German Economics Professor Concludes: “Solar Subsidies Are Senseless”

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And so how many more studies do we need to tell us the obvious?  There are so many studies out there that conclude renewable energy subsidies are a failure, yet you can be sure they will all be ignored by the next IPCC report, which instead will focus on some oddball quack paper by Ottmar Edenhofer.The University of  Witten/Herdecke has put out a press release here. Hat tip: oekowatch.de.

According to the press release, Prof. Dr. André Schmidt has drawn a harsh conclusion on the German EEG feed-in laws for renewable energies.

In his study of the economic and ecological impacts of the EEG Feed-in Act for favouring renewable energies for the Federal Office of Research, Prof. Dr. André Schmidt, economist at the University of Witten/Herdecke, has reached a devastating conclusion: they are counter-productive! “In Europe the feed-in act does not save a single microgram of CO2, subsidises carbon power plants in foreign countries, solar module  manufacturers in China, and so the German solar industry as a result gains no benefits on the market.“

Harsh words, and he has arguments behind them: “Through the EEG Act, power from solar cells has a price that is eight times higher (€ 0.34 /kwh) than conventionally produced power,“ he calculated. And he asked what do we get in return?

Carbon dioxide: When climate gases decrease because of the EEG, then the supply of of salable emission rights also goes down  (if  a functioning trading system indeed exists). ” The biggest polluters at home and abroad can cheaply purchase a free pass instead of thinking about filters.“

Employment: For the 48,000 German jobs (Source: Federal Association of Solar Economics for 2009) subsidies to the tune of €8.4 billion were forked out in 2008. “That comes out to €175,000 per job! When one compares this to coal mining subsidies, which are a relatively modest €75,000 per job, coal looks really good!“, Schmidt grumbles.

Competitiveness: 48% of all solar systems installed in Germany originate from China because German capacity simply cannot meet the demand. The global market share of German companies is at about 15%, and trending down: “When India and Thailand come onto the market soon, we’ll be at 8-10%. Here in Germany companies are investing too little in R&D, productivity advancement is sub-par, sales have stagnated. In 2010 there was a €4.3 billion trade deficit in solar modules.“. In Schmidt’s view, the inflated and guaranteed feed-in rates have paralyzed innovation in this industrial sector.“

In summary, the German EEG feed-in act is a flop.

 

 

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6 responses to “German Economics Professor Concludes: “Solar Subsidies Are Senseless””

  1. DirkH

    “Competitiveness: 48% of all solar systems installed in Germany originate from China because German capacity simply cannot meet the demand.”

    That’s only half true; German companies have ceased to make cells in Germany because you can’t afford to do it in Germany anymore; the process is rather energy-intensive so you better do it in a place where electricity is cheap. I am not being ironic – the cost of electricity rises because of the cross-subsidizing of wind and solar installations; this cross-subsidy must be paid by private and commercial customers – 3.5 cent a kWH, no exceptions, even though the base tariff of an industrial consumer is about half of what households pay. So the green subsidy regime prevents the cost-effective production of green solar cells in Germany – the green death spiral in action.

    So, if we absolutely had to we could produce the cells and modules ourselves but it would become economic carnage.

    We still assemble some of the modules in Germany but this is being ramped down too and the work is sent to Malaysia by several German companies…

  2. DirkH

    “Employment: For the 48,000 German jobs (Source: Federal Association of Solar Economics for 2009) subsidies to the tune of €8.4 billion were forked out in 2008.”

    And it’s 17 to 19 bn EUR in 2011 (3.5 cent a kWh; 7000kWh / capita and year; 80 Million people)

  3. mindert eiting

    Interesting article I met on my daily internet tour:
    http://www.idealtaxes.com/post3442.shtml

  4. nofreewind

    They can’t afford to make them at home because the process is “energy intensive”. Meaning it likely takes more energy to create a solar panel than what it saves. It’s very, very likely that each solar kWhr produces a net increase in CO2.

    1. DirkH

      You pay 2.40 EUR for a Watt-peak (module+inverter+installation) and it will return 0.80 EUR of electricity within 20 years (assuming 5 cent / kWh real value; not the inflated subsidized prize); that’s my last back-of-.the-envelope calculation, for German insolation (800 sunhours/year).

      While I compute it using PRIZES (because I have no reliable energy balance numbers) I think these numbers strongly hint at energetic unviability for the time being; for the production processes currently involved.

      Yes, it will produce more CO2 than just using gas powered plants, I’m very sure about that.

  5. Juraj V.

    The biggest polluters at home and abroad can cheaply purchase a free pass instead of thinking about filters.

    Well, you can not filter “climate gases” out.. but hey, he is an economics professor.

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