Clean Power

Published on May 16th, 2014 | by Shrink That Footprint


Has Germany Subsidized The World’s Now-Cheap Solar Power?

May 16th, 2014 by  

Originally published on Shrink That Footprint
By Lindsay Wilson


One of the most curious memes that has developed over the last few years is that the US leads the world in tackling carbon emissions. Without as much as a breath this is typically followed by a sentence with the word ‘fracking‘. But if you actually look at the data you can see declining oil use was as big a driver in the cuts.

Looking at data has a nasty habit of skewering memes you see. US carbon emissions fell by 12.1% between 2005 and 2012 (see above). Over the same period in the EU28 emissions fell by 12.4%. So while both have done very well the EU edged it since 2005, the year that the US happens to use as its baseline.

For most countries of course the baseline for emissions is 1990, the one from the Kyoto Protocol. With 1990 as a baseline US emissions figures are less flattering, up 7.4%. Europe is down 16.7%. So much for that meme then.

One of things with trying to lead on climate change is that it really is a scrappy business. Europe has done well on efficiency standards, but struggled to get its emissions trading smoothly off the ground. It’s doing well on fuel economy in cars, but been slow to deal with particulates from vehicles. On solar, it really looks to be paying the price of being a solar leader. Let me show you what I mean.

The other day I was reading a piece by Giles over at the excellent RenewEconomy which showed a graph of global PV module demand. The stacked bar chart for each year was hiding some fascinating data, so I’ve cut a new chart to show you what’s happening in the five main solar countries over the last few years.


For Germany and Italy this graph looks incredibly painful to me.

If you know anything about the cost of solar you’ll realize that the shape of the German and Italian demand curves indicate a very expensive affair. Those gigawatts installed from 2010 and 2011 could be installed at a fraction of their cost today. Given the falling costs of solar, the ramp-up in China and the US looks much more natural. This begs a question.

Has cloudy Germany done the heavy lifting, with its high feed-in tariffs and manufacturing investment, thus allowing the likes of China, the US and Japan to install so much solar today? Or did Germany push to0 hard too early on, leaving itself with a subsidy bill that is curtailing current investment in solar?

I’m not really sure to be honest. It’s a bit easy to criticize with 20/20 hindsight. But I still have the feeling that it is a bit of both. Maybe something else is at play? I am sure that the shape of that curve in Germany looks eye-wateringly expensive.

Is this the price of solar leadship?

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  • pandit yogamouse

    I have figures for the falling cost of installed PV per watt and I see that the price declined by roughly half every 5-6 years since 1979. This was a trend that resulted from steady technological advancement and investment.
    It had nothing to do with Germany buying lots of panels.
    Buying lots of something does not magically make it cheaper.
    Economies of scale are in general the result of fundamental engineering attributes of some particular industries.
    But to my understanding 2 million solar panels cost approximately twice as much to produce as 1 million. This is not an industry that benefits greatly from economies of scale.
    I am beginning to conclude that most of these ideas are modern myths.
    Germany will pay dearly for heavy subsidization of the market when merely waiting ten years would have resulted in 4 times as much bang for their buck.
    Personally, I can only conclude that a country of smart engineers was lead by ideologically inspired fools.
    And not the first time that Germany has suffered that fate.

    • Hans

      I think you need an introductory course to learning curve theory. The steady technological advancement and investment you mentioned happened because there was an (artificial) market. A large part of technology development is learning by doing and companies in the field making clear what kind of research they need.

      Just putting some scientists and engineers into a laboratory does not magically make a product cheaper.

    • Bob_Wallace

      There’s a noticeable price drop in 2009, something other than a “steady” decrease in cost over time. That was a couple years after Germany started their solar installation push.

  • rocketdan

    It is interesting this author chooses to compare the US carbon emissions to that of the broad EU28 instead of the more restrictive EU measures. This allows for the emissions of all the old Soviet Block countries to be included (Latvia, Lithuania, Hungary, Romania, Slovenia, Slovakia, etc) which had the worst emitting energy plants on the face of the earth and were updated quickly after their independence. It is the same reason the Kyoto Protocol chose 1990 as a basis date despite the fact it was signed in 1997. This way Germany, which had been reunited with East Germany, could count the massive reductions already done from replacing the East’s outdated dirty plants with newer units or simply taking their old dirty inefficient plants offline. The UK also liked the date because they were busy replacing their coal based generation with cleaner gas after Thatcher’s move to efficient generation. So by picking the data that best fits the argument the author is able to cloud the issue rather than enlighten. Neither a push for solar, nor the Kyoto Protocol, had much to do with these EU28 reductions.

