Feed in Tariffs Posts

Guest Article: How to Tune Your German Green Energy Asset Without Getting Sun Burnt in the Attempt

How can the returns on green energy assets be amplified without refinancing? What can be done to eliminate those “love handles” on wind or solar parks? For some readers, what follows will probably be a review of the basics of managing a renewable energy asset in general, however, I will highlight a few focus areas  that can generate further value, considering nuances of the German renewable energy regime (Erneuerbare Energien Gesetz – EEG). Perhaps as a backdrop, I have been focusing on the photovoltaic (PV) business (particularly large parks), yet, the EEG itself covers a much broader spectrum of technologies from hydropower and different types of biogases, to biomass, geothermal as well as wind (onshore, offshore, repowering), the tactics below, a priori, being applicable to all of them.

Martin Supancic writing about how to Tune Your German Green Energy Asset Without Getting Sun Burnt in the Attempt

German renewable energy assets are quite appealing due to the stable regulatory framework, although costs are mounting for German households. As a consequence, the pressure is growing for painful political decisions to be taken in order to curb this phenomenon. The surge of German renewable investments over the past few years has led to a gradual adjustment of the corresponding Feed-in-Tariffs (FiTs) in an attempt to disincentivise the amount of newly built capacity, especially in the form of large ground-mounted projects going forward. Thus, investors who were lucky enough to fetch a park in recent months have had to conform themselves to ever lower returns.

Finding strategies to lift the relatively low equity IRRs (5% to 6%) is challenging but not impossible. Buyers of PV parks prior to Jan. 2012 will probably find it easier to uncover hidden value – during the heydays of investment frenzy, project developers, EPCs and O&M contractors could easily turn a quick buck while dictating the transaction terms. Demand was gleaming hot and projects quickly sold in competitive bidding processes, even before being completed, to ensure the highest possible FiTs. As the tariffs dropped, all stakeholders adjusted to the circumstances: PV module prices fell substantially (e.g. global glut, new manufacturing capacity being added in China…), EPC and O&M costs came down to permit attractive prices perMWp, while project developers reined in their margins. As a result, both project costs (EUR/MWp) and O&M prices are quite different today compared to those two or more years ago, opening the door to optimisation potentials.

When we examine options allowing investors to extract further value from their existing assets, we can differentiate between pure financial (e.g. refinancing) and operational measures – I will focus on the latter. The typical “P&L” of a PV park is a good starting point:

– Sales
– Maintenance
– Insurance
– Miscellaneous Expenses: Accounting, Electricity…

Sales: Since the first of January2012 the revised EEG 2012 offers under §33b the opportunity to directly market renewable energy via the so-called “Market Bonus Scheme”, a limited-time opportunity. Provided the park is equipped with remote control devices, allowing it to be decoupled from the grid (e.g. negative market prices), the owners may earn two small margins (total approximately 1.4-1.7%) on top of the FiTs. Sounds like peanuts but for parks upwards of 20 MW, this can easily mean some EUR +100,000 over 18 months.

Maintenance: This is a more complex issue, where risk, covered/non-covered expenses and legal contracts must careful be considered. The result will depend on the existing supplieragreements, options to premature rescissions, and particularly bank consent, assuming the assets are debt financed. Its weight in overall operating costs is significant, thus, even a 1 or 2 EUR/kWp reduction positively impacts the recurring cash flow.

Insurance: As a percentage of operating costs, this is a relatively small item but it too, can be optimized, although absolute savings will be more limited.

Miscellaneous Expenses: This is a bit of a rag bag, with limited potential for a “hair cut”.

Stay tuned as subsequent blog posts shed additional light on the revenue-enhancing and cost cutting potential available to German green asset owners. Looking forward to your comments and particularly for your experiences in executing the mentioned optimization measures.

About the Author

Martin Supancic (37) is external financial advisor to Sojitz Europe plc, the European operations of Japanese trading company Sojitz Corp., with offices on all continents and in major European business capitals. He analyzes photovoltaic investments in Europe and Latin America, and has closed transactions worth 27 MW (more than EUR 65 mill.). In addition, he scouts for innovative cleantech start-ups, helping them grow their sales and arrange venture capital financing. Prior to advising Sojitz Europe plc, Martin advised companies in their internationalization efforts, headed international corporate development at now defunct Spanish biodiesel start-up Green Fuel Corporacion, SA, (shareholders included Endesa, Tecnicas Reunidas, Grupo TSK) and worked on multi sector deals, incl. wind and solar parks, at Deloitte Corporate Finance/Transaction Advisory Services in Madrid, Spain.

