Published on: January 29, 2025 / Updated on: January 29, 2025 – Author: Konrad Wolfenstein
Smart Meter, Smart Money: The market premium model with direct PV marketing explained simply (for savvy homeowners) – Image: Xpert.Digital
Photovoltaics reimagined: How to get more out of direct marketing
From feed-in to trading: This is how direct solar marketing works
Direct marketing of solar power is becoming increasingly important for private households with photovoltaic systems. In times when relying solely on the traditional feed-in tariff is no longer an option, selling self-generated electricity on the power exchange offers the possibility of doing so. But for whom is this model worthwhile, what requirements must be met, and what costs do operators of private PV systems incur? The following explains in detail how direct marketing works in principle, what risks and opportunities it entails, and why newer system owners in particular could benefit from it. Furthermore, important background information on the energy transition and the role of the Renewable Energy Sources Act (EEG) is examined to provide a comprehensive understanding of the topic.
Background and significance of direct marketing
Germany's energy transition aims to steadily increase the share of renewable energies in the electricity mix and thereby reduce the emission of climate-damaging greenhouse gases in the long term. Photovoltaic systems play a central role in this. They enable decentralized electricity generation, allowing citizens to actively participate in the energy system. For a long time, the business model for private PV system operators was relatively simple: In most cases, the generated electricity was fed into the public grid in exchange for a feed-in tariff guaranteed by the government. This tariff was paid for over 20 years and was very attractive at the beginning of the Renewable Energy Sources Act (EEG) to accelerate the expansion of photovoltaics.
Over the years, however, feed-in tariffs have decreased, as PV systems have become increasingly affordable thanks to falling module prices and more efficient technologies, and legislators wanted to avoid over-subsidizing the market. Furthermore, some systems that have been in operation for 20 years or more are no longer eligible for feed-in tariffs under the Renewable Energy Sources Act (EEG), leaving operators to grapple with the question of how to continue generating revenue. This is where direct marketing comes in.
"Direct marketing of surplus electricity can be an alternative to feed-in tariffs for private households with PV systems." This assessment means that marketing on the exchange can be quite worthwhile. It offers the opportunity to react flexibly to market prices and potentially achieve higher revenues than with a fixed tariff. However, there is also a greater risk involved because the exchange price can fluctuate. Anyone who delves into the topic quickly realizes that direct marketing is not always profitable for everyone, but it can be a very interesting option.
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How direct marketing works
The principle is relatively simple, even if the organizational and technical background may seem complex. Households with a photovoltaic system that produces electricity can sell surplus solar power on the electricity exchange. The crucial point is that a private system operator typically doesn't have direct access to the energy market. They therefore need a specialized company, a so-called direct marketer. This company handles the trading on the exchange and pays the operators a fee, minus a commission.
Many people wonder how exactly the compensation is calculated. A distinction is made here between subsidized and unsubsidized direct marketing:
1. Subsidized direct marketing (market premium model)
Under the market premium model, which applies to installations still covered by the German Renewable Energy Sources Act (EEG), PV system operators receive a market premium in addition to the so-called market value. The market value is the average price achieved for solar power on the electricity exchange. Depending on supply and demand, this value can fluctuate significantly throughout the month. "If the exchange market value of the sold electricity falls below the level of the fixed feed-in tariff, the grid operator pays the PV system operator an additional market premium." This compensates for the difference between the monthly average price on the electricity exchange and the feed-in tariff stipulated by the EEG. In effect, this means that everyone who opts for subsidized direct marketing and is eligible for EEG funding is protected and receives at least as much as with traditional feed-in. If, on the other hand, the exchange price rises significantly above the fixed value, the system operator benefits from the additional revenue.
2. Unsubsidized or other direct marketing
If installations cease to receive subsidies under the Renewable Energy Sources Act (EEG), for example after 20 years, or if they are otherwise ineligible for subsidies (e.g., very old systems), they sell their electricity on the open market. Here, they receive only the prevailing market price, which can fluctuate considerably. A fixed subsidy rate is no longer in place, meaning there is no safety net mechanism like the market premium. In the best-case scenario, this market price can be very high, increasing revenue. However, it can also be very low. In that case, one may have to accept lower income, especially if ongoing costs for the installation or its operation still exist.
Legal framework and EEG funding
In Germany, the Renewable Energy Sources Act (EEG) provides the legal basis for promoting solar power. While the EEG surcharge has been abolished, the fundamental principle remains that operators of new installations continue to receive a fixed feed-in tariff for their electricity for 20 years. This guaranteed rate has decreased steadily in recent years. Nevertheless, for small and micro-installations, the feed-in tariff often remains a stable safety net – especially when self-consumption is high and only a small portion is fed into the grid.
