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all new installation worldwide, according to
Solarbuzz, a research and consulting firm.
But in Spain, buying all that high-priced
power became a burden to the utilities. That,
along with a longer contract term and aggres-
sive pricing, caused the tariffs to be drasti-
cally cut. Without the high incentives, in
2009 Spain installed only 6 percent of the
world’s new solar-power capacity.
Nevertheless, interest in feed-in tariffs is
growing in the United States. At least two
cities—Sacramento, CA, and Gainesville,
FL—have enacted local plans. California,
Hawaii, and Vermont have passed laws that
would create their own feed-in tariffs, and
at least 15 other states have considered it.
What might these policies cost? In Ger-
many, electricity prices have soared more
than 60 percent over the past decade. But
Germany’s environmental ministry says
the tariff system is responsible for less
than a 10th of that increase, or about $3
per month for a typical household. Since
German households consume about half as
much electricity as U.S. homes, the extra
cost for renewable energy has not been a
deal-breaker for the public, says Kemfert,
who contends that a majority of Germans
support it. Overall, the tariff cost Germany
an estimated $11 billion in 2008 alone, about
a third of 1 percent of its GDP.
But why even bother with feed-in tariffs?
Many economists favor either a carbon tax
or a cap-and-trade system in which electric-
ity plants buy permits to burn fossil fuel. “It
would be better to tax brown power than
subsidize green power,” says Borenstein.
Coal is the biggest carbon emitter among
all energy sources, and it currently accounts
for about half the electricity produced in
the United States as well as in Germany.
Phasing out coal should be the main goal,
and pursuing that goal by putting a price
on carbon, he says, allows the market to
decide which renewable sources are most
cost-effective. That’s more efficient than
letting the government set prices.
However, neither cap-and-trade nor a
direct tax may be politically feasible in the
United States. So would a national feed-in
tariff be an acceptable alternative? Or would
it also be politically doomed, since it, too,
would raise electricity prices? To make a case
for it, politicians would need to convince the
American public that renewable power is
worth it, pointing to Germany as the exam-
ple. Indeed, the German experiment does
show that a large industrial society can reach
ambitious goals for scaling up new sources
of clean electricity, with users paying the
way. Germany expects to produce most of its
electricity from renewable sources by 2030.
Meanwhile, the United States produces only
about 7 percent of its electricity from such
sources, most of that from long-standing
The real significance of the German plan,
though, may not be as a model for other
countries but as a source of permanent
change in the world’s energy economy. In
this sense, Germany can be compared to
early adopters of new gadgets, who often pay
outrageous prices even though they know
that others will get improved technology
for much less a few years later.
Consider the changes in the market for
wind power. By 2006, Germany had by far
the largest wind-power base in the world,
with 20.6 gigawatts of capacity. The massive
scale brought the cost down, and wind began
approaching grid parity in many parts of the
world. In 2009, the United States and China
were able to surpass Germany in capacity,
but at far more attractive prices.
Thanks in part to the Germans, the same
thing now appears to be happening in solar,
with prices of photovoltaic panels plung-
ing 40 percent last year alone. Yes, the crit-
ics are right that Germany’s spending was
wildly inefficient. But what Germany did
was prime the global markets, showing that
renewable technologies can be a big busi-
ness worthy of investment. As a result, the
United States may not need to copy Ger-
many’s experiment to reap the rewards.
evan i. schwartz is an author and Journalist.
he produced and cowrote saved By the sun, a
pbs/nova documentary Featuring a segment
about the german solar policy.
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