Interview with Cofounder of Canadian Clean Energy Conferences Andrew Slavin

In 2009, Canadian Clean Energy Conferences was established in order to support the development of the Canadian renewable energy industry. It is a Quebec-based company that organizes renewable energy and climate events across Canada. Through business-to-business conferences, CEO think tanks, and training workshops, Canadian Clean promotes the advancement of renewable energies in efforts to mitigate anthropogenic climate change.

One of their recent and most prominent events includes the annual Ontario Feed-in-Tariff Forum that took place 3-4 April 2013. This event has previously attracted over 1200 attendees from around the world. It focuses on the opportunities provided by Ontario’s Feed-in-Tariff program for the renewable energy sector.

Milk the Sun is interviewing Andrew Slavin, the co-founder and director of Canadian Clean for stimulating opinions on moving towards renewable energy and a low-carbon economy

Canada PV Solar, Andrew Slavin

Andrew Slavin

Milk the Sun: Mr. Slavin, what are the main goals and achievements of Canadian Clean Energy Conferences and its events?

Slavin:  Our aim is to provide innovative and stimulating events that support the development of renewable energy projects across Canada. We are very proud of our “headline” event which is the Ontario Feed-In Tariff Forum. It is regarded by industry as the spring renewable energy event in Canada. We try to host our events like we are hosting an event at our house.  Though now quite big, we try to make this conference intimate, personable and an opportunity to meet all the right people in an informal but professional manner.

Milk the Sun: How has Ontario’s FIT program propelled Ontario in the renewable energy market? How is renewable energy progressing in other provinces?

Slavin: The Ontario FIT program has transformed the energy sector in Ontario (and arguably across Canada). The aim of the scheme was to enable the province (Ontario) to close its coal-fired power stations, create jobs and create a renewable energy industry in Ontario.  All of this has been achieved in a relatively short period of time. The program has not been without its teething troubles. The FIT was massively oversubscribed, swamping the administrators and creating delays. There has been some negative sentiment in rural communities who object to the rapid growth of wind farms. There has been friction between renewable energy developers and the incumbent utilities regarding connecting projects. Lastly, and perhaps most significantly, the FIT scheme has become a political issue with the scheme proponents, the Liberal Government, coming under pressure from the main Conservative opposition who claim the scheme is expensive and cumbersome.

Milk the Sun: How has Canada progressed in the renewable energy sector in comparison to other countries? What has made it competitive and how could it be improved?

Slavin: The Canadian energy market is complex with each Province having its own energy policy and goals. Provinces such as BC and Quebec have huge hydro power resources providing up to 90% of the energy needs from renewable sources. Ontario and Nova Scotia on the other hand have traditionally relied on coal or nuclear and hence have been more innovative when it comes to supporting renewable energy projects. The Ontario FIT scheme was seen as a way to both stimulate the economy and shift the power mix towards more renewable sources of energy. The scheme has energized the renewable energy sector across Canada making it more competitive in policy and financial terms. This competitiveness will increase once the real cost of carbon is included in energy pricing.

Milk the Sun: What do you expect to see in Canada’s future policies regarding the renewable energy sector?

Slavin: In the next few years all the provincial governments will mandate the procurement of more renewable energy. Even oil rich Alberta recognizes the benefits of supporting alternative energy sources.  Canada has huge potential in both traditional and renewable resources and has the opportunity to be a real leader in sustainable and balanced resource development. The federal government has committed to matching the US when it comes to carbon and climate change policies but in the meantime is taking a sector-based approach to climate policy in an attempt to clean up the most polluting industries. These actions, at all levels of government, are creating exciting opportunities for the Canadian renewable energy industry.

Milk the Sun: What are some of the issues Canada may have to overcome to reach a low-carbon economy?

Slavin: Just politics! The potential is there and huge it just requires politicians with the foresight to look beyond the next ballot.

Milk the Sun would like to thank Mr. Slavin for the interview.

Photovoltaics in Canada: Ontario

Area: 1,076,395 km2
: 13.5 million
Installed Photovoltaics
: 289 MW (2011)

Ontario has a clear lead in Canada’s solar photovoltaic (PV) industry and is even one of the leaders within North America. Approximately 91% of Canada’s 289 MW of PV was installed in Ontario alone, in 2011. Ontario is a leader in Canada’s renewable energy race due to its various procurement programs. These programs have all lead to increases in solar energy investment. It also helps that southern Ontario has one of the greatest solar resources in Canada.

Green Energy and Green Economy Act

In May 2009, Ontario’s government passed the Green Energy and Green Economy Act (GEA). Its main goals are to:

– Promote growth in renewable energy production such as  solar, wind, and biomass;
– Encourage energy conservation through savings and well-managed household energy expenditures;
– Create 50,000 jobs for people in Ontario within its first three years.

