Environment

Mar 27, 2012

Why power generators are terrified of solar

In Germany, solar PV is not just licking the cream off the profits of the fossil fuel generators -- as happens in Australia with a more modest rollout of PV -- it is in fact eating their entire cake, writes Giles Parkinson, of RenewEconomy.

Here is a pair of graphs that demonstrate most vividly the merit order effect and the impact that solar is having on electricity prices in Germany; and why utilities there and elsewhere are desperate to try to rein in the growth of solar PV in Europe. It may also explain why Australian generators are fighting so hard against the extension of feed-in tariffs in this country. The first graph illustrates what a typical day on the electricity market in Germany looked like in March four years ago; the second illustrates what is happening now, with 25GW of solar PV installed across the country. Essentially, it means that solar PV is not just licking the cream off the profits of the fossil fuel generators -- as happens in Australia with a more modest rollout of PV -- it is in fact eating their entire cake.

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