NCPA - National Center for Policy Analysis

Impact of Renewable Energy Policies in Germany

April 29, 2011

In a study of the impacts of Germany's aggressive promotion of wind and solar power, Manuel Frondel and colleagues noted that the German feed-in law required utilities buy solar power at 62 cents per kilowatt-hour, far above the normal cost of conventional electricity, which was between 3 and 10 cents.  Feed-in subsidies for wind power, they observed, were 300 percent higher than conventional electricity costs.  But rather than bringing economic benefits in terms of lower cost energy and a proliferation of green energy jobs, implementing wind and solar power raised household energy rates by 7.5 percent, says Kenneth P. Green, a resident scholar at the American Enterprise Institute.

  • German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country's energy portfolio.
  • In the case of photovoltaics, Germany's subsidization regime has reached a level that by far exceeds average wages, with per-worker subsidies as high as €175,000 ($254,000).
  • To the contrary, Germany's principal mechanism of supporting renewable technologies through feed-in tariffs imposes high costs without any of the alleged positive impacts on emissions reductions, employment, energy security or technological innovation.

 Source: Kenneth P. Green, "Green Energy: Don't Envy Germany," The American, April 23, 2011.

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