Ontario is one of the leaders of solar energy in North America. iStockphoto.com©xyno

Ontario is one of the leaders of solar energy in North America. iStockphoto.com©xyno

The GEA promotes energy conservation and attempts to build an economy based on clean energy. This act makes energy efficiency a key part of Ontario’s building codes and creates energy efficiency standards for household appliances. It also works with local electricity utilities to achieve energy conservation targets. Nevertheless, the GEA has been surrounded by some controversy as it demands a certain amount of labour and manufacturing to be done within Ontario in order to receive the tariffs. Ultimately, the GEA is part of Ontario’s effort to protect the environment and prevent climate change.

Ontario’s Feed-in Tariff Programs

One of the GEA’s most prominent features is its Feed-in Tariff (FIT) Program that acts to support its goals. In October 2009, the Renewable Energy Standard Offer Program (RESOP) was replaced by Ontario’s FIT program. RESOP was an incentive offered through the Ontario Power Authority (OPA) which enabled small-scale energy producers to sell their renewable power to the grid at a fixed price.

The FIT program offers a guaranteed funding structure through competitive pricing and long-term contracts for energy that come from renewable sources. Cansia, a national trade organization for Canadian solar companies, stated that FIT is the, “…single largest climate change initiative in North America.” Eligible electricity generators can sign a contract with OPA to sell energy produced by a renewable energy source and receive a fixed amount per kilowatt hour for 20 years. The FIT program is designated for larger solar projects while the microFIT program is intended for installations with a 10 kilowatt capacity or less (ie. homeowners, farmers, and small business owners). The tariff rates are reviewed annually and have decreased since its establishment. As of April 5, 2012, the FIT and microFIT rates are as follows in Table 1. A significant number of PV projects have been installed since FIT was introduced; Table 2 indicates the number of contracts and FIT applications in kilowatts. Approximately 75% of FIT projects are ground-mounted. This program also enabled one of the largest solar parks in the world to be built in Sarnia, Ontario at 97MW.

Table 1. Tariff rates for solar photovoltaic installations for FIT and microFIT program as of April 5, 2012.


Project Size

Price (cent/kWh)

Solar Rooftop ≤10kW


>10 kW ≤100 kW


>100 kW ≤500 kW


>500 kW


Solar Groundmount ≤10 kW


>10 kW ≤500 kW


>500 kW ≤5MW




Table 2. FIT contracts and large FIT applications as of January 31, 2013 (kW for contracts and applications).

Energy Type

Total Contracts (kW)

Existing Applications (kW)

Solar (rooftop)



Solar (ground-mounted)



Net Metering

Like most other provinces in Canada, Ontario has a net metering program available for those generating their own power through a renewable source. This program enables consumers to be paid for any excess electricity that is produced. The consumer connects to a distribution company that will read the meter and receive a credit for the excess power being supplied to the grid. Only generator facilities with less than 500 kilowatts are included in this program

Ontario’s Future

A shift in electricity supply in Ontario is expected in the near future. By 2030, 70% of electricity generation must occur in new or refurbished facilities. The demand for electricity will also increase, regardless of energy conservation measures. Ontario has developed the Long-Term Energy Plan (LTEP) to accommodate the change in Ontario’s energy supply and demand. LTEP calls for the majority of energy produced to switch to different sources such as solar and wind power. Solar PV is expected to contribute 1.5% of total generation by 2030. Ontario’s decision to phase out coal-generated energy by 2014 has also been revolutionary in promoting the move towards renewable energy. Ontario’s programs have attracted a significant amount of private investors towards the PV market. Its PV market is expected to generate $12.9 billion of total private investments by 2018.

Series in Photovoltaics in Canada
1. Photovoltaics in Canada – Introduction
2. Ontario

Source: Cansia, Ontario Power of Authority


Photovoltaics in Canada – An Introduction

Canada is one of the highest energy consumers per capita in the world. Due to its geography, Canada is currently the world’s second largest producer of hydroelectricity and is sixth in wind power generation. Nevertheless, solar energy is also expanding rapidly in Canada and especially, in Ontario. In 2011, there was 289 MWDC photovoltaic (PV) capacity installed throughout the country representing 335 GWh annually.

Canada has a significant amount of annual solar radiation, much greater than that of Germany’s the leader in solar energy. Ontario, Quebec, and the Prairies are leading the country in solar resources. Solar potential tends to accumulate in the southern regions but is much lower in the territories due to their high latitude. Canada’s small population is most scattered throughout the country with very few densely populated regions besides the Greater Toronto Area, Vancouver, and Montreal. In the last decade, PV installations were concentrated in off-grid systems for purposes such as navigational aids, remotes homes, and telecommunication.  These systems made up almost 90% of the solar capacity in Canada in 2009. Off-grid system remains prominent in Canada but will decrease in its market share as grid-connected systems continue to grow swiftly.