  • KM

    Germany might have spent more money on hardware but it does not mean they pay significantly more for solar energy than USA which entered this market later when the cost went down. That’s because nowadays the biggest cost is installation which due to red tape burdening US installers adds quite a lot to the final bill

  • Cosette

    April 2014 german feed-in-tariff is from 9,10 c€/kWh (utility scale) to 13,14 c€/kWh (rooftop < 10 kWc). (in french, with recent history)

    Solar photovoltaic power installed each quarter in Germany and weighted average cost of photovoltaic electricity for new installations.

  • Senlac

    German’s pay twice as much for electricity but use half as much. The reason why it made economic sense for them to start sooner is they were paying around 30 cents kWh. Installation costs where about $8-10 per kWh when they began, now $2-5.

    • globi

      The 30 cents/kWh were paid by the FIT-system which are independent from electricity prices. FIT were introduced by the German government in the year 2000 thanks to politicians like Hermann Scheer:
      Unfortunately, current policy makers want to get rid of FIT even though the FIT are significantly lower than ever before (particularly for PV). Also they want to tax people who produce and consume their own electricity with their own PV-system. At the same time they don’t want to tax coal power plants which run their gigantic bucket-wheel excavators also with electricity they produced themselves.

      Costs for German PV-systems on one-family-houses including installation are around €1.3 /W (with PV-modules and Inverter made in Germany – not China) – here’s an example:

      The reason why Germany had and has relatively high household electricity
      prices is because the 4 big German utilities have an oligopoly and
      because electricity is highly taxed.

    • Bob_Wallace

      Germans pay a lot of taxes that have nothing to do with electricity along with their electricity bill.

      Germans pay taxes that are used for renewable investments along with their electricity bill. Americans pay that money via income tax.

      Take out the taxes and Germans pay about the same as New Yorkers for electricity. Less than people in Hawaii and Alaska.

      Germany monthly electricity bills are only a few dollars per month higher than average US bills.

      Let’s look at how costs break out for retail customers in Germany…

      In 2013 the average household electricity rate is about 29 € cents / kWh according to the BDEW (Energy industry association).

      The composition:

      8.0 cent – Power Generation & Sales

      6.5 cent – Grid Service Surcharge

      5.3 cent – Renewable Energy Surcharge

      0.7 cent – Other Surcharges (CHP-Promotion, Offshore liability,…)

      In addition there are some taxes & fees that go straight into the governments budget:

      2.1 cent – EcoTax (federal government)

      1.8 cent – Concession fees (local governments)

      4.6 cent – Value added tax (19% on all of the above) – (federal, state & local governments)

      So 8 + 6.5 or 14.5 euro cents go to electricity purchase and delivery. About 19 US cents. That’s higher than the US 12.5 cent average, but less than a penny higher than New York and Connecticut.

      • globi

        But New Yorkers may pay 5 times more on rent?

        With efficient appliances it’s not difficult to run a household below 500 kWh per year and person (not including heating & hot water). Even at 30 cents/kWh that’s only €12.50 per month.
        For a household electricity costs are irrelevant compared to rent costs.

      • Senlac

        Here is my NSTAR bill, Boston MA, April 2014.

        Customer charge 6.43
        Distribution .06036 x 192 KHW
        Transition .00036 x …
        Transmission .02240 x …
        Renewable Energy .00050
        Energy Conservation .00250 …
        Delivery Total 22.83

        Generation Charge .09333 x 192 KHW 17.92
        Total 40.75

  • Cosette

    More renewable electricity, less fossil and nuclear power in Europe. [in french, but see charts]

    Example, between 2000 and 2011 in Germany, Spain, Italy, Denmark, Portugal, Great Britain.

  • Matt

    On the plus side German industry go cheap wholesale electric. Which is a competitive advantge.

  • Jouni Valkonen

    This is good observation. Germany and by lesser extent Italy and Spain, did carry out huge global responsibility as they accelerated the solar revolution by several years, by creating artificial markets for solar panels.

    Tesla has done the same in electric car business, as it forced other car manufacturers to take electric vehicles seriously. And therefore my guess is that Tesla accelerated the electric car revolution at least by five years. EV revolution should be in full swing by the end of this decade.

