With packages of measures – such as the Solar Package I – the German government is aiming for a climate-neutral electricity supply. The share of renewable energies in gross electricity consumption is expected to increase to 80 percent by 2030, up from 57% in mid-2024.
Massive expansion necessary
This requires the massive expansion of wind power (onshore/at sea) and photovoltaics (PV) in particular. The results of the Federal Network Agency’s last innovation tender in September 2024 indicate that potential plant operators are gaining more momentum for expansion. The amount of approx. 583,000 kW tendered by the Federal Network Agency was significantly exceeded by submitted bids of 1,856,000 kW. The last tenders do not reflect such significant oversubscriptions, and in some cases the bid volume was below the tender volume (May 2024: 583,250 kW vs. 564,046 kW; September 2023: 400,000 kW vs. 779,088 kW, May 2023: 400,000 kW vs. 83,500 kW).
Institutional investors as important capital providers
Institutional investors act as important equity and debt providers in such projects, balancing return expectations in the complex interplay between planning law, approval structures, power purchase conditions and project development processes. However, for several months now, there have been signs of a significant easing in the price development with regard to the procurement of plant components.
Drop in prices for plant components
According to the price index published by pvXchange Trading GmbH, prices for high-efficiency modules for photovoltaic systems in particular fell significantly from €0.23/Wp to €0.15/Wp in the period between January 2024 and the end of September 2024. The reasons for this are, among other things, overcapacities built up by Chinese manufacturers, which are waiting for customers in the warehouses of wholesalers.
Similar reasons and the fall in the price of raw materials for the production of battery cells lead to lower costs for Battery Storage Systems (BESS), which are indispensable for intermediate storage and stabilization of the power grid. Lithium iron phosphate battery cell prices have fallen from $95/kWh to $53/kWh within a year, according to Bloomberg. Goldman Sachs Research expects this trend to continue until 2030 with a price decline of around 11% p.a.
Development to support further expansion
Even if precise forecasts are subject to uncertainty, these trends should help to make investments in such investments (again) more attractive.
