Why subsidies for photovoltaic self-consumption should be abolished

Consuming the electricity generated with your own photovoltaic system as directly as possible as a “prosumer” instead of feeding it into the public grid is seen by the public as a worthwhile contribution to the energy transition. But why actually?

A general incentive to maximize solar self-consumption is usually justified by the fact that this relieves the grid, since the power fed back into the grid is minimized. State subsidy programs for the purchase of battery storage systems to maximize self-consumption are justified as a climate protection measure and a general contribution to the energy transition. However, these arguments do not hold water. Maximizing photovoltaic self-consumption does not necessarily mean relieving the grid. If my neighbor is charging his electric car, it is better for the grid if I feed my excess solar power into the grid instead of using it to charge my photovoltaic battery. In the low-voltage network, reducing the simultaneity of loads is particularly important, especially in the course of the spread of electromobility and heat pumps.

Battery storage systems only reduce emissions if they reduce any grid-related curtailment of green electricity. However, practically only wind power is curtailed due to (still) insufficient transmission capacities to consumers. These curtailments cannot be influenced by load shifts in the low-voltage range. Instead, it is currently the case that emissions are even increasing due to storage losses. Added to this are the emissions generated during the manufacture of the electricity storage devices.

Apart from the lack of benefit, subsidies for self-consumption of green electricity should also be viewed critically for social reasons and also create counterproductive false incentives:

The problem of non-transparent and non-solidarity support for self-consumption would in any case become obsolete if the energy price for household electricity tariffs reflected the actual generation costs of just a few cents per kilowatt hour, similar to the electricity tariffs for large industrial consumers. All other cost components, which largely finance things that are independent of the amount of electricity purchased, should consequently be allocated to the basic price. Since this would greatly reduce the incentive to save electricity in private households, this is not desirable in this extreme form, but even a partial transfer of consumption-independent costs to the basic price/performance price would significantly reduce the artificially created attractiveness of self-consumption. A reduction in the energy price would also make the sector coupling (electromobility and heat pumps), which is important for the energy transition, more financially attractive.

Where should a sufficient incentive to buy a photovoltaic system come from if the financial advantage of self-consumption disappeared? Financial support for photovoltaic systems should be based purely on the solar power generated and thus on the achievable CO2 reduction. The aim should be the most comprehensive use of all roof areas, independent of one's own electricity requirements. This is already the case with the classic feed-in tariff for photovoltaic roof systems. Of course, this would have to be increased moderately in order to compensate for the lost financial advantage of self-consumption. The overall economic costs would even drop, as this would make investments in battery storage and other measures to increase self-consumption superfluous.

There should only be special support for self-consumption or its increase, for example by means of storage, if this actually leads to a reduction in grid expansion costs or emissions in the specific case and if it is the most cost-efficient measure. However, this will rarely be the case in the foreseeable future.

In view of the increasingly effective European Emissions Trading System (ETS), in which the EU-wide emission volume is controlled via politically determined decreasing upper limits, the question arises anyway as to what sense national support for green electricity still has within the framework of the EEG. The rising CO2 price will automatically mean that more and more photovoltaic and wind systems can be financed through the inevitably rising market price of electricity. The proportion of green electricity that results in Germany in particular is not relevant at all for the EU-wide level of emissions and thus ultimately for the climate. If the German government does not find the proportion of green electricity resulting from emissions trading high enough, it should consequently work to ensure that the emission reduction path of the ETS is reduced more or buy up and shut down certificates itself. Reducing the emissions allowances issued is the most direct and cheapest way to reduce emissions.

All state climate policy interventions beyond emissions trading should therefore be limited to justified individual cases. This can include, for example, temporary funding of technologies so that they can reach market maturity more quickly, but not the widespread dissemination of existing technologies.

— The author Andreas Luczak has been a professor of renewable energies at Kiel University of Applied Sciences since 2016. Previously, he worked for Siemens for more than 15 years and, as Managing Director of the European subsidiary of a Chinese-American company, introduced its redox flow storage technology in Europe. His recently published book is entitled "Germany's energy transition - facts, myths and madness". —

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