German companies are rapidly increasing their investments in solar energy due to high energy costs, driven by the volatile global energy market and rising prices.
This surge is part of a broader strategy to enhance energy security, reduce dependency on fossil fuels, and comply with stringent environmental regulations. The push towards solar power is not only a response to immediate economic pressures but also aligns with Germany’s long-term commitment to renewable energy and carbon neutrality.
European Commission website says for medium-sized consumers with an annual consumption between 2 500 Kilowatt hours (KWh) and 5 000 KWh, electricity prices in the second half of 2023 were highest in Germany (€0.4020 per KWh), Ireland (€0.3794 per KWh), Belgium (€0.3778 per KWh).
Many businesses are installing rooftop solar panels and constructing solar farms to generate their own electricity, significantly cutting operational costs and improving sustainability profiles. The investment in solar technology is also supported by favorable government policies, including subsidies and tax incentives, which make solar projects financially attractive.
Advancements in solar technology have made it efficient and affordable, encouraging more companies to adopt it. This transition helps businesses manage energy expenses and boosts Germany’s position as a leader in renewable energy adoption.
In 2023, around 36.6 billion euros were invested in renewable energy plants, according to data available from Statista.com.
The latest Reuters news report has revealed why some of the corporate customers are selecting solar as their main source of power.
For instance, Philip Matthias and his father have installed solar panels on their metal products factory’s roof in Thuringia, eastern Germany, to reduce electricity costs and carbon emissions. Initially skeptical about the 2.3-million-euro ($2.5 million) investment, they decided to nearly double the project’s capacity, choosing photovoltaic modules capable of powering around 900 households.
“The PV systems amortize after about 7-1/2 years. The manufacturer gives a guarantee of 20 years. That means this is an extremely lucrative investment,” Philip Matthias told Reuters.
Germany has implemented laws to accelerate solar power expansion, aiming to cover 80 percent of the country’s energy from renewables by 2030. This shift is further encouraged by a feed-in tariff that guarantees a price for renewable energy producers and reduced solar panel costs. Consequently, German companies are increasingly turning to solar to circumvent high energy costs.
Though Germany has Europe’s largest capacity for solar and wind power generation, small and medium-sized enterprises (SMEs) have yet to benefit from lower electricity prices due to high grid fees and taxes. By generating their own solar power, these companies can avoid those costs.
Data from the BDEW utilities association shows that companies consumed around 69 percent of Germany’s national electricity in 2023. “As electricity prices in Germany show no signs of decreasing as previously anticipated, companies are increasingly recognizing the economic viability of installing solar panels,” said Marie-Theres Husken, an energy expert at the BVMW association for SMEs.
Corporate Solar Shift
Newly installed photovoltaic capacity on business rooftops increased by 81 percent year-on-year in the first four months of the year, outpacing the 1 percent growth in the residential sector, according to the BSW solar power association.
A May survey by pollster YouGov indicated that over half of German companies with suitable roofs plan to install solar power systems within the next three years. BVMW forecasts that nearly all manufacturing companies in Germany will use solar energy by 2030.
Germany’s largest residential solar power developer, Enpal, announced in April its expansion into the commercial sector. “The demand was not instant… but the growth is going to be very sustainable,” said Melchior Schulze Brock, CEO of commercial and industrial solar startup Enviria.
An April study by the Freiburg-based Institute for Applied Ecology highlighted the potential to install up to 287 gigawatts (GW) of solar capacity along German roads, railways, parking lots, and industrial areas. This potential far exceeds Berlin’s 2030 target of 215 GW and could significantly reduce reliance on agricultural land, where permitting and planning approvals can take up to a decade.
A legislative package passed in April, which eases regulation and increases subsidies for large rooftop systems, along with a pending tax investment reform for real estate funds operating rooftop solar panels, is expected to drive demand further.
State feed-in subsidies for large-scale rooftop photovoltaic projects, introduced in 2021 and selected via tender, have also boosted this trend. The last tender for subsidized projects in February saw a 107 percent increase in the number of offers year-on-year, according to data from the federal grid network agency.
A feed-in tariff of 9.3 euro cents per kilowatt-hour, higher than Tridelta’s power purchasing price, makes it cheaper for customers to sell future generated electricity to the grid and buy it back.
“There’s a high correlation between the feed-in tariffs and the build-up of solar PV rooftop projects,” said Hugo Willink, Executive Director at solar roofs developer Sunrock.
Sunrock, which secured an order from Mercedes-Benz in May to build a 23-megawatt solar project on the carmaker’s factory roofs, sees Germany as its core market for the coming year.
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