I'm not sure how seriously we should take a report that talks about the costs of the FIT program and ignores the benefits, including the very obvious benefit of providing power to people. The costs figures cited in the article don't even include the value of the electricity provided. Germany's FIT program has been the single biggest force in driving PV costs down worldwide to the point that solar is now at grid parity in many jurisdictions -- including in Germany. These cost comparisons will continue to become more favorable over time so I feel pretty confident that any net cost from the first 15 years of Germany's FIT will be made up many times over with net savings in the coming decades.
As one good example of the benefits of the FIT program, here's a quote from the report, which the report ironically lists as a detriment without realizing its contradiction of their own theme: "wholesale prices in Germany for base load have fallen dramatically from €90-95/megawatt hour (MWh) in 2008 to €37/MWh in 2013." Wholesale prices have fallen b/c solar and wind have pushed out higher cost fossil fuels. That's good!
Michael Keller, it's all but certain that Germany's FIT program will demonstrate a profound reduction in GHGs over time. Even if they have seen a temporary uptick in GHGs from new coal plants (which is itself debatable) Germany is on a clear path to 80% renewables by 2050 or sooner. Time will tell if I'm right, but either way it's far too soon to critique the FIT as not succeeding in its GHG reduction goals. Germany is headed for 30% renewables very soon, in just 15 years or so. This is remarkable. Cost is the debate, but as I mentioned below I'm also quite confident that in just a few years we'll be able to look back and say the net benefits of the FIT were very positive.
Steven, there's very good evidence that Germany was the major driver in reducing solar prices globally, benefiting all of us. Solar prices have dropped consistently about 20% for every doubling of delivered product (known as Swanson's Law). http://en.wikipedia.org/wiki/Swanson's_law.
Since Germany was responsible for about half of the global market for a number of years they were directly responsible for a very large portion of the recent reduction in prices.
As for Germany's wholesale price reductions, do some number crunching and extrapolation and I bet you you'll find that the reductions observed in Germany's wholesale prices far outweigh any premium paid for renewable energy from FITs.
As for grid reliability, Germany's grid is actually extremely reliable. There is discussion pending about providing capacity payments to fossil fuel plants that need to stay on line as backup, like is done already in many jurisdictions. Given Germany's track record on grid reliability and engineering issues more generally I'm pretty confident they'll keep the lights on even as they continue with the energiewende.
Steven, you're failing to see the contradictions in your argument. Why did overcapacity occur? Because producers scaled up due to the demand from Germany and other markets. Without the German FIT we wouldn't have had China coming online like it did with production. The long-term Swanson's Law holds, I believe, very well, though I agree with you there was an increase in price for a few years, prompted by a bottleneck in silicon supplies. But once silicon markets scaled up, the long-term price decline trend kicked back in. The end result: thanks to German's demand from its FIT program, and China's massive ramp up in PV panel production, we now enjoy around the world solar panels that provide power increasingly at grid parity or even lower cost in many circumstances. In Germany, solar power for "self-consumption" generally costs less than grid power. Stay tuned for the "solar singularity" as installations soar around the world in the coming years.
Steven, you're missing the point of Swanson's Law. It's not about R&D, it's about deployment and scale. R&D can still help but solar panels have long been efficient enough to be useful once costs of production came down enough. The massive scale that Germany's FIT directly promoted was directly behind the observed cost trends quantified by Swanson's Law. Does that make sense? So, no, we wouldn't have seen the same cost trends for PV without Germany's FIT.
As for Germany's cost of power, yes, their cost per kWh has gone up but their bill amounts on average are far lower than the US and many other countries b/c they're so efficient. There's far more than renewables behind German and European price increases more generally. Maybe you've noticed that energy prices are going up around the world in general? Just as in CA, higher prices prompt greater efficiency (within reason, of course), along with good policies to help conservation and efficiency. So a focus on the c/kWh alone is misplaced. What really matters is what we pay as percent of income, and by that measure both CA and Germany do very well. And we have a lot more renewables than most jurisdictions too. Hmmm, maybe policy does matter.
