Green Power Subsidy in Germany

Germany has been the biggest reason for the success of solar energy growth, as its EEG law allowed big solar panel makers to gain sufficient industrial scale. The progressive lowering of FIT under EEG also forced solar panel makers to cut costs every year, such that now in just 5-6 years solar panel prices have gone down by a stupendous 90%. Germany has the largest installed capacity of solar energy with more than 30 GW. This is a great achievement for a country which receives much lower insolation compared to other countries such as Brazil, India, China or USA.

Read more about The German Solar Industry here.

However, the German EEG law is starting to bite its electricity consumers who have to pay 8.5c/KwH extra for the green energy subsidies. The government in Germany passes on the costs of green energy subsidies to electricity customers directly. This year that charge is increasing by 18% leading to a big outcry against green energy. Note big industries do not have to pay this surcharge as the government wants to maintain their competitiveness, which has made the green activists protest the discrimination. The closure of nuclear energy plants has made power more expensive in Germany and there is no clear roadmap to Germany’s 80% renewable energy target by 2050. There is no consensus on how the costs will be divided between the consumers and industries. Though solar energy has become quite cheap these days, the older solar plants which were built when the cost were higher will still get the high old FITs. This means that for at least the next 20 years, the green power surcharge will remain high due to high FITs for wind and solar. It remains to be seen how Germany changes the EEG law to fairly divide the cost and benefits of renewable energy.