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.
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.