Marc Gunther, whose book “Suck it up” I reviewed on this blog recently, has posted on his blog about recent reduction plans for the solar feed-in tariffs in Germany, and he gets most of his facts wrong. He then goes on to call for the failing strategy of waiting for new miracle technology before deploying the existing one. Here is a comment I entered at his blog:
You got a couple of facts wrong about the situation in Germany.
For one, Germany has not “put an expensive bet on only one solution”. The feed-in tariff law works for all forms of renewable energy generation, and the government is especially interested in offshore wind.
Next up, the reductions in solar feed-in tariffs are not because Germans could not afford them or would not want to pay them. We are talking about only about 70 euro a year and household, compared to 380 euro a year in profits of the big utilities. A 61% majority favors even higher surcharges. The reductions were done because prices are collapsing so fast that keeping up the old tariffs would lead to much too high profits for owners of solar.
As you note correctly, the system has been extremely successful in reducing prices, a success that will also benefit solar in third countries like the United States.
You may also be wrong about calling the feed-in tariff a “subsidy”, depending on how one understands that term. This is not taxpayer money that is spent. That’s not the way a feed-in tariff works. The Court of Justice of the EU ruled in 1992 that these are not subsidies.
That of course means that it is not possible to just shift funds from “deployment subsidies” to “research subsidies”.
As a matter of opinion, while research is certainly necessary, that is no excuse to slow down deployment of existing technology until Bill Gates has finished his magic technology development in a couple of decades. Deploy, deploy, deploy some more, and deploy, as far as I’m concerned.
Update: Gunther kindly replied to my comment at his site, with this answer:
Karl, yes, you are right that the feed-in tariff does not rely on taxpayer funds. But it is a subsidy in the sense that other electricity users are subsidizing the deployment of solar energy and other forms of renewable energy. Not nuclear, however.
Your explanation of why the subsidies are being cut differs from what I read in The Guardian and BBC. They cited political opposition to the costs. Whatever the reason, the effect of the reduced subsidies–despite the lower costs of PV — is that deployment will be slowed by more than 50%.
And while in Germany it’s not possible to shift funds from deployment to research, that’s certainly an option in the US.
I wrote this not because I oppose solar or efforts to deploy more clean energy, but to bring some skepticism to the idea that solar can solve our problems.
Paul Krugman, for example, wrote last fall: “Fracking is not a dream come true; solar is now cost-effective. Here comes the sun, if we’re willing to let it in.” It’s not a matter of being willing. It’s being able to sustain political support for a costly form of clean energy.
I wrote the following answer to that:
As to the subsidy point, I agree completely. It is a question of how that word is understood.
I also agree that some politicians have expressed concerns about costs. That, however, does not make those concerns true, except if you think that about 70 euro a year is even worth mentioning compared to the much larger costs of global warming. Also, those concerns are much less convincing after the massive price reductions have already happened as a consequence of having the feed-in tariff in the first place. Adding another 8 GW this year would cost less than an additional 10 euro at the feed-in tariff levels before the last round of reductions.
We will see what kind of reductions in deployment the latest cuts will bring. No one can say now what will happen, though early reports say that there has been another last-minute boom sale in the first quarter because of the anticipated cuts.
As to “solar being a costly form of clean energy”, if large-scale projects can be done at 13.5 cents euro with German solar resources, which is the tariff after the latest round of cuts, they could be done at about 5 cents US in good United States desert locations even now. Eventually (in less than a decade) solar PV will be the cheapest option by far in all places getting over 2,000 kWh per year and square meter.