Germany Suspends EV Solar Charging Subsidy Due to Overwhelming Demand

October 3, 2023 12:58:44

Just one day after launching a subsidy program for EV solar charging, Germany was forced to stop the subsidy scheme amid booming demand from EV drivers. The plan aimed to subsidize payments for the installation of rooftop solar panels for charging electric vehicles as well as charging and storage points.

Funding worth $317 million (300 million euros) from Germany’s transport ministry would have provided subsidies of up to $10,762 (10,200 euros) for homeowners and EV drivers to install private solar panels and charging stations at home. However, the program was unable to keep up with the massive influx of consumer demand once it launched and was halted only 24 hours later, suggesting that one-off subsidies to encourage green-energy transition may not always be effective.

Electric vehicle charging has consistently been a barrier to EV adoption in most markets. Although Germany has a wide network of operational petrol and diesel stations for conventional fossil-fuel-powered cars, the nation’s public EV charging infrastructure still pales in comparison. Installing home chargers is always an option, but doing so can raise the overall cost of purchasing an electric car by around $500 to well over $1,000.

For German homeowners who also owned EVs, the subsidy presented an opportunity to ease their range anxiety issues at a much lower-than-usual cost. Philipp Schroeder, the chief executive of solar firm 1Komma5, noted that with more than 30,000 electric cars entering the market yearly, such one-time subsidy programs may not be as effective at building and sustaining demand for renewables.

Authorities launched the subsidy program last Tuesday, with German drivers submitting close to 33,000 applications within a day of the launch, essentially exhausting the more than $300 million in funding provided by the German Ministry of Transport in only 24 hours. A spokesman from KfW Development Bank, which issued the funds to EV owners, says the program launched at 8 a.m. CET and closed at 2 a.m. on Wednesday. Applicants only had to provide an investment plan and prove ownership of both an EV and a house.

Authorities first announced the program in early September with total funding of $527,145,000 (500 million euros). The remaining 200 million euros was earmarked for 2024. Schroeder posits that the one-time subsidy may have disrupted the growing renewables market and created uncertainty as EV owners who wanted to install a wall box-equipped solar system would have to wait until next year for the second phase of the subsidy program.

The enthusiasm that Germans have shown toward the solar-charging subsidy points to the potential market that EV makers such as Lucid Motors (NASDAQ: LCID) can tap into if they make deliberate moves to appeal to those motorists willing to switch to EVs.

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