Environmental Valuation & Cost-Benefit News

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Thanks to its aggressive push into renewable energies, cloud-wreathed Germany has become an unlikely leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, with roughly half of the world’s total installations. And it is the third-largest producer of solar cells and modules, after China and Japan.
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[Conservative lawmakers want to cut government solar energy incentives.] More than 40,000 people work in the photovoltaic industry, helping to revive blighted regions.... On Wednesday, Q-Cells, [a German company that surpassed Sharp last year to become the world’s largest maker of photovoltaic solar cells], reported a 63 percent jump in its first-quarter operating profit....

At the heart of the debate is the Renewable Energy Sources Act. It requires power companies to buy all the alternative energy produced by these systems, at a fixed above-market price, for 20 years, ... a mechanism, known as a feed-in tariff....

The amount of electricity generated by these installations rose 60 percent in 2007 compared with 2006, faster than any other renewable energy (solar still generates just 0.6 percent of Germany’s total electricity, compared with 6.4 percent for wind).

This, in a country that gets an average of only 1,528 hours of sunshine a year, less than a third of the total daylight hours. That figure is comparable to London’s but it is one-third fewer sunshine hours than in Florence, Italy, and only half San Diego’s, making German solar installations less efficient.
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Germany derives 14.2 percent of its electricity from renewable sources. That puts it ahead of a European Union target for countries to generate 12.5 percent of electricity from alternative sources by 2010.
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Now solar energy adds 1.01 euros ($1.69) a month to a typical home electricity bill, a modest surcharge that Germans are willing to pay. That will increase to 2.14 euros a month by 2014, according to the German Solar Energy Association.

But the volume of solar-generated energy is rising much faster than originally predicted, and critics contend that the costs will soar. Joachim Pfeiffer, a legislator, said solar power could end up adding 8 euros ($12.32) to a monthly electricity bill.... With no change in the law, he says, the solar industry will soak up 120 billion euros ($184 billion) in public support by 2015.

The conservatives would like to accelerate the rate at which the feed-in tariff declines, now set at 5 percent a year.
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Eicke R. Weber, a prominent physicist, said the estimate of 120 billion euros in subsidies was too high because it did not take into account the rising price of conventional electricity. That, plus a gradual decline in the cost of solar, will close the price gap between conventional and solar-generated electricity by 2014 or 2015, he predicted.

The actual subsidy, Mr. Weber said, will be 40 billion to 60 billion euros, a third of what the German state is paying to prop up its ... coal industry.
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Defenders of solar energy see the hand of Germany’s power companies behind the effort to change the law. Reducing incentives for solar would favor wind, which is a more natural fit for the utilities, since the cost of building wind farms is too high for the average homeowner.
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[Solar energy is not a sure path to economic growth. One manufacturer,] Signet is building its next factory in Madras, India; Q-Cells is building one in Malaysia. Other German companies are exploring the Mediterranean markets, particularly Spain.

by Mark Landler
FOR FULL STORY GO TO:
http://www.nytimes.com/2008/05/16/business/worldbusiness/16solar.html?em&ex=1211083200&en=7431caef408f0266&ei=5087%0A
The New York Times www.NYTimes.com
May 16, 2008