The rapid expansion of renewable energy generation in Europe has been driven by policy, and specifically by the provision of relatively high guaranteed prices for renewable energy sold into the transmission grid — known as feed-in tariffs.
To spur solar, governments have to incentivize producers with guaranteed long-term rates because the energy source wouldn’t be able to compete with fossil fuels on price otherwise. Of course, someone has to cover those subsidies, which is why consumers in Germany—both households and businesses—are paying exorbitant rates for electricity, rates so high that many businesses are fleeing Europe for shale-rich America’s better business climate.The NYT‘s specious defense of Europe’s feed-in tariffs is threefold: first it points out that Britain recently negotiated feed-in tariffs for a new nuclear energy plant, second it cites a study that found the costs of feed-in tariffs are outweighed by their benefits, and finally argues that removing the tariff, as Spain has done, would cause irreparable harm to the industry. But do these arguments hold water?First, it isn’t clear how Britain’s decision to pay out the nose for nuclear excuses solar’s problems. Secondly, the article cited was released in 2011, the year Germany’s energiewende kicked in. Costs have soared since then, making this two-year old study outdated. And third, since when has “we started so we can’t stop now” been an good reason to charge ahead?Europe’s green energy policy is a disaster—even Brussels can see that. Greens, and the NYT, like to credit the continent’s propped-up renewables industry for a recent downtick in emissions, but a sluggish economy has had far more to do with that “green” progress. Higher electricity costs will continue to hold back a European recovery, so in a sense, solar’s feed-in tariffs are accomplishing their goal. Just not the way green policymakers had planned.[Broken solar panel image courtesy of Getty Images]