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To cut costs, German industry turns to solar power as renewables rule the roost

With electricity prices in Germany showing no signs of falling as previously expected, companies are increasingly seeing the economic feasibility of installing solar panels

In an effort to reduce electricity costs and carbon dioxide emissions at a metal products factory, Philip Matthias spent months trying to convince his father to put solar panels on the roof of their company in the eastern German state of Thuringia.

His father decided to nearly double the project’s capacity by installing photovoltaic panels that could power about 900 homes in addition to the factory, after first being dubious about the 2.3 million euro (USD 2.5 million) investment, a substantial amount for the mid-sized company Tridelta.

“Photovoltaic systems pay for themselves in about seven and a half years. The manufacturer gives a 20-year warranty. That means it’s an extremely lucrative investment,” Matthias said, as reported by Reuters.

Berlin has imposed regulations intended to hasten the expansion of solar power in the wake of the conflict in Ukraine and the dramatic drop in Russia’s fossil fuel exports to Germany. The nation wants to produce 80% of its electricity from renewable sources, and this includes the regulations by 2030.

In order to avoid high energy costs, German businesses are increasingly turning to solar power thanks to a feed-in tariff system that guarantees renewable energy producers a price when they sell their power and the decreased cost of solar panels.

German small and medium-sized enterprises have not yet profited from reduced electricity prices, despite the country having the greatest solar and wind power generation capacity in Europe due to high grid fees and taxes. They circumvent these charges and taxes by producing their own solar energy.

According to data from the BDEW Association of Public Utilities, utilities accounted for roughly 69% of Germany’s domestic electricity consumption in 2023.

“With electricity prices in Germany showing no signs of falling as previously expected, companies are increasingly seeing the economic feasibility of installing solar panels,” Marie-Theres Husken, energy expert at the BVMW Association of Small and Medium-sized Enterprises said.

Things Are Changing Faster

In the first half of 2024, renewable energy sources covered approximately 58% of Germany’s gross domestic electricity consumption, marking a new milestone. This figure, sourced from preliminary calculations by the Centre for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW) and the Federal Association of the Energy and Water Industries (BDEW), represents a nearly 6% point increase from the same period in 2023, which saw renewables at 52%.

Throughout the first half of 2024, renewable energies consistently provided over half of the monthly electricity consumption. Since April, their monthly share has been 59%. Photovoltaic (PV) systems have produced significantly more electricity compared to 2023, generating a total of 37 billion kWh.

The above mentioned surge is attributed to the record expansion of PV systems in 2023. In June 2024 alone, photovoltaic systems produced over 10 billion kWh, achieving this monthly output for the first time. Hydropower also contributed significantly, generating 12 billion kWh in the first half of the year.

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