEW – VOLUME 4 ISSUE 1 Tax Credits
There are many other forms of support policy for renewable power generation, including tax incentives and credits, sales tax and value-added tax (VAT) exemptions. Some governments grant tax reductions as a percentage of the installed total cost or the material costs of the PV plant (up to a maximum percentage), tax exemptions for income generated from the sale of electricity, reductions or exemptions on environmental tax for energy produced from RES, VAT reductions or exemptions (often capped at a maximum value) or depreciation of investment costs (for enterprises). All of these measures are included in the term ‘tax credit’. At present, 18 EU countries have adopted tax credits together with other support policies. Table 1 details the use of all of the above financing strategies in the 27 countries of the EU (EU-27).
• the fact that they attract new market actors, especially in terms of the obligation of producing a given quota of renewable energy.
The main disadvantage of GCs is price fluctuation, which depends on many factors, such as the location of the facility producing the GCs or the type of power generated. At present, GCs have been adopted by only two EU Member States specifically for PV systems; this incentivisation policy is more widely used for wind power plant promotion.
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