With the market premium model, the legislator aims to create incentives for producing and marketing solar power in line with demand. Those still eligible for feed-in tariffs under the Renewable Energy Sources Act (EEG) benefit from direct marketing because it offers a degree of security while simultaneously providing the potential for higher revenues. "Since 2023, income from the sale of solar power has been tax-free for smaller PV systems," which is particularly attractive for private individuals who don't want to file a complicated tax return for their system.
Smart meters as a technical requirement
Metering plays a central role in direct marketing. To accurately record the generated electricity in real time or at short intervals, a smart metering system is required. "A smart metering system in the house is a technical prerequisite for direct marketing, enabling the PV data to be recorded every 15 minutes and automatically transmitted online to the direct marketer and grid operator." These smart meters are increasingly replacing conventional Ferraris meters.
The installation of smart meters is generally initiated and implemented by the metering point operator. There are specific legal requirements that stipulate the minimum system size or electricity consumption threshold for mandatory smart metering. Currently, anyone operating a photovoltaic system with a capacity exceeding 7 kW or consuming more than 6,000 kWh per year must have a smart meter installed. This upgrade can, of course, entail additional costs for those considering direct marketing. However, the legislator has set price caps to keep these additional costs manageable.
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Role of remote controllability
Until recently, all PV systems participating in direct marketing were required to be remotely controllable. The rationale behind this was to enable rapid, centralized intervention in the event of a surplus of renewable energy on the grid, thus ensuring grid stability. This requirement has been lifted for smaller systems with a capacity of up to 25 kW since May 2024. "For PV systems with a capacity exceeding 25 kW, remote controllability is still mandatory for direct marketing systems." This means that larger systems must still be equipped with a technical device that allows for rapid reduction or shutdown in the event of grid congestion.
This is a significant advantage, especially for private individuals operating small systems, as it eliminates the investment costs for the necessary control technology. However, it's advisable to inquire beforehand whether the direct marketer has any specific requirements and how to ensure that all technical prerequisites are met for smooth marketing operations.
Cost aspects of direct marketing
Even though direct marketing sounds tempting because it potentially generates higher revenues than feed-in tariffs, you should take a closer look. Because: "Whether direct marketing brings higher revenues depends heavily on the fixed costs." A significant item is the commission payable to the direct marketer. In many cases, this is calculated either as a cent-based amount per kilowatt-hour fed into the grid (e.g., 0.1 to 0.3 cents per kWh) or as a fixed flat fee. Sometimes there are also combinations: a basic fee plus a revenue-based component.
In addition, one-time setup fees may apply, which, according to practical examples, can amount to around €200. Furthermore, operating a smart meter is subject to charges. If consumption or system capacity exceeds the legal threshold, the metering point operator must install the smart meter free of charge, but in return, ongoing fees apply. "Depending on the circumstances, the ongoing costs for operating a smart metering system are either €20 or €50 per year." For those who voluntarily switch to a smart metering system, however, a price cap of €30 applies for installation, plus the ongoing fees. It should also be noted that the metering point operator may charge up to €10 per year for data communication for direct marketing purposes.
Anyone venturing into direct marketing should therefore conduct a careful cost-benefit analysis. This analysis should consider both the expected market prices for solar power and the amount of commission and other costs. Additionally, self-consumption should be taken into account: those who use a large portion of the generated solar power themselves will have less surplus to sell – and thus reduce the potential additional revenue that can be generated through direct marketing.
Are the additional efforts and expenses worthwhile?
"Those who consume less electricity than their own photovoltaic system produces can not only feed the surplus into the public grid in exchange for the legally mandated feed-in tariff. Alternatively, selling the excess solar energy on the electricity exchange can be worthwhile: direct marketing." As tempting as this idea may sound, it is highly dependent on individual circumstances:
Size of the facility
For very small systems (under 5 kW), the ratio of additional costs to yield is often worse than for medium or larger systems. Many direct marketers have minimum system sizes, as the effort is otherwise not worthwhile for them.
Self-consumption share
Those who consume most of their own electricity have relatively little surplus. Direct marketing tends to be more worthwhile the larger the portion that can be sold.
Current market level
Electricity prices on the exchange can fluctuate significantly. "The market value of solar power, which is crucial for the direct marketing of PV electricity, moves up or down monthly." What is very attractive during a period of high prices can be less worthwhile during a period of low exchange prices.
Funding status
Those who still have a high feed-in tariff can often achieve a good return with minimal administrative effort and have little reason to switch. Newer plants, on the other hand, usually have lower feed-in tariffs, which is why the market premium model can prove to be an attractive option.
