A Year-End Look at the German Solar Industry

The Los Angeles Times makes a case for country-wide government solar incentives in its article “Germany shows government role is key to thriving solar industry,”which takes a brief look at the country’s solar incentives and comparesthem to the state-specific, localized incentives found in the UnitedStates.

Although Germany doesn’t receive as much sun as places likeSpain or Hawaii do, solar advocates say that the country’s thrivingsolar industry is a testament to the success of its national incentives. What you do need, energy experts say, is a nationalgovernment willing to foster the development of renewable energy.Leaving it purely to market forces — or piecemeal local incentives, asin the U.S. — doesn’t work as well.

A renewable energy law passed in 2000 mandated that utilitycompanies had to purchase energy from solar plants at higher rates andto pump this energy into their grids, which added roughly an average of$5 to the energy bill of each household per month. This feed-in tariffhas the potential to provide solar plants financial returns of 15% peryear, a staggering return that has contributed to the exponentialgrowth of a sector that employs roughly 50,000 people in Germany.

Energy harvested from the sun now accounts for 1% ofGermany’s power supply. Although that still lags behind wind andhydroelectric projects, optimists say the amount could climb to 7% bythe end of the next decade. By contrast, coal- and gas-fired plantscurrently provide more than half of Germany’s energy and nuclear powerstations with more than 20%.
“It took some time. In Germany, we had no history of PV for a long,long time. But now Germany is a more mature market” than the U.S., saidMarkus A.W. Hoehner of EuPD Research, a consultancy based in Bonn.

“The major difference is that the U.S. market has no feed-in tariff.You have more than 800 combinations of incentives in the U.S. . . . Ineach region it’s different,” Hoehner said.

As it does anywhere, the political climate in Germany has played akey role in the industry’s growth there. No public debates over climatechange or the economic benefits of renewable energy hold the solarsector in gridlock, although the popularity—and subsequent implosion—ofSpain’s solar industry has moved the German government to scale back its own incentives.Still, the L.A. Times article states that any reductions in Germansolar incentives will be small and gradual, as the administration hopesto eventually wean the industry off of them altogether. While Germany’ssolar model certainly shouldn’t be imposed on the U.S., given theirdifferent political and socio-economic environments, it provides acrucial point of comparison between the industries in both countriesand will illustrate how easily—or with how much difficulty—our ownsolar industry can reach price competitiveness with traditional, lessefficient forms of energy.

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