    • Omega Centauri

      here, US gov gets a good part of the credit, $7500 federal credit for buying an electric car. Add in the state incentives, and the Leaf is actually a cheap new car. So maybe we can trade off sparking different techs. The Europeans definetely get the credit for PV. US gets a decent chunk of the credit for EVs.

      • Good to point out. Germany has, unfortunately, been very weak on support for EVs. Hopefully that will soon change.

        • Ronald Brakels

          While there hasn’t been much direct support for EVs in Germany, the fact that Germans pay twice as much for gasoline as in the US adds up to a much larger incentive over the life of an electric car than what the US offers.

          Even the Tony Abbott “Some men just want to watch the world burn” government in Australia is increasing the fuel tax and making electric cars a little more attractive, even though that is clearly not their intent.

  • apostasyusa

    Thanks Germany! Thanks Italy! Cheers to you!

  • Doug Cutler

    How much of this flows from a German constitution allowing proportional representation which in turn allowed the rise of the Greens?

  • Nash

    to be fair to the Germans most of their peak power is now solar, With out storage, there is not much more solar that they can add. Apart from that solar is a great peak power source, and has been for a while now.- they where forward thinking enough to see that.

    • Omega Centauri

      Somewhat true. Although they probably overdid the current slowdown. Its tough to get FITs right, during the buildout, they kept getting more PV built then they had targetted, even though they would readjust the FITs every six months. Now it looks like the reverse is happening, they got more slowdown than they wanted.

      • globi

        The policy-makers wanted that extreme slowdown (some call it the “Würgedeckel” or the “chocking-lid”) since the utilities/coal-industry asked for it.

        • globi

          The current PV-FIT is solely based on GW installed not on costs.

          If they wanted to reduce costs, policy makers would for instance have limited the amount of FIT-funds available for PV (not the number of GW installed).

    • globi

      German average power demand is 68 GW (600TWh/8760h) and electricity demand during day time is higher.

      Given the fact that PV power in Germany is typically not going above 20 GW, PV is hardly ever even covering a third of the peak demand.

      In addition, electricity is still cheaper at night (night-time rate is lower). German utilities could simply shift the night-time rate to noon and loads like hot water heaters could turn on at noon instead of at night.

  • nullbull

    Yep, we’ll get it cheap because they did all the investing early. Lucky us, right? Uh, no. They now have all the expertise, the institutional memory of what works and what doesn’t, the manufacturing capacity, the installation capacity, the tested business models, and the intellectual property.
    We sat out the early rounds, watched while someone else positioned themselves for maximum benefit, and now all we can salvage from the deal is buying the stuff for cheaper than them. When we could have been making it here, designing it here, manufacturing it here, and maintaining it here. WE will get the LEAST profitable portion of the pie.

    • Yep, insightful foreword-thinkers have been saying this for many, many years. Yet, very few have been able to persuade their countries to become such leaders. And I think that comes down to a tremendous heap of factors, such as civic involvement and sense of responsibility amongst the masses, political corruption or lack thereof, quality of media, distraction with other topics, etc.

    • Omega Centauri

      But, China (mostly) ends up with the manufacturing industry. The Germans still have efficient mounting tech, and great installation experience, but that doesn’t tend to export. The only German PV company that comes to mind is SolarWorld, trying to survive by bring trade sanctions. The Dutch did better with wind, retaining a lot of the manufacturing capability.

      • globi

        Following German companies for instance are invested in PV:
        Wacker, SMA, Fronius, Heckert Solar, Schott, Schmid-Group, Roth-Rauh
        And following German companies produce wind turbines:
        Enercon, Siemens, Nordex, Senvion

  • Ian

    Germany has spent very little on defence, so its commitment to renewables can be offset from that. Their example can be seen as foreign aid to numerous communities around the world. China was hell bent on constructing coal power stations and this construction is mitigated by an enormous rollout of solar and wind power generation. Imagine if germany relied on russian gas to power their country – which would have been the case if they had not gone the renewable route- the Ukraine would not have a fighting chance against russia. So really german renewables have been incredibly cheap to them.

    • Man, loving all these awesome, additional perspectives! Another great point.

      We have such an awesome crew of readers and commenters!

    • Violet

      Uh… Wouldn’t the Ukraine be better off if Germany relied even more on Russian gas then it already does (about 30% of supply)? I mean, if Germany didn’t have its own direct pipeline in the Baltic Sea, the Ukraine pipeline would be the only way to deliver Russian gas to Germany, and Russia couldn’t simply cut off the supply to the Ukraine. It’s not like Russia can truly afford to piss of Germany and lose a well-paying customer. (AFAIK, the Ukraine got its gas at a lower price than what it’s worth on the world market, until now. Germany, on the other hand, has a deal that binds the price of gas to the oil price, so the gas price has been steadily rising irrespective of demand and supply.)

