50 percent grid connection mandatory in SDE++ : 'another complication added for the business case'

“The continuation of more and more SDE++ projects is under serious pressure due to increased costs,” said Cees van de Werken of ProfiNRG. “The 50 percent grid connection requirement means an additional challenge.

In the next SDE++ round, only solar power projects connected at 50 percent of peak capacity will be honored. This mandatory capping obviously stems from grid capacity problems in the Netherlands. But what does this mean for the business cases of these projects? Cees van de Werken, founder and co-owner of epc contractor ProfiNRG, points out that those are under serious pressure anyway.

On hold

‘The base amounts of the subsidy have steadily declined in recent years. Prices for solar panels have risen sharply, by as much as 10 cents per watt-peak. Other materials such as cables, mounting systems and subcontractor services have also become substantially more expensive. Project prices have risen 25 to 30 percent as a result. The consequence is that projects are increasingly difficult to round out; this is the big problem in our current market. Many projects are being put on hold or cancelled. Others continue in the hope that power prices will remain as high as they are now.’

Who dares?

With current electricity prices, there is a lot of money to be made in the short term with a large-scale pv installation on a roof or field. Van de Werken stresses, however, that this is not a basis for a major investment that should pay off for a 30-year period.

Van de Werken: “Nobody knows what the prices for electricity will do in the future. There are wonderful thick reports being written about it by experts; the consensus seems to be that it won’t stay that way, that the price will go down again. But no one knows when and how much. As pv generation capacity increases, there will be more frequent periods of low power prices. I have yet to see parties signing 15-year power purchase agreements (ppa’s) at 25 to 30 percent higher prices than 2 years ago, even though that would be the minimum necessary to keep projects afloat. Therefore, more and more investors are stalling. In addition, a second effect is looming. Developers are paying more and more attention to added value, such as increasing biodiversity and environmental participation. When the margins become smaller and the risks greater, it is not surprising when these kinds of issues are compromised, even when tenders have already been won for them.’

Quick math

Van de Werken calls the requirement for 50 percent grid connection in the 2022 SDE++ an additional complication. The basic amounts were increased to compensate for the loss of capping; he has no doubts about the model used by the experts at RFO in doing so. However, a quick calculation shows that here, too, the flush in terms of costs and benefits is thin. Suppose one puts twice as many watt-peak solar panels on a flat roof, in an east-west orientation at a 10-degree angle. Then, according to Van de Werken, one roughly arrives at a clipping loss of 6 percent. One saves on grid connection. In principle, that should just about do the trick in terms of profitability.

Complications

‘If you do this in a south-facing arrangement on a 12-degree roof with an average row spacing,’ Van de Werken calculates, ‘you quickly end up with a clipping loss of 9 percent. In this case, you’re talking about a real challenge. You can’t lay this kind of system everywhere. You have to look for places where you can include your own consumption in the size of the grid connection, for example. It could also be a reason to go with battery storage, although that again has its own complications. From the point of view of congestion issues, the new requirement in the SDE++ is of course logical. But also remember that developers are already capping PV systems even now because grid capacity is insufficient and they are always looking for maximum return on their investment. Incidentally, I see a second new and recent requirement in the SDE++ that may well have a major impact on the submission and awarding of projects: the mandatory roof construction survey. Having that done correctly not only costs a lot of money, it also takes a lot of time to organize. Registration for the next round closes in a month already…’

Source: SolarMagazine

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