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No Subsidies, No German Green Renaissance

When the government was buying, everyone in Germany was eager to jump on the green bandwagon. One of the country’s storied soccer clubs joined the party, blanketing its new stadium with solar panels. The Guardian reports:

In 2008, shortly after the EU set its green energy targets for 2020, the Freimarkt funfair and Werder Bremen football club both switched to renewable power, with the club completely renovating its stadium in a business deal with energy company EWE….The Weser Stadium is armadillo-plated with 200,000 single module solar cells that resemble a huge postmodern lampshade. Next to it is a solar-powered restaurant.

But now, as the German government moves to phase out the subsidies that propped up purchases like Werder Bremen’s, institutions, companies, and individuals are starting to regret some of that enthusiasm. The Guardian continues:

[Klaus Filbry, the managing director of Werder Bremen] said that the removal of tax incentives for solar had already affected all clubs with tie-ins to renewable energy firms: “A lot of those partnerships were finished because of changes to the law and that certainly had a financial effect that was felt in the league. Less money came in. Our sponsorship with one company went down from €500,000 to €200,000. We were able to compensate and find other partners but it did hurt the club financially.”

Subsidy cutbacks have been felt across the industry, as the cost of solar power has fallen closer to the cost of fossil fuel energy. From a zenith of $0.90 per kilowatt hour, German feed-in-tariffs that pay people for generating energy from solar have fallen to around $0.20 per kwh today. The guaranteed 20-year tariff offered to early household investors is now a thing of the past.

At the heart of Germany’s vaunted Energiewende were guaranteed long-term, above-market rates for renewable energy producers. These rates, called feed-in tariffs, were a form of government subsidy that was then passed along to consumers in the form of a green energy surcharge on their electricity bills. The bills skyrocketed and were soon among the most expensive in Europe, prompting Merkel’s coalition to move to water down these subsidies.

Werder Bremen’s struggles are symptomatic of an unhealthy industry, thrust into the limelight before it was ready. Rather than propping up solar and wind with expensive subsidy regimes, governments would be much better served funneling money toward the research and development of new technologies that could help renewables compete on their own merit.

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  • Andrew Allison

    “These rates, called feed-in tariffs, were a form of government subsidy that was then passed along to consumers in the form of a green energy surcharge on their electricity bills.” says it all, namely that it was a consumer, not a government subsidy. Put differently, the German government committed its citizens to investing in uneconomic alternative energy. It cannot be said often enough that if an alternative energy technology is insufficiently promising to attract private investment and requires taxpayer subsidies, it is not viable.

    • Boritz

      “consumer, not a government subsidy”
      Since without exception taxpayers are also consumers of energy there isn’t much of a difference. How the money flows through is just accounting magic. U.S. citizens were likewise committed to investing in Solyndra (well, the 53% who pay for everything).

      • John Tyler

        No, the 53% who actually paid for Solyndra did not commit to invest in Solyndra; it was the crooks, the charlatans, the lying SOB politicians in DC who receive campaign contributions from “environmental” groups that coerced, that forced, that UNILATERALLY compelled the 53% to pay for that scam.

        The fundamental problem is that the government has been given the right to compel the citizenry to pay for things – via taxation, direct payment, etc., – that the citizens have never asked for nor do not want.

        The 16th Amendment of the Constitution, enacted in 1913 must be repealed. It is this amendment that allowed the Federal Govt. to confiscate, to STEAL, the wages of the citizenry via the personal income tax. It is this amendment that has allowed the criminals in DC to waste the hard earned wages of the citizenry on their pet projects and this theft will never end until this unlimited flow of money is halted.
        In its stead, the Constitution must be amended to allow each state legislature to determine – in a totally voluntary manner – how much of their citizen’s wages will be sent to Federal Govt. If a state legislature decides that that amount will be zero, so be it.

        This is the only way to slay the criminal enterprise that is our corrupt, wasteful, criminally negligent Federal govt.

        • FriendlyGoat

          Fresh off an election win, is your whole side racing off to these ludicrous ambitions?

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