      Also, the gas is mainly used for heating in Germany, which electricity is not. So solar and wind aren’t off-setting the majority of gas demand. What they do is reduce the wholesale electricity price to a level where gas-fired power plants can’t make a profit anymore. This was not intentional – we’d actually like to keep the gas plants because they make much better backup for intermittend solar/wind than coal plants. But coal (especially lignite) is a much cheaper fuel and domestically available, so the coal plants can still operate under the lower electricity prices. Lowered gas consumption is a problem of the Energy Transition, not a feature.

      As for the military spending… Do remember that Germany (both parts) still had mandatory military service for young men until 2011. The many closures of military bases have been quite recent. And the maintenance of the bases of the occupying armies wasn’t paid solely by the military budget of the originating country either.

      It’s true that Germany doesn’t have a military budget as insane as the US – but then, no country does. (US: nearly 700 billion; China 170 billion; Russia: 90 billion) But at 45 billion we’re still (un)comfortably in the top 10 – not all that much less than the UK/France/Japan (around 60 billion each) and nearly twice as much as Australia and Canada (20-25 billion). As a percentage of GDP, Germany (1,4%) spends about the same as Canada (1,3%), slightly more than Japan (1,0%) and slightly less than Australia (1,7%). (all figures are from the 2012 SIPRI database)

      Still, I don’t quite understand what the government’s military budget has to do with German solar investments. The solar boom was mainly financed by feed-in-tarifs, i.e. citizens paying a bit more on their electricity bills, and private bank loans for solar companies and PV systems on roofs, not by tax-funded subsidies or large public contracts. And it’s not like the government decreased a tax and lowered its spending budget to make up for the additional expense everyone had to come up with each year. In fact, according to the SIPRI estimate, Germany was spending a couple billion more on the military in 2013. (I don’t know why.)

      From the non-green politician’s viewpoint, the Energiewende had 3 main purposes:

      1. Pleasing voters and distracting them from other issues (Germany still doesn’t have a minimum wage, for example), as well as preventing the left-liberal parties like the Greens from getting ‘too much’ power. Right after Fukushima, the Greens polled at 20%, for example, but with their main issue co-opted by conserative Chancellor Merkel, they were back at 8% at the time of the election. If they hadn’t lost so many of their more affluent voters, we might well have a Social Democrat / Green coalition government now, or the Conservatives would have had to make concessions on issues like immigration in order to get a majority with a Conservative / Green government.

      2. Except for a war that doesn’t take place on your own soil, nothing beats a large infrastructure project to lower unemployment and to get out of an economic slump (which Germany was in during the early 2000s, when the laws for the Energy Transition were first introduced) They just were extra clever in financing it through means that didn’t require much governmental spending.

      3. In creating demand for solar and other green tech, Germany also created another export industry for itself. Even if it’s not financially viable to produce PV panels in Germany anymore because China does mass production much cheaper, the chinese factories still have to be equiped with machinery and systems (which is something German small and medium companies traditionally excel at), and the now experienced engineers can be hired out to consult. The temporary overcapacity and low wholesale price has also led to some huge electricity exports over the last few years. However, the big energy companies that profit from that are mostly owned by foreign governments or shareholders, so I don’t think that was intentional (aside from what industry lobbyist paid certain politicians for).

      I do think that, ultimately, the costs of the investment will be made up for with the savings in fossil fuel imports alone, nevermind the environmental benefits, the improved political negotiating position with Russia, or the benefits from lower health costs and less power in the hands of oligarchical energy companies funnelling their profits out of the country. (The guy who first sponsored the laws leading to the Energy Transition recently said that it would probably cost 1 trillion, but that 1 trillion was also the sum of savings in fossil fuels up to 2050, if I recall correctly.) However, most politicians who don’t belong to the Green party don’t seem convinced of that calculation yet, despite ever-rising fossil fuel prices.

      • Excellent post. Thanks! Stick around and chime in more. I’m sure many of us would appreciate it. 😀

  • JamesWimberley

    After WWI defeated Germany was saddled with enormous and unpayable reparations, that didn’t do anything to prevent a rerun twenty years later. After that one, no reparations were imposed, even though Germany’s war guilt was straightforward. The FIT burden German citizens now have to bear for the next 20 years (total something like €100 billion) can be seen as modest delayed restitution to the rest of the world.

