Internal Project Management Guidelines - PV Policy Group

PV Policy Group – WP2 – Questionnaire on national policy framework for PV
The combination of the two instruments HTDP and EEG has proved particularly effective in motivating
ecologically and socially motivated consumers. The advantage of the “two-column” support model is
due to the fact that the initial investment costs are by far the most dominant factor in financing PV
installations. As a result, a soft loan programme enabling the funding of up to 100% of initial
investment cost, is a decisive leverage for any investor.
On the other hand, even in the year 2001 the soft loan under the HTDP programme led (depending on
the size of the installation) to specific electricity production cost of 51-62 €ct/kWh. Given an average
electricity price in the liberalised energy market of 2,4 €ct/kWh (in 2002), there was still a financial gap
of nearly 50 €ct/kWh to make PV electricity production profitable. The Renewable Energy Law (EEG)
introduced such a higher feed-in-tariff for everyone in April 2000. The EEG feed-in-tariffs were 50,6
€ct/kWh for PV plants installed from 2000 to 2001, and 48,1 or 45,7 Cent for plants installed from 2002
to 2003. The fact that the feed-in-tariff was guaranteed for at least 20 years ensured investors a
secure, long-term cash flow that in combination with the HTDP loans ensured a full payback of the
initial investment. But EEG and HTDP were not only complementary; there were further synergies that
leveraged the overall market development. The guaranteed feed-in-tariff reduced the credit risk of PV
investments, so commercial banks were willing to offer 100% financing solutions by means of the
HTDP loans (that are never given directly by the public KfW bank, but via private banks). On the other
hand, the public soft loan programme led to the introduction of commercial credit offerings for PV
projects by the banks themselves. This is an important issue since before this technology was virtually
unknown, so that a financing was difficult to get and only with high risk charges (high interest rate, high
security requirements).
Overall, the German PV Policy model turned out to be very successful – with exception of the
intermediary “stop & go” effect of the HTDP programme (details later).
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