In the lead up to another 15 percent reduction in Germany's feed-in tariff (the price paid for solar electricity fed into the grid), the German solar industry finished 2011 off with a bang — installing 3,000 megawatts of solar photovoltaic systems in December.
Let’s put those figures in perspective: In just one month, Germany installed almost twice as many megawatts of solar than the entire U.S. developed during all of 2011. Preliminary figures show Germany ended the year with roughly 7,500 MW of installations; the U.S. ended up with about 1,700 MW, according to GTM Research.
Oh, and I should probably mention that the Germans installed all of that solar at almost half the price. The average price of an installed solar system in Germany came to $2.80 in the third quarter of 2011. In the U.S., it was about $5.20 in the third quarter.
Why the disparity? The Germans have a much more mature solar market. The country’s simple,long-term feed-in tariff makes financing projects less expensive, and has created a sophisticated supply chain that allows companies to source product, generate leads and get systems on rooftops efficiently.
Some criticize feed-in tariffs for not creating a “market” like we imagine in the U.S. The activity we saw at the end of 2011 is representative of what happens every year in Germany: because the incentives are dropped down to meet market pricing, there is always a rush in December to install systems quickly. But isn’t that what we do in the U.S. when tax credits and rebates are about to expire?
It’s fair to criticize feed-in tariffs like those in Spain and the Czech Republic which caused an unsustainable boom before crashing down. But when looking at the numbers and pricing that the German solar market continues to post, there’s still a very compelling argument for states and municipalities to consider moderate, long-term pricing mechanisms like feed-in tariffs.
This article was originally published on Climate Progress and was republished with permission.