Last, what boom and bust in Germany? There has been no bust, only boom. Going from 7.5 GW to "only" 3 GW of solar is hardly a bust. And of course wind power and biomass have been growing apace at the same time, so there is no bust in Germany's renewable market. They're set to soon surpass 30% renewables, in just fifteen years of the FIT being in place. I hope you'll pay attention to the facts and one day see what a success Germany's programs have been not only for Germany but the world as a whole.
Steven, Swanson's Law has held quite nicely in the last few years even as the solar boom has expanded. So, again, Germany's FIT program has been directly responsible for much of the observed price decline in solar panels. Here's a good chart through 2013 (estimated, but I believe accurately): http://www.economist.com/news/21566414-alternative-energy-will-no-longer-be-alternative-sunny-uplands. The article gets it a little wrong: it's not PV production capacity that is relevant but, instead, delivered product. You'll see there have a been few periods of increased prices, followed by a return to trend. Germany's FIT was certainly responsible for a large part of the price declines after 2009 b/c this is when the FIT really began to kick in, and when China really began to come online with major deliveries.
As for Germany's energy bills and efficiency, you're conflating efficiency and conservation. Efficiency is doing the same with less energy. Conservation is changing behavior and thus using less energy. Germany's economy is the most efficient in the world: http://www.theguardian.com/environment/2014/jul/18/germany-is-most-energy-efficient-major-economy-study-finds. So, again, Germany's bills are relatively low even while their rate per kWh is quite high. But what matters are bills and bills as a percentage of disposable income (not rate per kWh), and by this measure Germany is doing very well.
As for booms and busts in PV, where is the bust? Globally, markets have been growing strongly and steadily. Yes, Spain screwed up big time. And it's probably not good for Germany's solar market to see a 50% reduction in one year. But to suggest that these changes are indicative of government-induced boom and bust is to miss the fact that there has in fact been steady and strong growth around the world and to miss the great number of market booms and busts that are indeed real and usually a result of lack of good regulation. Look to 2008 as a recent example with respect to the US and global economy, which clearly resulted primarily from a lack of smart regulation of derivatives by US and other banks.
Steven, you've got the details and, accordingly, the big picture pretty wrong. The big picture first: solar is booming and has been booming for well over a decade. The future is very bright indeed for solar. 2014 looks to add 45 GW or more of solar installations, a 32% increase over the cumulative total at the end of 2013, continuing the very strong solar growth over the previous decade.
We're set to surpass 200 GW of installations early in 2015, up from just 3 GW at the end of 2004 a decade ago. If that's not a boom, I don't know what is. More importantly, the future looks equally bright because costs are now so low. If we grow at "only" a 20% annual rate through 2030 globally we reach a whopping 3.4 TW installed capacity. Will we continue to grow at double digit rates? Time will tell. While growth will surely slow with scale it may well continue in double digits as more and more countries realize the cost and environmental benefits of solar. The "solar singularity" may well be around the corner.
You, like Paula Mints, seem to focus on the solar production company side of the equation. This is, of course, an important part of the equation. But it's far less important than the net result. Yes, many companies have gone bankrupt, and many more will in the future. But the overall industry is booming and will continue to boom. All new industries go through periods of consolidation. The solar industry as a whole seems to have avoided the sharp dips of many new industries b/c, as just mentioned, the industry as a whole is doing very well indeed.
Japan's FIT has quickly brought it to the top of the global solar market. China's FIT is also prompting major solar growth in that country. Europe's FITs continue to provide major growth. The US is really the anomaly here in its refusal to renew its FIT policies, like PURPA, that showed such tremendous success in California in the 1980s and 1990s. CA is now doing quite well under its RPS policies (not a FIT), but I and many others have been urging CA to get with the program that the rest of the world has pursued successfully and enact a robust and cost-effective new FIT program. Thus far, CA's FIT efforts since PURPA have been diminutive at best. CA's success with solar is almost entirely large utility-scale or residential rooftop. The goldilocks middle ground has to be developed and a cost-effective FIT would be the best way to do that.
In terms of comparing Germany and US on renewables, policy and GHGs, your analysis is highly misleading, as I think you know. US GHGs did dip in 2009, but this was due to three primary factors (according to EIA): 1) a dip in the economy from the Great Recession; 2) a shift toward natural gas and renewables; 3) a more efficient economy. The efficiency improvements induced by the fossil fuel price spike in 2005-2008 have generally persisted from 2009 onwards. Importantly, US GHG figures don't include fugitive emissions for natural gas, which by some reputable studies brings the net emissions on par with coal. That debate aside, the US is still far far weaker than Germany on renewables. Germany is set to soon surpass 30% renewable electricity. The US is at just a few percent. The US long ago fell behind many other countries on renewables because we haven't had farsighted leadership like we've seen in Germany.