Direct marketer Lumenaza, for example, advises that direct marketing is particularly worthwhile if the additional revenue is "at least 3 to 4 cents per kWh above the respective feed-in tariff." This estimate can be taken as a rough rule of thumb, but one thing always remains crucial: an exact calculation taking into account the expected market prices, the system's output, and self-consumption is essential.
Current market situation and outlook
In recent years, solar power prices on the stock exchange have been highly volatile. "While they stood at 39.91 cents/kWh in August 2022, they had fallen to just 7.53 cents/kWh by August 2023. Last year, average monthly prices continued to decline, reaching a low of 3.16 cents/kWh." The reasons for this are manifold: The energy crisis, triggered by political and economic factors, temporarily drove prices up in 2022. Markets have since calmed down somewhat, and the supply of solar power continues to increase. Although reliable price forecasts are difficult, it can be observed that the market value of solar power tends to fluctuate more as photovoltaic capacity expands. Prices fall during sunny periods with high PV power supply, while they can rise significantly during periods of low solar power feed-in or high demand.
This dynamic offers opportunities if direct marketing is handled professionally and, if necessary, even if parts of one's consumption can be timed to profit from electricity trading. However, most private individuals are neither able nor willing to constantly monitor the market or negotiate with direct marketers. This is where automated solutions are needed to optimize marketing as much as possible. Some service providers already offer AI-supported models that determine the optimal selling time, taking into account weather forecasts and current market prices. Whether these additional revenues actually justify the extra effort in the daily operation of a small PV system needs to be examined more closely on a case-by-case basis.
Older plants (“over 20 plants”) and other direct marketing
Photovoltaic systems that have completed their 20-year subsidy period face a particular challenge: they no longer receive a legally guaranteed feed-in tariff, raising the question of how to handle the surplus electricity. "When the EEG subsidy ends after 20 years, older systems may continue to feed their electricity into the grid until the end of 2032. Instead of a fixed amount, their operators will receive compensation based on the annual market value of solar power (a maximum of 10 cents per kilowatt-hour)."
This regulation ensures that operators of older systems don't suddenly find themselves without income. While the amount is capped, it can be manageable for many system sizes. However, ongoing costs (maintenance, any necessary repairs to the PV modules, insurance) must still be covered. For these "post-EEG systems," other forms of direct marketing are also an option. However, it's important to remember that this exposes them to full market risk. If there's a surplus of solar power, the sales revenue may be lower than if they use the somewhat more reliable regulation based on the annual market value.
Economic calculations and practical tips
When deciding for or against direct marketing, a detailed economic analysis should always be carried out. This analysis should focus particularly on the following questions:
1. What is the potential additional revenue?
Current and projected market prices are factored in here. The fixed EEG rate or the potential remuneration for existing plants is used for comparison.
2. What costs will be incurred?
Commissions from the direct marketer, smart meter fees, possible one-off costs for technical implementation – all of this should be added up.
3. How much electricity can be sold?
Those with high self-consumption have less surplus to market. Therefore, the potential returns from direct marketing tend to be lower when self-consumption is high.
4. What is the plant's output?
Larger plants usually have a better chance of covering the costs of direct marketing through higher electricity volumes.
5. Is there a desire for flexibility or planning security?
Direct marketing can offer greater flexibility and potentially higher revenues, but also fluctuating income. Traditional feed-in tariffs provide planning security, albeit at a potentially lower level.
Anyone wanting to make an informed decision should obtain quotes from various direct marketers. Many offer online calculators where you enter the basic data about your system (system size, expected annual yield, self-consumption, location, installation date). Based on this information, they generate a forecast of how the return could develop under the market premium model. It can be beneficial to use reputable providers established in the German energy market. "From well-known, nationwide energy suppliers and municipal utilities to lesser-known wholesalers and energy-as-a-service platforms, many companies are active in direct marketing." The range of options is constantly increasing as this market becomes more professionalized.
Key innovations and outlook
The energy market is subject to constant change. Legal frameworks adapt, and technological innovations enable new models. With regard to the direct marketing of solar power, the following developments are of interest:
Further expansion of renewable energies
The German government has set ambitious targets for the expansion of photovoltaics. The more solar power is produced, the more this temporarily puts downward pressure on prices on the energy exchange – for example, during periods of high sunshine at midday. In the long term, however, it can be assumed that with increasing demand for green energy (electric vehicles, heat pumps, etc.), demand will also remain high, which could encourage price increases during peak demand periods.
Technical innovations and storage solutions
With the increasing prevalence of battery storage in households, self-consumption can be increased proportionally. This reduces the surplus for direct marketing, but makes a household less dependent on external price fluctuations. Furthermore, smart home systems offer the possibility of reacting flexibly to price and market signals and either feeding electricity into the grid or storing it when it is profitable.
