How Soon Will the US Surpass Germany in Solar Investments?

Sustainability Consultant, SaveOnEnergy.com

Germany set a world record by producing 23,900 megawatts of electricity in a single day from thousands of solar systems across the country on July 8. While the number is impressive, it’s not likely to hold for long. Two of Germany’s leading downstream solar power companies filed for insolvency just days before the record-breaking accomplishment. According to Forbes, these businesses are just a few in a long line of companies leaving the solar market in Germany, which the news site says is evidence of a collapsing solar industry in the country. To top it off, new market predictions suggest Germany may soon be surpassed by the US in solar investments.

A report released by CohnReznick LLP and Clean Energy Pipeline studies the landscape of renewable investments and acquisitions in the next 18 months. It’s based on a survey of more than 850 senior-level executives from renewable energy industries around the world. These respondents include investors, corporations, governments, debt providers and service providers.

The survey found that the US is the most attractive place in the world for future investments in renewable energy, including mergers and acquisitions. In fact, the renewable energy mergers and acquisitions that took place in the United States during 2012 are valued at $10.1 billion. And 90 percent of survey respondents believe the number of multimillion deals is only going to increase during the next 18 months.

In addition, a number of the high-level executives surveyed believe they will be investing in renewable energy in the United States. Almost 45 percent of respondents plan to acquire or invest in renewable energy in America over the next year and a half, which is more than double the number of interested parties that Germany is predicted to see.

Investing in solar energy

With the cost of installing solar systems decreasing and a number of government tax credits still in play, solar energy is the hottest renewable energy investment. The survey found that in North America, 63 percent of respondents were targeting solar for investments and acquisitions.

In line with the interest in solar investments, the US reported a record number of solar installations in 2012, which added 3,313 megawatts (MW) of energy to the grid. In total, the United States now has more than 8,500 MW of installed solar capacity, or enough to power 1.3 million homes according to the Solar Energy Industries Association (SEIA).

It’s certainly short of Germany’s 34,000 MW capacity, but with continued investments in solar in the US and the decline of solar companies in Germany, it’s possible America could surpass Germany in the future, not only in the number of solar investments it receives but in overall generation capacity.

Germany has an ambitious plan to supply 80% of its power from renewable energy by 2050. But subsidy programs for solar energy caused a massive surge and inevitably an oversupply of solar manufacturing. Because the supply of solar panels in Germany is high, but the demand is much lower than predicted, manufacturing companies can’t sell their goods and are suffering in the crowded market.

In 2012 Germany made some changes. It scaled back its state support of the solar industry and in turn saw numerous companies file for insolvency, causing a loss of more than 20,000 jobs in the solar industry, according to eNews Channel Africa.

But apparently the cutback wasn’t enough. On July 9, Germany announced its intention to stop subsidizing solar energy by 2018.

The US on the other hand is expected to have record growth in the solar energy industry yet again this year. The SEIA predicts that an additional 4,400 MW worth of solar panels will come online in 2013. And the potential for growth is almost unimaginable. For example, if all the usable land in the deregulated state of Texas was covered in solar panels, it could produce twice the amount of solar energy than any other state. That’s a huge implication of one of the US’s most competitive energy markets.

Even if investments in solar energy remain the same in the US, it’s possible the country could surpass Germany’s solar capacity in just six years. But the length of time could be even shorter with so many companies pulling out of Germany’s solar industry and U.S. as the new hotspot for investments in the resource.

Kristina Ross currently works as the webmaster and sustainability blogger at SaveOnEnergy.com. Her work concentrates on a healthier relationship between the environment and the people that live in it. She promotes the reduction of environmental impact through cleaner means of energy production and consumption.

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