The US renewables market is quite good, but we're well behind on cumulative installations compared to our peers. The solar market is finally at scale here in the US and the future looks bright. But it's now very bright due in large part to countries like Germany, which almost singlehandedly brought us the cost savings that have made solar so competitive today. China's production market was a direct response to Germany's FIT and similar FITs inspired by Germany (like Italy, Spain, Czeck Republic, etc.)
Germany's increased reliance on coal is likely a short-term phenomenon prompted by their nuclear shutdowns after Fukushima. Germany's official goal is 80% renewables by 2050. And they're likely to achieve this goal early considering the trajectory they're on now (even with changes to their FIT program). What is the US official goal for 2050? There isn't one. Obama's new goal for 30% reduction in power plant emissions by 2030 is a great first step, but it's likely that the market was on a path to achieve this without any government action. We need to do a lot more in the US, and emulating Germany's FIT program would be a great step. For example, reviving PURPA would do much to sustain growth in the renewables market in the US. PURPA requires that new contracts be at or below the avoided cost, so cost is not an issue. It's political will that's the issue.
There is one interpretation of US renewables policy that legitimately puts the US in a good light, if you don't mind being a freeloader. We have benefited from Germany's investments in renewables in a very direct way. They put in the money and time to bring solar costs down. And now we and the rest of the world are benefiting. That's smart from a certain perspective. Why invest now if we can wait and benefit later from others' investments? But it's certainly not farsighted or proactive leadership.
Back to Swanson's Law, the site you cite supports my point very well. The figure does indeed show a linear log plot, with a bump from 2005 to 2008 that is explained in the text: silicon prices were very high but as producers caught up the long term Swanson's Law trend returned. It states that price declines are "not dependent on time but on volume." So, again, your own data sources strongly support my argument: Germany's FIT-induced high volume of solar was directly responsible for major price drops in solar. I agree putting solar on all four sides of a shed roof is inefficient. But surely you would agree that the price drops induced by Germany's FIT far outweigh any inefficiencies that some pricing in the overall FIT regime may have induced (just as we're seeing in Japan right now, which is the new Germany)?
From what I can tell, it makes no sense to use excess or curtailed power for hydrogen production rather than battery storage due to the large loss of energy in converting electricity into hydrogen and then back into electricity. 70-80% of the energy is lost in these two conversions, whereas a far lower amount is lost in storing electricity in batteries and then producing that power back to the grid as needed. Moreover, as EVs take off we'll have a ready made army of batteries ready to receive excess power. In CA, for example, policymakers project 10 GW or more of EV batteries available by 2025 for smart charging (V1G) or two-way charging (V2G). I think it's time we simply shut down the discussion about hydrogen, whether it's for vehicles or stationary storage. It makes no sense given far better alternatives. Here's a recent study from UC Irvine showing the 2.5 times higher efficiency of using electricity directly in EVs rather than to produce hydrogen for fuel cell vehicles: http://www.apep.uci.edu/3/Research/pdf/SustainableTransportation/WTW_vehicle_greenhouse_gases_Public.pdf
The article quotes the Economy and Energy Minister on the fact that European electricity rates are twice what they are in the US. This is true but highly misleading b/c the amount European countries and ratepayers pay for electricity as a whole, a function of rates AND consumption, is actually far lower than in the US. So there is no competitive disadvantage because European nations are so much more efficient than the US. Inefficiency is the curse that abundant energy produces and nations that "enjoy" higher rates also enjoy greater efficiency. This is good for ratepayers as well as for the environment. The same dynamic exists with respect to California and the rest of the US. Historically higher rates in California have been a large incentive for much higher efficiency and the net result is that Californians actually pay much less overall for electricity than the large majority of people in other states. Again, what ratepayers pay for electricity is a function entirely of rates AND consumption, not rates alone.
Typo in the first paragraph: gigawatts not megawatts.