Wrong focus in German solar subsidy policy

April 6, 2012

The entire world is looking at renewable energy as a source to replace carbon-dioxide emitting fossil fuels in the long run. Solar energy is a very prominent component of this strategy. Germany has been trying very hard in the last decade to wean its dependence away from carbon fuels and nuclear energy. These efforts have intensified after the Fukushima Nuclear Tragedy in Japan with the German government deciding to phase out nuclear energy in a time-bound manner. At the center of all these efforts lie Germanys absolute mastery in solar technology.

Faulty strategy?

The German government hands-out massive subsidies to the solar energy industry in the way of billions of tax-payer funded Euros. Solar energy uses up almost half of all the allotted doles to renewable energy but churns out only 3% of the annual power output in Germany. The government justifies this low output on the grounds of the need to protect the environment. While the intent cant be faulted, its the implementation that has turned out to be a Greek tragedy. Typically, solar energy generation works well in countries that are blessed with an abundant amount of sunshine round the year. In contrast, Germany receives just about 30% of sunshine in a year in the total amount of available daylight hours. This results in sub-optimal utilization of its gigantic installed solar power capacity. Needless to say this poorly directed handout ends up being funded by the poor taxpayer at the end who gets punished in the form of higher electricity bills. Its a conservative estimate that this faulty policy adds up to a few hundred Euros in the annual energy bills of each German household. Thankfully there have been signs that of late, the German government has recognized the utter waste of money in an era of fiscal austerity and they are trying to trim down the money allotted to this program in a gradual manner.

Renewal energy is the future:

While the German government has doubtlessly erred in getting its priorities wrong, there is no question that its heart is in the right place. They are trying to redirect their efforts to more sustainable forms of recycled energy like wind power as per the advice of their experts.