Solar PV costs and incentives in Germany and Belgium

A well-known French solar PV systems developer wanted to expand their product and services into important European markets.

Background

After being acquired, the developer decided to tap into European energy market expertise to provide comprehensive solutions for commercial and industrial (C&I) clients. To achieve this, the client teamed up with LCP Delta to help them navigate the complex regulatory landscapes in these key markets, take advantage of changing incentives, and improve their project economics. Through this collaboration, the client gained valuable insights into solar obligations, surplus injection rules, and cost benchmarks, positioning themselves effectively in their target markets.

Client needs and key question(s)

The client wanted to enter the German and Belgian markets by:

• Understanding national and regional incentives, including subsidies, tax benefits, and accounting treatments for solar projects.
• Navigating complex PV surplus injection regulations, particularly in scenarios involving negative electricity prices.
• Benchmarking competitive Power Purchase Agreement (PPA) structures, pricing trends, and construction costs.
• Adapting to evolving regulatory landscapes and anticipating future market trends. 

To make informed decisions, they needed comprehensive insights that would help them evaluate investment opportunities and risks while ensuring compliance with regulations and maximising financial performance in these new territories.

What we did

LCP Delta employed a rigorous methodology leveraging our proprietary knowledge of European energy markets, regulatory databases and knowledge of subsidies and incentives, and combined this with comprising extensive desktop research, detailed regulatory analysis, and validation via expert interviews.

Key deliverables included:

• Incentives analysis: Detailed reviews of incentive programmes, including Germany's EEG 2023 and Solarpaket, and Belgium’s regional support schemes, notably green certificates and tax incentives.
• PV surplus injection rules: Comprehensive assessments of surplus energy management during negative price periods and related compensation mechanisms. Insights included grid access requirements and associated restrictions or costs. This was then assessed for its impact on PPA pricing.
• Benchmarking PPAs and costs: Comparative analyses of PPA durations, pricing structures (eg. pay-as-produced, fixed, virtual), and construction costs in both markets, highlighting cost drivers and market dynamics.
• Legal and regulatory outlook: Identification of current obligations and anticipated regulatory changes impacting C&I solar PV.

The study provided the client with actionable intelligence, facilitating informed strategic decision-making and operational planning.

The results

The client gained critical insights, including:

• Clear understanding of incentive structures enabling efficient utilisation of financial benefits like feed-in tariffs, low-interest loans, and tax exemptions.
• Strategic recommendations for managing surplus energy effectively during negative pricing events, particularly through battery storage and demand-side management.
• Optimised entry strategies based on the detailed comparison of construction costs and PPA pricing trends and regulatory incentives. This included leveraging longer-term PPAs in Belgium and flexible models in Germany to mitigate market risks.

The detailed roadmap enabled the developer to prioritise investments, streamline compliance processes, and establish a roadmap to entry, aligning operations strategically to local market conditions.