UK Feed-in Tariff compared to Germany

A decade ago, when the German government formed a collation with a green party, a national solar energy incentive – the Feed-in Tariff – was created. This meant that, for the first time, anyone producing renewable electrical energy would be paid a guarenteed fixed rate by the German electricity companies. This has proved an overwhelming success and there are now over 500,000 rooftop solar photovoltaic system installed in Germany. In recent years, many EU countries have followed and finally, on the 1st April 2010, the UK’s Feed-in Tariff scheme became a reality.

Our countries have similar population (UK 61 million, Germany 82million), similar Gross Domestic Products GDPs (UK $2.67 Trillion US dollars, Germany $3.65 Trillion US dollars), and, importantly, similar solar climates (the average solar irradiation in UK and Germany is around 1,000 kWh/m2/year). So how do the two Feed-in Tariff schemes compare?

How do the schemes work?

Both schemes allow money to be made THREE times. First, for every kWh generated by the solar panels (paid by the utility companies), secondly from the reduced electricity bills, and then an additional payment for any unused electricity exported to the grid.

What are the main differences?

The most important difference by far is that, unlike Germany which gives a guarenteed income for the electricity generated by solar panels for 20 years, the UK scheme guarantees income for 25 years. If the system’s payback is around 10 years this represents 50% extra profit in the UK.

Also, unlike the German scheme, the UK scheme is income tax free which makes UK solar photovoltaic power even more attractive.

How much do they pay?

Both schemes pay a very healthy rate although it is difficult to compare exactly because the pound has fallen against the Euro since the German Tariff was announced.

In May 2010, the German parliament approved cuts to their Feed-in Tariff. The Bundestag voted in favour of a 16 per cent cut to feed-in tariff incentives for solar rooftop installations, as well as an 11 per cent reduction in incentives for solar installations on conversion sites. The environment minister Norbert Röttgen said the cuts were a necessary adjustment given that the price of solar panels has dropped by around 30 per cent in recent years. “The amendment is a response to the price reduction associated with the introduction of mass production,” he said. “We will therefore make the necessary corrections to reduce compensation to a reasonable level, in order to limit the cost of electricity to consumers yet further increase our share of solar power. ”

So now the German roof-top solar electrical energy Feed-in Tariff is 39 Euro Cent/kWh compared to the equivalent UK Feed-in Tariff which is 41.3p/kWh.

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