    • Hmm, interesting perspective. Definitely think there could be some macro-psychological truth in that. And that has crossed my mind in the past, but never spelled it out as such.

    • Violet

      “no reparations were imposed”

      What? Bullshit!
      I don’t know the details of the official war reparations paid by West Germany, but I do know that they confiscated the assets of all German citizends that had been stored in foreign banks . Yes, the official West German reparation payments were ended in 1953, but even just the payments for keeping the Allied military occupation housed and fed were higher than what West Germany got as part of the Marshal Plan (which was understandibly mostly designed to help rebuild countries like France and Britain).

      And don’t you ever dare tell an East German that they didn’t have to pay reparations. The Soviets even took thousands of factories and half of the area’s rail way tracks – anything they could possibly use. They also took an average of 20 % of the GDP directly from company profits, until a rebellion in 1953 that was suppressed with Soviet tanks but did change some occupation policy issues. And while East Germany was allowed to rebuild its industry eventually, partly as advertisement for socialism right in front of the Iron Curtain, Moscow was trying to to force the country to become the factory of the Warshaw Pact – i.e. no more argriculture for food independence, sacrifice the landscape and people’s health to pollution, only concentrate all work force on building cars and industrial machinery for the rest of the Eastern Bloc and for export to the West. The GDR politician who was supposed to sign that ‘treaty’ shot himself instead, shortly before the government collapsed under the pressure of the public.

      According to recent research, West Germany paid about 2 billion (in 1953 money) in WW2 war reparations plus 3,5 billion in recompense directly to Israel. And East Germany paid 99 billion (also in 1953 money) – which is apparently the highest reparations sum ever paid by any country in the 20th century. The recompense payments made to people who suffered slavery and death under the Nazi regime (mainly people now living in Eastern European countries, Isreal, and the US) come out to about 70 billions cummulatively (though West Germany was much better about that than the East German government).

      By the way, Germany only finished finally paying off the reparations from WW1 in 2011. And the country pays about the same amount of development aid as Britain and France – despite not having had much of a colonial empire through which to systematically exploite the resources and people of half the world’s third world countries to build its own prosperity and inherited wealth. And is the US paying anything to the Native Americans for conquering their land and almost wiping them out?

      But yes, that development aid, and the costs of bringing solar down to a level that poorer countries can afford, is partially seen as a moral obligation by a lot of people here. Not personal obligation, obviously – there are hardly any people still alive who where adults during WW2, and even those few who were teenage soldiers are getting too old to have any influence on today’s policy decisions or even to pay their own electricity bills. But still, the national guilt has been ingrained so deeply that terms like “national pride” and “patriotism” are still four letter words, even for the children and grandchildren of the people responsible (or not responsible – my grandfathers risked their lives dodging the draft). So anything good to come out of this country does help to heal the national psyche.

    • Ronald Brakels

      The German Fit is a transfer, not a cost, so it’s not much of a burden as it doesn’t really make Germany as a whole any poorer.

      • Omega Centauri

        But it transfers money to early adopters from late -or non adopters. The later are resentful of having to pay. The good thing about FITs, was that it still allowed competition of installation cost, something that has been largely lacking in the USA, where we subsidize instalation. The dark side, is it defers much of the cost (again to those who are buying more expensive power to pay off the earlybirds), and that seems to have generated a backlash. As politics responds to emotion, not logic, the result is a slowdown just as the benefits of adding solar were getting good.

        • Ronald Brakels

          I just want to make it clear that when people in the media present German feed in tariffs as being a cost they are wrong. They are a transfer which is quite a different thing. If I have three apples and the teacher makes me give one apple to Kenny who has none, that’s a transfer and not a cost as the total number of apples in the system is the same. Now if after school I beat Kenny up and make fun of him because his daddy’s an alcoholic that doesn’t change the fact that it was a transfer and not a cost. But if Cartman takes one of my apples and throws it into a pile of poop than that’s a cost as no one is going to want to eat that apple, so there’s one less apple in the system.

        • globi

          Besides that energy costs are much smaller than rent and health care costs and oil prices have increased 400% in the last 10 years (and no German media outlet is complaining about the high oil prices).

          Since the German industry doesn’t pay for the FIT but directly benefits from the cheap wholesale electricity prices (thanks to renewable energies), the FIT are indirectly simply another subsidy for corporations.
          Corporoations are subsidized almost everywhere in the world. In this particular case it at least reduces CO2-emissions.

