Germany Wavers Over Feed-in Tariffs

Germany, perhaps the greatest success story for solar energy and a leading exponent and pioneer of the now widely employed feed-in tariff is seriously considering re-thinking its backing of renewable energy. Cuts in German feed-in tariffs while not welcomed by solar investors or those simply looking to make a quick Euro in green energy, are of course necessary and an important mechanism in regulating what can be an explosive sector.

Feed-in tariffs work by offering fixed, premium rates for renewable energy generated and used by small scale generation projects. While Germany has been a world leader in solar energy generation on the back of generous tariffs, it now seems that it in the current climate of austerity, the German government is perhaps rethinking its legislative bias towards green energy projects.

In a statement issued by Environment minister Norbert Roettgen, it certainly appears that the current stance is unequivocally pragmatic when it comes to backing solar energy over more traditional fuel sources. Indeed, pragmatism turned Teutonic bluntness when questioned on plans to further reinforce legislation designed at boosting solar investment,

“We’re in talks with the solar power sector to come to a reasonable further development. Those who want renewable energy should keep in mind that there is a need for society’s acceptance of it,”

Of course, while there is a need to regulate the the solar market in order to prevent a situation similar to Spain where the market became saturated, the fact remains that feed-in tariffs do not come out of the public funds. Instead, they come from the big utility companies obliged by legislation to purchase the units of renewable energy at the rate set by the tariff. This goes to add weight to the argument against reducing tariffs too drastically in Germany. Certainly, protectionism of certain industries at the expense of others is questionable but the figures for renewable energy in Germany speak for themselves.

Reports from the German finance ministry have shown that the revenue from renewable manufacturers alone came to over 16 billion Euros in 2009. In the same year around 294,000 Germans were employed in renewable energy with 64,000 of these working in solar energy. With these employment figures in mind and the fact that in Germany there is a real appetite for renewable energy investment, it would be politically naïve for any government to make too dramatic a cutback to tariff rates, even during these times of draconian spending measures.

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