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Electricity Rebels (Stromrebellen)

April 7, 2007
Paul Gipe

The Aachen Solar Tariff Model


April 7, 2007

by Paul Gipe

In the early 1990s the city of Aachen (Aix-en-Chapelle) Germany set the world of solar energy on its ear. Until that time development of solar PV depended entirely on direct and substantial subsidies. Then in June, 1993 Aachen's city council approved the first solar PV tariff that paid a profitable price for solar generated electricity.

Aachen calculated a tariff that would allow recovery of the "cost" of solar PV plus a modest profit called kostendeckende vergütung in German (literally a cost-covering remuneration). This principle is much like that used to determine the tariffs or electricity rates for regulated electric utilities.

The city did not base it's tariff on the "value" of the solar electricity. This was--and is--revolutionary because solar PV is expensive and if rates are based on what it costs to install solar PV, the tariff will be much higher than that for other, cheaper, technologies. Aachen's city council took a bold move and said in effect, "we want solar and we're willing to pay what it takes".

At the time, solar generated electricity in Germany was paid 90% of the retail rate under Germany's 1991 electricity feed law, the Stromeinspeisungsgesetz or the law on feeding in electricity.

Aachen determined that in addition to the feed law tariff, it was necessary to pay a citywide solar tariff of 2 DM/kWh (US$1.28/kWh) for ten years. Shortly thereafter the Bavarian city of Freising followed suit.

Between 1994 and 1997, 30 Bavarian villages implemented a similar program.

Aachen and its sister cities established the principle of paying for the cost of generation for the generating technologies they desire-and not necessarily those that are the cheapest.

The Aachen model became the foundation for Germany's successful EEG, the Renewable Energy Sources Act (also known as the Act on Granting Priority to Renewable Energy).

Aachen's solar tariff and subsequent solar tariffs under Germany's EEG provided successful examples for the Ontario Sustainable Energy Association in proposing a solar tariff for Ontario.


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