          • Omega Centauri

            As far as I’ve heard the FIT costs are born by residential (obviously non-solar) customers. This situation is ripe for political exploitation by the industrial enemies of solar. In some sense no monetary cost costs the net economy anything, one persons cost is another persons paycheck/profit. But, in reality there are always winners and losers. And the losers typically recieve tthe greater media attention, which can generate political action.

        • driveby

          PV+Wind.. caused German electricity prices to float or go partly down – the prices for the big players.. industry is profiting the most from this..
          1) prices on the electricity exchange are cheaper than without the renewables AND

          2) they’re mostly exempt from the FiT cost that all the other electricity buyers have to pay on top..
          So yeah, the small people footing the bill there mostly.

          • Bob_Wallace

            Germany’s wholesale electricity prices have been dropping. Rather a lot.

            It’s too bad that industry hasn’t been required to do some of the investing that is driving cost drops.

          • Jan Veselý

            The price is falling because the market is oversuplied. Utilities will have to close old coal and nucelar baseloads. About 15-20 GW, otherwise their fancy new fast ramping and efficient coal plants will never pay for itself.

    • Matt

      No matter how you slice it, I say “Well played Germany” Danka! all our kids and grandkids thank you.

      • driveby

        Thank The Greens over there.. they had been the junior partner to the socialists back then (1998–2005) and got this in for their ‘support’ of the socialists – was a nice and wonderful ‘horse trading’ 🙂

    • globi

      Germany pays about €100 billion per year on fossil fuel imports.
      Assuming a fossil fuel price and inflation increase of only 2.5%, Germany will have pay €2554 billion for imported fossil fuels in the next 20 years (if German policy makers succeeded to stop renewable deployment).
      €100 billion for renewables is not only cheap in comparison, it is also mostly regionally added value (roofers, electricians, PV-planers, wind-turbine-production, biogas-facility-production, inverter-production, PV-equipment-production, silicon production etc. are mostly German based).

      Btw, how much will the US pay for imported fossil fuels during the next 20 years?

      • €2554 for fossil fuels (often to other countries) + health & environmental costs


        €100 for renewable energy that is largely provided by my neighbors

        … hard decision

        • globi

          To be fair though there’s more energy in those fossil fuels.
          However, the PV-modules will still produce power in 20 years from now, while the imported fossil fuels will simply be gone and just be part of the global warming problem.

    • spec9

      That is an interesting perspective. But I prefer to think of it as a gift they gave to the world.

  • Mahdi

    After all it seems to be not so bad for Germany. Sure they spent tons of money on photovoltaics, windpower, biogas, etc. But that money stayed in the country, right now their are saving money on fossil fuels they don’t need to buy abroad, hundreds of thousands new workplaces are pushing down the unemployment, German industry is making money on selling wind turbines, PV panels, inverters, controls and electricity is getting cheaper and cheaper.
    PV and wind are now probably beyond need of financial support in Germany, now it’s time to push for batteries, smart grids, reducing heat demand, maybe some fuel cells and most of all push for E-cars to kill big oil.

    • Indeed. And now they’re leading the way into new energy storage solutions.

    • globi

      Interesting to note: Germany is economically much much better off than France. (Even though according to many ideologues it should be the other way round: As renewables are supposedly destroying an economy and nuclear is supposedly doing the opposite.)

      • No way

        Germany has one of the highest costs for electricity in Europe, France has one of the lowest, and that is not even including the enormous cost the German government have for their subsidies of private net-metering solar. So what ever economical benefit Germany might have in your opinion it’s definitely not based on the electricity.

        • Bob_Wallace

          No, German wholesale and industrial electricity prices are less than the EU27 average.

          Retail prices are higher due to taxes. See my longer tax comment in this thread.

          • No way

            That the government sponsors the industry with tax exemptions doesn’t make the electricity cheaper. Retail prices are what normal people get to pay and that includes taxes, there are a reason for those taxes and taxes like that are applied in all European countries.

            Where are your stats for all EU countries wholesale and industrial prices from by the way?

          • A Real Libertarian
          • No way

            Nice. It’s pretty different from the European Commissions but I trust the Eurostats more. I stand corrected that the industrial prices are not in the most expensive part of the table anymore. It’s still cheaper in France but not by an extreme margin.

          • Bob_Wallace

            France built their reactors years ago. Germany has only recently installed wind, solar, and more efficient coal plants.