Power Purchase Agreements (PPAs)
In the commercial sector, so-called PPAs – long-term power purchase agreements between electricity producers and consumers – are already well-established. Such models could also gain traction on a smaller scale in the future, with private plant operators partnering with companies to supply green electricity directly. This would essentially be a form of direct marketing outside of traditional exchange mechanisms, securing fixed terms for several years.
Regulatory relief
Some hurdles to direct marketing have already been lowered in recent years. For example, the requirement for remote controllability for smaller plants has been abolished, reducing technical complexity. Further simplifications could follow to make market access easier for small-scale plant operators.
It is becoming clear that direct marketing is less and less of a niche topic and can be a genuine alternative for private solar system operators. The big question, however, remains: "When does direct marketing make sense?" Those installing a new PV system today who, due to low feed-in tariffs, don't benefit as much from a fixed feed-in tariff, can profit from the market premium model, especially if electricity prices become more attractive over a longer period. On the other hand, those with older systems that once received high feed-in tariffs have little incentive to switch as long as the guaranteed feed-in tariff is still in effect.
Practical example: A hypothetical household
To make this abstract concept more tangible with numbers, let's assume a hypothetical household with a 10 kW photovoltaic system. Assume this system generates approximately 10,000 kWh of electricity per year. Self-consumption is 4,000 kWh, meaning that 6,000 kWh could be fed into the grid. The feed-in tariff is, for example, 8 cents per kWh. This would correspond to a revenue of €480 per year (6,000 kWh x €0.08).
Switching to direct marketing means paying a commission of approximately 0.2 cents/kWh. There are also ongoing costs for the smart meter of €50 per year. Furthermore, a one-time setup fee of €200 may apply. Let's assume fluctuating market prices and an average annual market value of 8.5 cents/kWh for solar power. In months with low market prices, the market premium kicks in, guaranteeing at least 8 cents/kWh. In the best-case scenario, with high market prices, the difference between 8.5 cents and the target value can be fully realized.
To sharpen this example slightly: If there are periods when the market price reaches 10 or 12 cents/kWh, you benefit. At the same time, there could be periods with very low prices. However, you have the security of not falling below 8 cents thanks to the market premium (for a newer system eligible for feed-in tariffs). Ultimately, the household could perhaps achieve an average of 8.7 cents/kWh, which corresponds to 522 euros per year. From this, you deduct the commission (6,000 kWh x 0.2 cents = 12 euros) and smart meter costs (50 euros). This leaves 460 euros, hardly more than with the fixed feed-in tariff. If you also add the setup fee in the first year, you actually fall slightly short of the traditional feed-in tariff.
Direct marketing would only make sense here if the revenue per kilowatt-hour increases noticeably in the long term. This example illustrates why careful consideration is necessary and why it cannot be said categorically that direct marketing is always more profitable. However, it is also true that if market prices suddenly rise permanently, the additional revenue can be very attractive.
Recommendations for action
Direct marketing of solar power has undoubtedly gained relevance for private households in Germany. "PV system operators who market their renewable electricity directly can be certain that, under the subsidized market premium model, they will receive at least as much money as they would from the fixed feed-in tariff." This guarantee significantly reduces the risk. Those who are also willing to bear the associated costs and see the potential for higher returns during periods of favorable market prices can benefit from this form of marketing.
Nevertheless, direct marketing won't be worthwhile for everyone. Operators of older plants with comparatively high feed-in tariffs often see no advantage in switching systems. For smaller plants with minimal surplus, the effort can also be disproportionately high. To make the right decision, an individual profitability analysis is essential. This analysis should compare the anticipated returns from trading on the electricity exchange, any market premiums, and personal consumption against the costs of metering equipment and the direct marketer's commission.
Anyone planning to commission a new PV system in the coming years should also find out about the mandatory installation of a smart meter as early as possible. Since this technology will gradually reach more and more households by 2025, direct marketing of the generated electricity should be considered in the long term, even if one initially starts with the traditional feed-in tariff. Switching between the two models is generally possible at the beginning of any month.
Direct marketing offers a modern, flexible, and potentially more profitable way to market solar power. Thanks to legal safeguards within the framework of subsidized direct marketing, operators of new systems can benefit from rising electricity prices with minimal risk. For older systems, it can be an option when feed-in tariffs expire and operators want to secure lucrative income for a few more years – provided market conditions are favorable. Ultimately, direct marketing is another important building block in the transformation of the energy system towards greater decentralization, flexibility, and climate protection. It can support the expansion of renewable energies and open up new financial opportunities for operators of photovoltaic systems.
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