Germany and Spain’s Solar Market Cast Shadow in the U.S.
Should the United States look to Europe to
determine whether progressive renewable energy
policies are worth pursuing? Government subsidies
there are playing a big part, all in an effort to
help the continent reach its goal of increasing its
renewable generation mix from 7 percent today to 20
percent by 2020.
The ultimate aim is to reduce greenhouse gas
emissions tied to global warming. The European Union
is a global leader and as such the member nations
enacted incentive programs to achieve their desired
results. It has helped boost solar power there.
Growing demand, in fact, has helped reduce
production costs through the advancement of
solar-cell designs and manufacturing processes.
This discussion will highlight two countries:
Germany and Spain, and then try to link their
experiences back to the United States. In May 2012,
Germany made headlines when at one defined point
it generated 22,000 megawatts from solar power,
which is roughly half of the country’s electricity
needs. Renewable advocates then hailed that short
moment as a shining example of what clean energy
could become -- reliable, emissions free and
dominant.
Renewables, in fact, comprised 23 percent of
Germany’s electricity mix in 2012. One of the keys
to this growth has been "feed-in tariffs." Such
government incentives guarantee each plant operator
a fixed tariff for electricity generated that is
channeled into the grid. Each grid system operator
is obliged to pay the statutory fee, which is
dependent on the technology used and the year of
installation.
Skeptics, conversely, took the opportunity to remark
that the solar sector there is so heavily subsidized
that it is hurting the national economy. Germany is
planning to cut that support by about $2.5 billion.
Meantime, Germany remains committed to closing its
17 nuclear generating stations, which had provided a
quarter of the country’s electricity mix.
Authorities have already shutdown eight such
reactors, with the rest providing 18 percent of the
country’s electric power. That has enabled coal to
gain a foothold there. The
World Nuclear Association says that coal has
increased its market there from 43 percent in 2010
to 52 percent this year. E.ON, RWE and Vattenfall
are all impacted by the closures.
Declining Subsidies
The result:
Bloomberg news service is reporting that
Germany’s Environment Ministry said that carbon
dioxide equivalents rose from 917 million tons in
2011 to 931 million tons in 2012.
But Amory Lovins, chairman of the
Rocky Mountain Institute, says that the math is
wrong: Renewables have more than offset nuclear
energy’s contributions. The increased use of coal is
the result of rising natural gas prices.
“Anti-renewables reports often claim that Germany is
going back to coal because renewables didn’t work
and are proving unaffordable. Actually, they work
just fine.”
He also says that anti-greenies like to propagate
the myth that the German grid is unable to handle
increasing amounts of renewable generation. He says
that the country ranks first in European grid
reliability and has scored better than the networks
used in the United States by a favor of 10.
Finally, Lovins says that the cost of the
feed-in-tariffs that have helped support the German
solar sector are expected to fall as the cost of the
associated technologies decline.
GTM Research says that the average residential
solar system fell by 18 percent last year while
non-residential prices dropped by 13 percent, as
reported by GreenTech Media.
Spain, too, is a hotbed for renewable energy
development -- and dissension as to whether
government has reached too far. In 2010, 23 percent
of its electricity was generated from wind and solar
energy. But the feed-in-tariff deficit there is now
$29.5 billion. Policies are in place to cut the
subsidies, which is also expected to result in the
burning of more fossil fuels.
“The level of the tariff deficit has reached a
magnitude that makes it unsustainable and requires
effective measures,” says the
Department of Foundations of Economic Analysis at
the University of the Basque Country in Spain,
in a report. “Through tariff deficits, regulators
have allowed transferring part of the present costs
of the electricity service to future consumers but
this cannot be done indefinitely and a deep revision
of regulation in this market is in order.”
As for the United States, federal spending aimed at
clean energy technologies will total
$150 billion from 2009 to 2014. The massive
injection will soon end. But the annual subsidies to
wind and solar could continue in some form. The goal
is to create grid parity, which means that wind and
solar energy would be competitive with other fuels
without federal help. By all accounts, prices tied
to solar panels and wind turbines are dramatically
falling.
As such, wind and solar production increased by
16 percent and 49 percent in 2012, respectively,
says the
Lawrence Livermore National Lab. Still, the two
fuel sources as a percentage of the
overall energy mix in the United States only
account for 4 percent of all energy produced, with
future projections varying.
The huge fight over the production tax credits
awarded to wind and solar producers during the last
budget battle does not portend well for their
ongoing continuance here. The same resistance is now
happening in Europe with respect to the allowances
that they offer. But, the global outlays have helped
bring down the price of the underlying technologies
that may ultimately make those green energies more
competitive.
Twitter: @Ken_Silverstein
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