          • globi

            These are prices for medium sized companies. They don’t buy electricity at wholesale-price-level.

          • Bob_Wallace

            Here are the industrial prices for the EU.


            Yes, France has cheaper electricity, but that’s using old, paid off reactors which will soon need replacement.

            Europe has commonly used taxes on electricity and fuel as a way to encourage efficiency. The final “tax included” price is not the cost of electricity.

          • globi

            Bob is correct.

            Also, ideologues would often claim that Germany exports power cheaply (because of renewables).
            In fact the opposite is true:
            2012 Germany exported its kWh for 5.56 cents/kWh and imported it for 5.25 cents/kWh (average price).

            On the other hand France has been exporting surplus nuclear power at night at close to 0 cents/kWh and during a cold snap France needs to import power expensively (due to the badly insulated houses and inefficient electric heaters):

          • No way

            You missed the point totally. You are looking at import/export prices. Not at the prices the companies and households are paying. What a few percent of the total electricity might cost during short periods of time doesn’t affect the total price payed during the year.

          • globi

            You missed the point. This was not a short period of time. It is the German electricity average trading prices with all neighboring countries (including France, Poland, Czech Republic etc.) for an entire year of 2012.

            And the fact that France is subsidizing nuclear power and promoting cheap household electricity prices to incentivizes inefficient electric heaters (such that it is forced to import power expensively during cold snaps is actually harming the French economy). (Btw, not having sufficient dismantling funds is an additional subsidy harming the French economy in the long run: )

            But back to wholesale electricity prices.
            Future prices for German electricity:!/2014/05/16
            Future prices for French electricity:!/2014/05/16 (approx. 20% higher)

          • Bob_Wallace

            Can you somehow get it though your head that what retail customers in Germany spend per kWh is far higher than the actual cost of electricity?
            Can we stick to the cost of electricity and not how different countries collect taxes?

          • No way

            Just checked the stats for the wholesale and industrial electricity prices for the EU and the latest statistics I can find are from the second half of 2012 where Germany are the 4th most expensive country and France the 7th cheapest country.

          • globi

            Here’s a stat from spring 2012 and wholesale electricity prices in Germany/Austria were lower than in France:


            Meanwhile Germany has installed more renewables.

          • heinbloed
          • Bob_Wallace

            More than 20 EU countries had higher industrial prices than Germany in 2013.


            I haven’t found recent wholesale price lists.

          • Jouni Valkonen

            Tells something that electricity is somewhat too expensive in Europe. But I am pretty sure that solar revolution will push the wholesale prices down by significant factor — at least in summer!

            This is of course bad for workers, because it encourages that workers are keeping most of their vacations during the winter!

          • heinbloed

            It’s too cheap.

            Incentives to save on energy usage are countered by the cheap subsidised prices.
            ALL fossile and atomic generators are selling below costs.

            Now the EU is asked to step-in to save the ailing stinkers and radiaters, a so-called “Energyalliance” should protect the loonies:

            Poland Wants Utilities to Give Up Profits to Help Save Mines (1) – Businessweek

            Polish coal industry under pressure amid falling prices | Shanghai Daily

            Ukraine Crisis Feeding Poland’s Coal Hunger

            A permanent Bad Bank for the antisocial elements of our society is demanded. With an endless amount of money in it.
            Or a war, as Tusk says more or less directly.

            Pirates and henchmen, mercenaries and crooks are running the fossile and atom business.

        • Jouni Valkonen

          high cost of electricity does not really matter for the economy, because it just creates more well paying middle class jobs. And the economy lives from middle class jobs who can afford to buy German alternative for Third Generation Tesla car.

        • one.second

          High electricity prices lead to innovation. That is what Germany does and sells to the world and that is why France is lagging behind.

  • Ross

    They can average it out by installing more.

    • Haha, good point! Sort of ridiculous that industry & certain politicians have swung away from installing more right as the price has come down to such a good level.

      • Omega Centauri

        Kind of reminds ne of the UK and NorthSea oil. They were big exporters when the price of oil was low. Then as the supplies ran down and prices skyrocketed they became importers. Timing is important.

        • mike_dyke

          I agree, It’s also the case with fracking – The price is low, so we’ll export what we get now. If they wait a few years until after the first boom is over, then they’d get more for their non-reuseable oil.

          • globi

            The frackers have to sell what they pump-out (regardless of price) as they need to pay off their well-investments. (Better solution would be not to drill wells in the first place.)

