At last, photovoltaics is achieving an expansion in the German commercial sector: In July 2024, the deployment of systems between 30 and 100 kilowatts grew by nine percent compared with the previous year, and that of systems between 200 kilowatts and 1 megawatt even went up by almost 26 percent. Where is this segment heading, and what are the drivers of deployment?
At the Intersolar Europe Conference 2024, which covered PV for commercial applications among other topics, we discussed these questions with Dirk Haft, Managing Director at IBC SOLAR.
In Germany, there are 900,000 small and medium enterprises (SMEs), and only an estimated 20 percent of them currently have a PV solution. That leaves 80 percent of 900,000. That is a large number of businesses that have the potential of growing the market and curbing climate change.
We would like to see more red tape being cut and subsidies to be more effective. Tax cuts, which may be introduced with the Solar Package II, would also be an option. Nevertheless, we are happy to see that things are moving, for example that higher feed-in tariffs have been introduced. This bundle of measures is not going to deliver results over night. The C&I segment follows different rules to the residential segment: There is always a management involved, there is planning involved and at the end of the day it is a financial decision. Ultimately, time will tell how the recent improvements will impact the market. We could do a lot more to help the market grow.
Easier access to financing is, of course, always an effective incentive for C&I. The same goes for a general positive economic climate and attractive feed-in tariffs for excess electricity. In some countries, such as France, solar carport solutions have been made mandatory for large parking lots – another clever solution. There are many possibilities.
That is probably the way forward, particularly when it comes to public buildings. Public buildings are attributable to the commercial sector. Large public buildings are not usually equipped with PV yet.
We are only just starting out on this journey. The reporting obligation will start affecting medium-sized and large companies in the next few years. Many companies have started working on the topic. At IBC Solar, we will submit our first extensive report in accordance with the European Sustainability Reporting Standards (ESRS) this year. In these reports, companies will reflect on sustainability and that is the beginning of data collection.
They then prepare a strategy on how to become more sustainable from one year to the next. That will trigger the deployment of PV because installing PV systems can be one of many mechanisms to achieve a company’s specific sustainability goals. The big deployment wave resulting from the sustainability reporting obligations and the Taxonomy Regulation is still to come, for sure. It could be that more regulations will follow, such as tax disincentives for companies that do not move towards becoming more climate-neutral.
Planning in the C&I segment is complex. You have to start by establishing the electricity demand, and then analyze the situation to find out what is best. Recently, many companies have been opting for self-consumption, which is probably more financially attractive than complete feed-in. In view of six to ten euro cents per kilowatt hour of generation costs for solar energy compared with around 30 euro cents per kilowatt hour for buying electricity from a utility, this makes sense.
But the best solution requires careful planning of a good energy concept with or without storage. It always depends on when electricity is consumed. A shopping mall, for example, will use most of its electricity during the day, concurrently with PV electricity being produced. But if your company has a lot of activity at night, and electricity is produced during the day with PV, it may make more sense to feed the electricity into the grid and then get it from the grid when it is needed. Alternatively, the renewable electricity could be stored in a sufficiently large battery storage system until it is needed. A good energy concept needs to consider the specific company.
With digitalization on the rise everywhere, an Energy Management System (EMS) is an integral part of a solution. These systems will become even more important in the future in order to shift demand. A growing number of charging solutions for electric vehicles, battery storage systems and heating generators or air conditioners will need to be integrated into an energy concept. So it goes without saying that an EMS will become an integral part of energy control. The smarter the control – even with artificial intelligence – the more electricity and carbon consumption will be saved.
The segment is going to grow strongly, with less volatility than the residential market, which is more sensitive to government incentives being introduced or abolished. C&I shows a more sluggish response, but it has a great future. PV is becoming more and more established. It helps achieve climate targets and can be expected to continue receiving government support. A C&I solar installation makes financial sense, too. For most of our customers, the amortization period is between 3 and 9 years.