Following the success in the UK, where with their local partner Engynious, 30 schools are now benefiting from solar panels, the team has been working on a German approach aimed specifically at helping Kindergartens and small private schools save energy costs by using solar panels.
The Business model in Germany is identical to the UK: we install the solar panels at our own cost. The school (or in Germany the Kindergarten) only pays for the electricity it consumes from the panels. As this is cheaper than buying electricity from the grid, they save money. Easy and clear for everybody.
Installing solar panels on buildings started in Germany nearly 20 years ago and over the years over 35GW has been installed, making Germany the country with the most installed solar in the world. So why choose Germany as the second country to expand into?
Surprisingly, the German market is relatively underdeveloped in terms of providing funded solar panels to building owners in exchange for a power purchase agreement. By contrast, in the UK there are now at least half a dozen companies offering funded solar solutions to building owners in general.
The reasons for the slow uptake of funded of ‘free’ solar panels in Germany are:
Cheap debt: As all income from a solar panel was dependent only on the sun shining, the equipment working and the German government’s ability to pay the subsidy, it was possible to borrow up to 100% of the installation costs of the solar panels at very low interest rates. So most entities can finance the solar panels entirely via their local bank.
Subsidy structure: The German Feed in Tariff as its name implies rewards panel owners for every unit of electricity fed in to the grid. Given that the subsidy price was much higher than electricity prices paid for by consumers, there was no incentive to consume the electricity generated on site. This has now changed. FiT rates are about 0,11 Euros a unit vs. a consumer price of up to 0,28 Euros, so where consumers pay high electricity rates, self consumption is far more attractive than exporting to the grid.
Tax on electricity sales: In order to implement more control on the development of the solar market in Germany, the government introduced a law, by which self consumption of on-site-generated electricity is taxed. Every unit of energy that is produced on site and self consumed is charged a tax of between 0,02 to 0,06 Euros.
Given the above conditions it is not surprising that, apart from a few companies leasing solar equipment, funded solar business models based on power purchase agreements have not really made much impact in Germany. Returns to all concerned are much slimmer than in the UK as subsidies are less. On the other hand we will be able to offer kindergartens a free wall mounted display showing how the system is performing in real time. This display can also be used to post kindergarten news and timetables if desired.
“Our research indicates that whilst larger schools purchase electricity at a cost that solar + tax can’t compete against and thus not economically attractive, smaller schools, private schools and kindergartens can in many cases still benefit. Following initial trials with a number of schools, it is now time to launch a dedicated division for the German market. “ Martin Augustin, COO.
The founding team behind Solar For Schools and Solar für Kinder is focused on building a long term viable business, that makes a significant positive contribution to society by reducing global warming, whilst educating our children into how to live sustainably and making a meaningful cost savings that enable smaller schools and kindergartens to invest in more equipment for children.