            The German policy makers cracked down on PV to protect the utilities / coal-industry (not because of costs – as their official story would one make believe).

          • Yes, when it comes down to it, things are often quite simple. But we’re easily distracted by the smoke and mirrors.

    • Ronald Brakels

      Yep, the amount of solar capacity they have now is likely to be dwarfed by what they will build in the future.

  • spec9

    Yes they have. The world owes Germany a hearty “Thank you!” (Or “Danke!”) for creating a large enough market that forced down the price of PV equipment.

    Unlike Bjorn Lomburg’s misguided thinking, you can’t just R&D your way to lower cost products . . . you have to R&D, build, deploy, learn, and then refine. The cost reducing refinements do not just come from R&D, they come from the ENTIRE pipeline . . . from materials suppliers, material research, engineering, design, manufacturing, delivery, financial innovations, installation, monitoring, recycling, etc. . . . the ENTIRE chain must be continually refined.

    • well said.

    • Omega Centauri

      As Zach said. Thats the whole purpose of early subsidies, to create the conditions where economy of scale kicks in. Free Market bigots can’t seem to get this, they would only let things that already make enough commercial sense (i.e. are competitive -or promise to be soon enough that investors will junp in). This was obvious years ago, Germany was doing much of the heavy lifting to develop a global PV industry. So what happened, have they got indigestion, because they are still paying the bills for this, and mistakingly transfer this assumed cost to current PV buildout? They’ve paid the price, now is the time to benefit by building lots of cheap solar.

      • For me, comes down to a difference between “let’s stay where we are” vs “let’s move forward” people.

      • one.second

        I can tell you what happened. The utilities worked tirelessly for the last decade to dismantle the EEG, the Renewable Energy Law.
        Their lobbyists succeded in messing up the FIT system in 2009 and they have driven a massive media campaign to exploit this the last five years.
        Now they got a bought Economic Minister and they were finally able to cut back the RE growth.
        The excellent news is, that it is to late. The RE capacity is there and now their coal plants are loosing money, RE are cheap and getting cheaper by the day and there is no way back. 😀
        Sadly the are delaying the complete transition for a couple of years right now. If they are at least a little bit smart, the utilities will use their remaining time now to switch to REs themselves. That is why offshore wind still got its high FITs.

    • globi

      If one could R&D ones way to lower cost products, we would have a cheap fusion reactor by now.
      (This whole R&D talk is just an excuse to not install renewable energies in the first place. The same is true for the CSP-in-the-Sahara-talk and especially the new-nuclear-reactor-talk.)

      • Guest

        A lot of it is begging for more nuclear R&D money.

      • Thanks. Wish more journalists and bloggers and “environmentalists” got this!

    • Jim Seko

      Brilliant observation. We could say the same thing about wind energy, electric cars or uber efficient heat pumps. Having said that, it seems the US is leading in producing EVs (Tesla)

      • Bob_Wallace

        Germany’s led the way with onshore wind and EVs?

        • one.second

          True for onshore wind, Germany built and has way more per capita, especially when it was still expensive, but EVs? The German car industry wasn’t to pleased to introduce them, cause their conventinal cars are a very easy sell because they are the world’s best.
          I surely would give Tesla credit for leading and thereby causing the EV revolution.

          • Bob_Wallace

            Germany was building onshore wind prior to the US construction of the Altamont Pass wind farm? I don’t think so.

            Japan gets credit for reintroducing EVs to modern times with Nissan’s Leaf. Germany is late to the EV game.

            Germany (along with Spain) installed solar on large scales which helped bring down panel prices.

            Denmark has led on offshore wind.

            The US has led with geothermal.

            Ireland is leading with non-barrage tidal.

            Credit gets spread around.

          • one.second

            I don’t care about one windfarm. Look at the money spend and the wind capacity build in Germany from 2000 till 2010 and compare that to the USA. It was Germany that made the mass market and the price come down.

          • Bob_Wallace

            Why don’t you take a look at this page and compare installed wind by year starting with 1981?


    • jonbohmer

      Why can’t we have both more R&D and quick deployment? The energy industry has the lowest R&D spending of any industry at only 0.3% of revenues. Pharma has 15% and IT 20%… I can’ really see how spending more R&D dollars would in any way slow down deployment of existing PV and wind technology.

      • A Real Libertarian

        We can.

        It’s just that a lot of anti-renewable propaganda is packaged as cutting deployment subsidies in favor of R&D spending.

        Witness everything Bjorn Lomborg has written for instance.

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