Germany to launch first auction of land for solar power

FRANKFURT Jan 28 (Reuters) - Germany is to open a first auction of land for solar power installations from next month as it seeks to bring renewable energy into the wholesale power market, away from a costly era of subsidies.

The cabinet on Wednesday agreed rules for a pilot project to auction open spaces for the deployment of 1.2 gigawatts (GW) of installed photovoltaic capacity over the next three years.

"We are creating the basis for a competitive promotion of renewable energies," Economy Minister Sigmar Gabriel said in a statement.

The number is small given that total solar capacity already totals well over 35 GW but if the move is successful, from 2017 onwards, other renewables such as wind power could be brought into similar schemes.

The system agreed on Wednesday entails the energy regulator, the Bundesnetzagentur, collecting offers up to April 15 to award permits to build 500 MW of solar in 2015, 400 MW in 2016 and 300 MW in 2017.

The bidders with the lowest possible price proposals for the power to be produced on the land will win. The power would have to marketed at that price, which would replace the current system of 20-year guaranteed state hand-outs.

As free land is scarce, the government also plans to provide some 1,000 hectares of federal land in 2016 and 2017 for the purpose and also include some land that has been defined as unsuitable for farming.

The government is partly acting under the watchful eye of Brussels which last year stepped up pressure on Berlin over the generous subsidies that have turned Germany into a champion of wind and solar, but cost taxpayers dearly and undermined trading in the wholesale market for thermal power.

The government in a law last August pledged that renewable operators will be increasingly asked to face commercial risks, such as dealing with trading and infrastructure costs, supply shortages and lack of storage for electricity.

It curbed direct incentives and set caps on the expansion of green power.

The BSW solar industry lobby said the latest move was "bureaucratic and its success uncertain". The capacity to be auctioned was too small, given that an annual expansion of solar power of 7.5 GW is allowed. (Reporting by Vera Eckert and Markus Wacket; Editing by Michael Urquhart)

Source: Reuters Africa