This sad stretch of eastern Germany, with its deserted coal mines and corroded factories, epitomizes post-industrial gloom. It is a place where even the clouds rarely seem to part.
According to IHT, yet the sun was shining here the other day--and nowhere more brightly than at Q-Cells, a German company that last year overtook Sharp, a Japanese company, to become the world’s largest maker of photovoltaic solar cells. Q-Cells is the anchor tenant in a flowering cluster of solar start-ups here, known as Solar Valley.
Thanks to its aggressive push into renewable energies, a cloud-wreathed Germany has become an unlikely world leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, which convert sunlight into electricity, with roughly half of the world’s total installed capacity. And it is the third-largest producer of solar cells and modules, after China and Japan.
Now, though, with so many solar panels on so many rooftops, critics say Germany has too much of a good thing. Even at a time of record oil prices, solar is encountering resistance from conservative lawmakers who want to pare back its generous state incentives. They say it is growing at an unhealthy pace, threatening to burden consumers with too many costs in the form of higher electricity bills.
Solar-energy entrepreneurs warn that reducing these incentives would deprive Germany of its pole position in an industry of tomorrow. They liken Germany to the United States and Japan, which were both once solar stars but faded as their subsidies became less attractive.
Environmentally-Minded Country
The debate over solar energy subsidies is a test of how an environmentally-minded country can move from nurturing a promising alternative energy to creating a mass-market industry that can compete, on its own footing, with conventional energy sources. It is a tricky transition, even with a sympathetic population.
“Germany’s law has basically been a turbocharger,“ said Anton Milner, the chief executive of Q-Cells. If the proposals being floated by the Christian Democratic Union, the party of Chancellor Angela Merkel, were adopted, he predicted, “you’d kill the industry.“
Germany’s surging market has lured investors from Canada, Norway, and the United States. More than 40,000 people work in the photovoltaic industry, helping to revive blighted regions like this one.
Leading a visitor past gleaming rows of solar panels on the roof of the Q-Cells’ headquarters, Milner, a British-born former executive at Royal Dutch/Shell, said Germany could not afford to blow this chance.
Joachim Pfeiffer, a member of Parliament who is drafting the plan to cut incentives, said, “We don’t want to slaughter the solar industry. We think photovoltaic technology will have a great future. But to have that future, we can’t have overkill now.“
At the heart of the debate is the Renewable Energy Sources Act. It requires power companies to buy all the alternative energy produced by these systems, at a fixed, above-market price, for 20 years.
Feed-In Tariff
This mechanism, known as a feed-in tariff, gives entrepreneurs a powerful incentive to install solar panels because with a locked-in customer for their electricity, they can earn a reliable return on their investment. It worked: homeowners rushed to clamp solar panels on their roofs and farmers planted them in fields where sheep once grazed.
The amount of electricity generated by these installations rose 60 percent in 2007 compared to 2006, faster than any other renewable energy (solar still generates just 0.6 percent of Germany’s total electricity, compared with 6.4 percent for wind).
With wind, bio-mass, and other alternative sources also growing, Germany derives 14.2 percent of its electricity from renewable energy. That puts it ahead of a European Union target for countries to generate 12.5 percent of electricity from alternative sources by 2010.
Spain, France, Italy, and Greece have copied the law.
Solar energy now adds Û1.01, or $1.56, per month to a typical home electricity bill, a modest surcharge that Germans are willing to pay. That will increase to Û2.14 per month by 2014, according to the German Solar Energy Association.
But with the volume of solar-generated energy rising much faster than originally predicted, critics contend that the costs will also soar. Pfeiffer said solar power could end up adding Û8 to a monthly electricity bill, which would alienate even the most green-minded. With no change in the law, he says, the industry will soak up Û120 billion in public support by 2015.
The conservatives would like to accelerate the rate at which the feed-in tariff declines, now 5 percent a year. Under a draft proposal, it would fall 30 percent in 2009, and 9 percent a year after that. The law’s term might also be shortened to 15 years from 20.
Merkel, who prides herself on her green credentials, has yet to enter the debate. Her party must persuade its coalition partner, the Social Democratic Party, which might be tough, given that the law was strengthened in 2004 by the last government, led by the Social Democrats. Meanwhile, solar advocates are testifying before Parliament and publishing articles defending the law.
