The American Interest
Analysis by Walter Russell Mead & Staff
An Energy Eclipse German Solar Stutters Once Subsidies Dry Up

As part of its energiewende, Germany guaranteed solar energy producers long-term above-market rates for their energy contributions. It worked like gangbusters, transforming Germany into the world’s leader in solar energy, but the subsidies necessary to keep the boom going came with heavy costs. Recently, Berlin has walked back its over-generous feed-in tariffs, as the subsidies are called. Now, as Reuters reports, new solar installations are plummeting:

Lower subsidies in Germany cut the installation of solar panels sharply in the first quarter, data from its energy regulator showed on Wednesday…”This development is mainly due to the steady decrease in subsidies,” said the Bonn-based Bundesnetzagentur (BnetzA). [...]

Additions already last year had halved over 2012 to 3.3 GW…The government over the past two years introduced curbs to feed-in tariffs, as they contributed to sharply higher power prices for consumers who share the subsidy bill.

This isn’t the sign of a healthy industry, and it should tell Germany’s policymakers that reducing these feed-in tariffs was the right choice. Clearly, as an energy source, solar can’t compete on price with its browner, non-renewable alternatives.

Greens around the world have held up Germany’s recent solar “boom” as evidence that renewables can play a larger in national energy mixes, if only policymakers would get on board. But Berlin’s experience tells a different story. Paying producers exorbitant amounts of money will kick things off, but the costs of those subsidies are ultimately borne by consumers: Germany pays among the highest prices for electricity in Europe.

The irony of a sustainable energy source being implemented in unsustainable ways isn’t lost on us. Solar isn’t ready for primetime yet, and that’s okay. We’re seeing photovoltaic panels make efficiency gains over time and can reasonably expect the technology to progress to a point where they can compete with fossil fuels on their own merit. But we would be much better off devoting the money countries have spent to prop up current-gen technology to the research and development of better panels.

Published on May 2, 2014 8:56 am
  • Jacksonian_Libertarian

    This has all been a waste, Governments have an unvarying record of failure in their attempts to pick winners and losers in the market place. Trillions of dollars are being wasted on so called green boondoggles like alcohol, solar, wind, electric cars, etc… when the wisest thing to have done was nothing. If the markets had been left to operate in their normal efficient way, mankind would now be much wealthier to the tune of Trillions of Dollars.