The Ebbing Tide Lifts All Boats

That’s a strange title for this post.

It is of course a word play on the wide spread aphorism that “a rising tide lifts all boats”, which even has its own Wikipedia entry.

I just learned from that: This was originally in one of John F. Kennedy’s speeches. Now it generally is used to argue for policies that favor the rich. The idea is that if the rich get richer, the less fortunate will see their incomes rise as well.

Here I am talking about the German feed-in tariff system. It has four goals, listed right in the first Article of the Law on Priority for Renewable Energy. The fourth goal mentioned there is to promote the development of renewable energy technology.

The basic idea is to build a mass market with the feed-in tariff system. That in turn will develop technology and bring down prices.

The latter goal has been achieved rather convincingly. Prices for solar have dropped massively over the last decade.

That is the ebbing tide.

And it raises the boats in all countries worldwide.

For example, Japan has started its own feed-in tariff system in July of this year. And it has already deployed over 1 GW of solar in the first two months of the new system, which would bring it to a highly respectable 6 GW a year if that pace is kept up.

But it has done so at far less cost than Germany had to pay to get the first 6 GW under the German feed-in tariff built. Germany’s consumers surcharge payments have indirectly benefited also Japanese developers of solar.

For example, China is starting to see a major domestic solar market, having deployed 2 GW in 2011 for third place world wide (after Italia and Germany), which is expected to at least double this year.

The ebbing tide lifts the boats in China as well. With prices dropping faster than official reports or feed-in tariffs can keep up with, it makes more and more sense for China to switch from coal to solar.

The nice thing about this is that it is a positive feedback loop. With prices falling everywhere, world wide deployment will continue to grow exponentially, which will bring prices down even more, which will lift even more boats.

For more detailed data and market forecasts until 2016 I recommend the European Photovoltaic Industry Association’s May 2012 report “Global Market Outlook for Photovoltaic Until 2016″.