Two things happened last month to give us pause to reflect on clean energy. First, Germany added the equivalent of nearly 1 percent of its electricity supply with solar energy between January and August. The first 1 percent took 10 years to achieve; the next 1 percent just 8 months. Second, the author of this revolution, Hermann Scheer, died.
Scheer was a German politician, a Social Democrat who entered the Parliament in 1980. He was also an author, environmentalist and a powerful agent of change in the fight for a clean-energy future. He was called many things, from “solar king” to “the Stalin of renewables.” Within the solar industry, the title was more prosaic — “the father of the feed-in tariff.”
Introduced in 2000, and dubbed “Scheer’s Law,” the feed-in tariff enabled owners of a renewable energy system to sell the power they generate at attractive rates, and mandated utilities to buy it. This helped all renewable energy, but it particularly helped solar photovoltaic (PV) energy.
Before this, solar PV panels, which convert light into electricity, could only compete on remote sites, off the electricity grid, where it was too expensive to transport conventional fuels and electricity. Now, solar PV could be profitably installed on any south-facing structure and connected to the grid, turning homes, offices, warehouses and farms into solar power plants.
How did Germany fund its feed-in tariff? Not with annual budgets, or stop-and-start tax credits, but with an elegant surcharge on conventional electricity that adds a bit more than a euro per month to the average German electricity bill.
At the time, I was working for Shell Solar, a subsidiary of the oil company, heading a division focused on rural markets in the developing world. I remember watching with amazement as the new grid-connected solar market surged past the off-grid one — and as Shell bought Siemens Solar, catapulting itself to No. 3 position in the solar industry.
But this would not be a market suited to Shell and other slow-moving oil companies. Within three years, Shell fell from 3rd to 10th in the solar industry, and then quietly exited in 2006. At the same time former no-name solar companies, charged with entrepreneurship and venture capital, sped past and helped forge an entire industry.
With rapid growth came thousands of smaller solar companies, focusing on ever more specialized parts of the solar value chain and generating a whole new species of green jobs. Solar power plants that started at just 1-5 megawatts grew to more than 50 megawatts. Now plants of 250 and 550 megawatts are being contemplated in California, and of 2,000 megawatts in China — the size of several large coal-fired power plants.
In line with this maturation of the industry, country after country has followed the German model of feed-in tariffs — Spain, Italy, France, Czech Republic, Korea and recently even cloudy Britain.
Wholesale solar panel prices spiked from $2.5 per watt in 2002 to more than $4 by 2007. With the financial crisis, solar modules plunged as low as $1.5 per watt, but the industry is now primed for another round of growth.
Seeing this unfold over the last 10 years, I stand in awe of what Germany has achieved. Today 2 percent of Germany’s power is supplied by solar, and if the country follows current trends, it will be 20 percent by 2020. There’s a lesson here for America and the world on how to proceed with climate change.
As Scheer used to say, you didn’t need a global treaty for mobile phones to spread. Putting the treaty before the technology was putting the cart before the horse. Do solar in the name of clean air, energy security, and job creation, and in doing so, pave the way for a solution to climate change.
Look at the Montreal Protocol, which effectively banned CFCs and plugged the hole in the ozone layer. In that case, the replacement technology (HCFCs) was available and cost-effective, corporations had an interest in promoting it, and governments willingly signed on.
The United States is one of the two top energy consumers in the world (along with China), so the world cares how fast America becomes convinced that there is a viable replacement to fossil fuels. The domestic American market should reach 1,000 megawatts next year. But to put that in perspective, Germany next year could add 1,000 megawatts in just 1.5 months.
To catch up, President Barack Obama needs to push for a federal feed-in tariff, or a mandate for states to have one, and fund it with a surcharge on conventional power — small enough to pass, but big enough to move solar away from cumbersome grants and tax incentives that come and go with the annual budget circus.
And Obama needs to make his case not with climate change, but based on clean air, avoiding oil spills, the specter of peak oil and reduced dependence on the Middle East.
Of course, opponents will cry “tax.” But the German feed-in tariff adds the equivalent of only about $2 per month to the average electricity bill. Is that so great a price for energy security?
There is no other energy source that feels so right. The sun comes up, and in just one hour the world receives enough energy to power its needs for a year. I salute Hermann Scheer for harnessing its power so effectively, and encourage America and the world to learn from Germany’s example.
Damian Miller, the chief executive officer of a leading provider of solar energy in India.