Government Regulations

Federal incentives are lacking in Canada, with the exception of the Income Tax Act’s Accelerated Capital Cost Allowance for certain PV systems. Solar energy legislature is almost always left solely to the provincial government. Most provinces in Canada have Net Metering programs that allow smaller renewable energy generating units to connect to the grid system.

Ontario has so far been the clear winner in Canada’s solar race. Ontario’s Renewable Energy Standard Offer Program (RESOP) and feed in tariff (FIT and microFIT) program has had substantial support. In 2010, the public budget for photovoltaics in Canada was $61.8 million with the majority funding Ontario’s solar efforts. Formal solar networks and testing facilities for panels have also been established, funded by both federal and provincial governments, which have worked to increase the collaborations and PV innovations throughout Canada.


In 2010, Sarnia, Ontario’s solar plant, Sarnia Solar, was considered the world’s largest solar plant. It has since been exceeded by other plants around the world. It has an installed capacity of 97MW and consists of 635 acres of modules, approximately 1.3 million thin film panels. Municipal governments and communities have also worked towards developing renewable energy. House owners now view the addition of a PV system as a normal house upgrade and base it on affordability and reductions in environmental impact. In 2007, the Drake Landing Solar Community was completed in Okotoks, Alberta. It is the first community heated by a district system and is able to store energy generated during the summer for the winter months. This allows 90% of each home’s heating to be generated directly from solar energy.

Despite all this, Canada is still behind some of the major competitors. However, politicians all around Canada are aiming to reduce greenhouse gas emissions through use of renewable energies. New legislation such as Ontario’s Green Energy and Green Economy Act established in 2009 is also pushing the country towards a renewable energy  -based economy. As older electricity plants begin to degenerate and age, Canada is looking towards renewable energy to replace ever increasing energy demands. Canada’s vast landscape is an unlimited resource for sustainable energy from renewable sources.

Check out the article on Ontario later on in the week which will expand on its legislation and accomplishments in solar energy.

Sources: Canmet, Cansia, DLSC, Pembina Institute


Photovoltaic in the USA: New Jersey

State: New Jersey
Area: 22,588 km²
Population: 8.8 Mio.
Percentage of Renewable Electricity: 8.8%
Installed Photovoltaic: 900 MW

Übersicht über den PV-Markt von New JerseyNew Jersey is the fourth smallest state in the United States of America. Nevertheless, it is home to 8.8 million inhabitants, making New Jersey the most densely populated state in the entire US. The state lies just south of New York NY, North America’s most populous city. Trenton is the state capital with 84,000 inhabitants.

Second largest Photovoltaic Market in the USA

Despite its small size, with over 900 MW of installed PV capacity New Jersey is tied with Arizona for the second largest solar energy market in the USA. Ample state incentives have resulted in many solar manufacturers setting up their production facilities there.

In New Jersey municipalities, businesses and private land owners are investing heavily in roof-top photovoltaic installations.

Sonne gibt es in New Jersey auch für Photovoltaik

Sunset on a Beach in New Jersey

Photovoltaic Policy and Renewable Energy Goals

The Renewable Portfolio Standard (RPS) requirements of New Jersey are some of the most aggressive in the entire USA. By Energy Year 2021, 22.5% of electricity produced in New Jersey will come from renewable energy sources. At least 1,100 MW is required to be sourced from off-shore windparks. Additionally, at least 4.1% of purchased electricity will have to come from Solar sources by 2028.

Electricity providers can meet these requirements by purchasing Renewable Energy Credits (RECs), similar to the system in place in California. Solar Energy Credits (SRECs) are distinguished from other RECs to facilitate the completion of the 4.1% solar energy carve-out.

For windpower, biomass and fuel cell factories, there are additional subsidies  through the Renewable Energy Incentive Program.

New Jersey also has a Net-Metering program, through which residential PV system owners obtain credit according to the electricity they feed into the grid.

Finally, sales tax exemptions exist for the purchase of solar modules for installation.

Further programs and campaigns for Photovoltaic and Renewable Energy

Investments in energy efficiency and renewable energy are also subsidized through New Jersey’s Clean Energy Fund. For 2001-2012, the fund made $2.4 Billion available.


Series Photovoltaic in the USA:

1. Photovoltaic in the United States of America (USA) – An Introduction
2. California
3. New Jersey

Sources: njcleanenergy.com, DSIRE, ACORE.org, powerrouter.com


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