For an American who follows renewable energy issues, coming to Germany is like stepping into the future. In the U.S. total solar generation capacity is less than 0.1 percent. In Germany it is already 10 percent of the country’s base load—and 75 percent of that comes from solar panels on people’s homes and businesses. Those rooftop panels or ground-mounted solar units provide electricity directly to a home or business. And when there’s excess capacity, residents are able to sell electricity back into the electric grid at a fixed rate—often up to a 30 percent profit. How’s that for self-reliance and entrepreneurship?
The rapid growth of solar energy in Germany is largely the result of the country’s feed-in tariff. (It’s certainly not because of the number of sunny days; Germany gets roughly as much sun as Seattle and Portland.) A feed-in tariff is a government policy that encourages the growth of a new energy technology. Producers of electricity using certain technologies—like solar, wind and biomass—are guaranteed a certain price for electricity generated for 20 years following installation.
For the average German homeowner, that means they can install rooftop solar—at an average cost of 25,000 euros—and often pay it off in 10 years. The remaining 10 years on the feed-in tariff can be pure profit for the homeowner, netting an overall profit of up to 30 percent. Each year the feed-in tariff goes down by a scheduled amount until a point in the future when solar energy is expected to be cost competitive with electricity from the grid (often natural gas or nuclear). That’s already happened in southern Italy, where the cost of solar energy has become equal to energy from conventional sources.
The success of solar energy can also be attributed to Germans’ preference for products that are hergestellt in Deutschland, or made in Germany. The solar industry in Germany encompasses manufacturing, installation, maintenance, sales and marketing, creating jobs at all levels of the economy—with more than 380,000 jobs in the sector last year. Companies at all levels of the solar value chain—from photovoltaic panel manufacturers to installers—need help telling their story.
While the German industry has experienced some hiccups due to global competition, the solar industry as a whole is here to stay. Germany plans to meet 35 percent of its electricity consumption needs in 2020 with renewable energy. Thirty U.S. states, from Washington to Virginia, have passed legislation mandating that renewable energy account for 15 percent or more of consumption. It’s been exciting to learn more about the industry in a place where it’s been so successful and get a sense of the industry’s potential to grow in the U.S. and globally.