Germans Give the Rest of Us a Helping Hand.



Let's pause to give thanks to the Germans, for an experiment they started 10 years ago to promote the use of renewable energy. As an article in Technology Review explains, the policy enacted in 2000 forced utility companies to buy electricity from solar, wind, and other renewable producers at inflated rates, with the costs spread across all ratepayers. This guaranteed a secure market for the renewable producers, thereby encouraging more development of these kinds of energies. It's the kind of thing that the cynics among us would say couldn't happen here in America: a policy for which everyone had to pay, to serve an environmental end, with little in the way of immediate direct benefits.

It didn't create as many permanent jobs as they'd hoped, and the whole thing cost a lot of money. Of course, this is only one way to go about encouraging the development of renewable energy. But in any case, the Germans did the rest of us a favor by boosting the demand for solar cells and wind turbines, much as the early technology adopters who paid $500 for their iPads will enable the rest of us to get them for $200 in a couple of years:

Consider the changes in the market for wind power. By 2006, Germany had by far the largest wind-power base in the world, with 20.6 gigawatts of capacity. The massive scale brought the cost down, and wind began approaching grid parity in many parts of the world. In 2009, the United States and China were able to surpass Germany in capacity, but at far more attractive prices. 

Thanks in part to the Germans, the same thing now appears to be happening in solar, with prices of photovoltaic panels plunging 40 percent last year alone. Yes, the critics are right that Germany's spending was wildly inefficient. But what Germany did was prime the global markets, showing that renewable technologies can be a big business worthy of investment. As a result, the United States may not need to copy Germany's experiment to reap the rewards.

It may not guarantee a renewable future for all of us, but every little bit helps. So danke schön!

-- Paul Waldman

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