Fraunhofer ISI: PV Installations Generate Almost Three Times Higher Profits Than Onshore Wind Despite Lower Yields

In view of the substantial increase of costs for electricity consumers for financial support paid under the Renewable Energy Sources Act (EEG), Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) examined “Distributional effects of the promotion of photovoltaic expansion and wind onshore“. The study shows great differences between the two renewable sources. Photovoltaic installations generate significantly higher profits than onshore installations, even though they produce less electricity overall, Fraunhofer ISI says. The study also points out striking differences between individual federal states.

The aim of the study was “to investigate the amount of electricity generated depending on the federal state, size of installation and annual amount for photovoltaic and onshore installations and to calculate the annual profits”.

“In 2012 the realized profits of 750 million euros made by onshore installations were significantly lower than for photovoltaic installations, which at around 2.7 billion euros, generated profits which were almost three times higher despite the fact that far less solar electricity than wind power is produced”, Dr. Barbara Breitschopf, project manager of the study at the Fraunhofer ISI, highlighted one of the main results.

In addition, the investigation also found the following patterns for electricity capacities, electricity generation and profits which depend on the location of the installation.

For example, Bavaria and Baden-Wuerttemberg alone cover around 40 per cent of the installed solar electricity capacity in Germany and make the highest profits. These are primarily generated by smaller, often private installations which at the same time bring in the lowest profit margin for the generated amount of electricity per kWh. The natural conditions, the high number of farms and roof surfaces available for solar panels all have an effect on the installed capacity.

In contrast, the northern German states such as Lower Saxony, Brandenburg, Schleswig-Holstein and Saxony-Anhalt generate approximately 19 GW more wind power than the remaining twelve federal states produce together. However, the profit margins differ substantially as the example of Schleswig-Holstein highlights: Compared with Lower Saxony the most Northern state has only half of the total electricity capacity the profits for 2012 were just 9% less. The reverse is true for Brandenburg. Since 2000 it has had the second largest total electricity capacity but according to a model estimate it makes only a fraction of the profits which Lower Saxony or Schleswig-Holstein make.

According to Fraunhofer ISI the substantial differences can be partially explained by the natural weather conditions which are more favorable for onshore installations in Schleswig-Holstein than in more southerly regions in Germany. In addition, regional spatial planning has a great impact on the location for onshore installations, Fraunhofer ISI says.

The study does explain the three times higher profits generated by PV plants compared with onshore wind power plants in some more detail. However, it looks like the study does not provide easily identifable figures on average profit margins for wind or for solar. Neverteless, the study explains that profit margins for PV vary, mainly according to the following factors: It states that three-quarters of the profits of PV plants were generated by plants installed in the period from 2009 to 2011, when the costs of plants decreased faster than EEG feed-in tariffs were adjusted (cf. page 20; Regarding the solar feed-in tariff reduction that came into effect on 1 April 2012, please see here). A very worthwhile analysis of the Fraunhofer ISI by Craig Morris is available at Renewables International.

For more information on increasing solar support under the EEG 2014, which will enter into force on 1 August 2014, please click here. Regarding wind power support under the EEG 2012 please see here. Information on financial support for onshore wind power under Section 49 EEG 2014 can be found here.

Source: Fraunhofer ISI

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