September 2018 showed its might. High commodity prices with subsequent corrections, as well as a series of political announcements at EU and German level. In addition: The condemned live longer. Blockchain technology is not yet at an end.
Solar tariffs on Chinese modules are gone
The EU made an expected but very relevant decision: Import duties on solar products expired on 3rd of September 2018. This was the decision of the EU Commission.
Since 2013, there have been minimum prices on Chinese solar modules and cells. The price of products of manufacturers who did not adhere to the regulation were artificially increased by up to 65 percent by means of these penalty duties. This was intended to protect the European manufacturers of solar modules against low (dumping) prices from China. And thus keep the European industry alive (source: Handelsblatt).
The falling prices of solar modules due to economies of scale by Chinese producers thus did not reach Europe in their entirety. The EU Commission’s decision to phase out the current punitive tariffs has also been taken against the backdrop of ambitious expansion targets for PV in European countries.
“After considering the needs of both producers and those using or importing solar panels, the Commission decided it was in the best interests of the EU as a whole to let the measures lapse,” according to the EU Commission (source: EU Commission).
Falling subsidy rates in China could also lead to further price reductions for imported modules. The Solar Alliance for Europe promoted the abolition of customs duties. They assume that module prices will drop as low as 200 €/kW (source: Energate).
Political announcements in Germany
There were also a number of political announcements for Germany in September 2018. The special tenders for PV and wind were actually expected before the summer break. They will soon become reality with an amendment to the EEG. This was announced by State Secretary Bareiß from BMWi at the beginning of September.
Long discussions between the governing parties have delayed the special tenders further and further into the future. Also, a concept is to be drawn up for the new target of the Federal Government of 65 percent renewable electricity in 2030 (source: Energate).
In addition, changes are expected to the feed-in priority for renewable energies. Here, the government hopes to reduce the economic costs of redispatch measures.
An amendment clause for the Energy Industry Act (EnWG) is currently being discussed in the BMWi. It states that in the case of adjustments to active power generation due to current and voltage fluctuations, the measures “which are likely to cause the lowest overall costs” should be selected.
In some situations, EEG or CHP-plants could be shut down instead of large thermal power plants being used for redispatch measures (source: Energate).
In September 2018, the acceleration measures for grid expansion were also discussed with the responsible federal states. Here, changes are to be made to the Network Expansion Acceleration Act.
The procedures for approving the routes are to be streamlined. In particular, parts of the federal planning approval could be omitted if new lines are planned on or near existing power lines.
Economics Minister Altmaier announced: The expansion of the grid is a matter for the boss”. Altmaier stated the approval procedures for all new north-south lines should be completed by 2021. It is particularly important here to regulate compensation payments for property owners. So that the costs for grid expansion are not significantly higher than expected (source: Energate).
However, Altmaier tends to step on the brakes elsewhere. In the important area of energy-efficient building refurbishment and renovation, slightly more than 100 million euros less will be spent in 2019 than in 2018 (source: Energate).
The impact of this reduction on the Building Energy Act, which has been under discussion since 2017, remains to be seen. Here, the Energy Saving Ordinance, the Renewable Energies Heating Act and the Energy Saving Act are to be merged (source: Energate).
It appears that interesting changes to the regulatory framework are still pending in autumn and winter of 2018.
Blockchain: no revolution, but far from being written off
The traditional electricity trading process of large generators and consumers via long-term contracts is currently probably less affected by blockchain applications. In particular, the clearing process and regulatory hurdles, such as the Mifid or Remit Directives, make such transactions very complex (source: Energate).
On the other hand, large energy companies continue to experiment with and invest heavily in this new technology. For example, the Innogy Innovation Hub has invested in the Berlin software developer Fractal.
The development of digital business models is at the forefront here. For example, the billing of photovoltaics and e-mobility, as well as the connection of such procedures with social media are being developed (source: Gründerszene).
The French Engie Group is also dedicated to decentralized databases. Although the aim is not to move in the direction of the classic blockchain, Engie and The IOTA Foundation will be researching the “IOTA Tangle” at the group’s own research center ENGIE Lab CRIGEN.
The two organisations have entered into a partnership for this purpose. Linking of artificial intelligence and distributor Ledger Technology will be the main task. Plus the optimisation of business processes and the development of new products in the digital energy world (source: Kryptoszene).
Rise and correction on the price side
At the beginning of September 2018, both the high quotations for CO2 and coal drove prices higher. Thus the base for the front year in the German market area rose from 50 to over 57 EUR/MWh from 01.09.2018 to 10.09.2018.
CO2 prices climbed to over 25 EUR/tonne. Subsequently, there was a reduction in the CO2 certificate market by more than 5 EUR/tonne.
According to market participants, the low demand at the primary market auctions for the certificates was an important reason for this. At the end of September, the price was again just under EUR 22/tonne, while the annual base contract for Germany closed at just under EUR 53/MWh.
Unaffected by this, however, coal rose to 99 USD/tonne in September. Figure 1 shows the relative changes in coal, CO2, and electricity price quotations during August and September 2018 (source: Montel).
On the short-term side, very low wind input during extended periods of times led to high prices and strong hard coal power generation. However, in the night from Saturday 22.09.2018 to Sunday 23.09.2018, the first negative prices occurred in several months.
Due to high wind feed-in and relatively low consumption, hardly any coal-fired power plants were generating. The quarter-hourly generation profile in Germany and the day-ahead spot prices are shown in Figure 2.