A May 16 article in the New York Times focused on the debate in Germany regarding whether generous subsidies for solar energy should be continued. Buried in the story was the remarkable fact that Germany has created 40,000 jobs in formerly blighted industrial areas by “turbo-charging” the growth of the solar industry there. Imagine if our government took a leadership role in jump-starting solar production in areas like Pittsburgh, Indiana, and Michigan, where much of the infrastructure and work force still remain from the declining steel and auto industries. Some facts:

• Germany has half the sunshine hours of San Diego.
• An American company, Signet Solar, chose to build its thin film plant in Germany, not the U.S.
• The engine that grew Germany’s solar industry is its feed-in tariff, which requires power companies to buy citizen-produced solar energy at an above-market rate for 20 years. Citizens have responded — by putting solar panels on nearly every available surface.
• Spain, France, Italy and Greece have copied Germany’s subsidy plan. California is using a version of it by requiring utilities to pay customers rebates for the amount of energy they would have bought if they didn’t have solar modules.
• Growing solar has helped other alternative energy production to grow as well: Germany gets 14.2 percent of its electricity from renewable sources, putting it ahead of the EU target of 12.5 percent from renewables by 2010.

Critics of the subsidies argue that they will eventually make solar energy too costly vs. other energy sources; defenders argue that the support for solar still doesn’t match subsidies to the dirty and declining coal industry, and that conventional energy costs will rise at a higher rate. Others charge that this is a classic attempt by large centralized power companies to weaken the role of distributed generation — citizen-generated, de-centralized power sources. Whether or not Germany decreases subsidies at a faster rate than planned, for now they are the world’s largest market for PV systems.

“To develop a technology, you’ve got to create an industry,” said Mr. Milner, the chief executive of Q-Cells, referring to the German success story. “You can wait and wait and wait for costs to come down, but it takes too long.” –Mark Landler, New York Times, 5/16/08

Conservatives call into question highly successful feed-in tariff

There is a reason that Germany has half of the world’s installed solar generating capacity, and it is not the Northern European country’s boundless sunshine. Renewable energy capacity has achieved such tremendous growth because of the German government’s aggressive energy policy.

The policy vehicle responsible for the rapid acceleration of the country’s renewable energy capacity, known as a feed-in tariff (FIT), guarantees a fixed-rate of return for homeowners and farmers who install solar, wind, small hydro, biomass, and methane capturing systems and sell their surplus electricity back to the grid. Germany has Europe’s highest feed-in tariffs, allowing consumers to earn around 40 euro cents ($0.62) per kWh compared to paying retail rates of 18 euro cents per kWh after taxes and support fees.

Electricity generated through Germany’s feed-in law produces about 50 terawatt-hours (billion kilowatt-hours) of electricity per year, or nearly 15% of German electricity consumption (1). This adds an average of only 1.01 euros ($1.69) a month to a typical home electricity bill.

Bu, despite the law’s success, conservatives in the German Bundestag want to ratchet back the incentives that support renewable energy development. (more…)