Short interview on “Biddings and chances in the german market”

The result of the auction was certainly surprising at first, but in the end it actually wasn’t. Diverse associations had earlier warned that the criteria for forming citizen cooperatives were too “lax”, and the result has shown that they were indeed right. I am still critical about whether auctions are truly the right instrument for the controlled expansion of renewables. The “old” EEG and the flexible ceilings also worked fine and with much less bureaucracy, at that.

The prices offered by the tenderers certainly came as a surprise – here I believe that the level of these prices will be roughly the same in the future. As for other things, I am certain that there still will be cooperatives that will be used as a cover-up for the activity of large development companies.

Answer: I believe there are some snags to the auction procedure which actually rather hinder the expansion. On the one hand, especially in the case of wind farms which were enrolled in the auction as wind farm cooperatives because they don’t hold approvals, it should be assumed that not all projects will be completed. The ratio of completed projects will be thus probably significantly below 100%. Any capacities that fail to be delivered will not be auctioned again in the next auctions – they will be thus lost in terms of the expansion. Furthermore, the whole process is quite complicated when you look at it from the angle of financing – you, as a developer, take an additional risk when you enrol your farm for which you already hold an approval; this is because only after the bidding phase will you know whether you’ll be awarded any remuneration at all (“anzulegender Wert”). It is thus practically impossible to hedge this risk, which the unexpected result of the first auction round clearly showed because apparently many used the privilege designated for those without approvals and registered for the auction as cooperatives.

I believe the PV market will be now driven by small-scale power plants with capacities under the de minimis threshold (10 kWp). A return to the old investor model is unlikely. Nonetheless, I believe that, given the 750 kWp rule, there is still the opportunity for implementing projects, especially in the case of project bundling. 10 such power plants also yield quite a handsome investment volume. I also hope that the industry will come to realise that photovoltaics offers an incredible opportunity for setting up energy-efficient supply systems at production sites, thus, enabling them to decrease the level of purchased power.

I see tremendous opportunities in various countries – as with any country, entering a new market should be approached professionally, but the rule is: the early bird catches the worm. You can currently see PV contracting models emerging in Ghana, Nigeria; good opportunities for suppliers are opening up in India.

Also Turkey plans to overhaul its support mechanisms in 2018. For investors and developers (also in early-stage projects), the challenge is certainly always to find each other. Therefore, we have developed the matchmaking platform www.renerex.com specifically designed to address this issue.