Germany’s Solar Cell Promotion: An Unfolding Disaster
AbstractThis article revisits an analysis by Frondel, Ritter and Schmidt (2008) of Germany’s Renewable Energy Act, which legislates a system of feed-in tariff s to promote the use of renewable energies. As in the original article, we argue that Germany’s support scheme subsidizes renewable energy technologies not based on their long-term market potential, but rather on their relative lack of competitiveness, with the photovoltaics (PV) technology enjoying high feed-in tariffs, currently over double those of onshore wind. The result is explosive costs with little to show for either environmental or employment benefits. Indeed, we document that the immense costs foreseen by Frondel and colleagues have materialized: Our updated estimate of the subsidies for PV, at 100 Bn €, exceeds their expectations by about 60%. Moreover, with installed PV capacities growing at a rapid rate, these costs will continue to accumulate, diverting resources from more cost-effective climate protection instruments.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0353.
Length: 23 pages
Date of creation: Jul 2012
Date of revision:
Find related papers by JEL classification:
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-23 (All new papers)
- NEP-ENE-2012-07-23 (Energy Economics)
- NEP-ENV-2012-07-23 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010.
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Elsevier, vol. 38(8), pages 4048-4056, August.
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- Johann Wackerbauer & Jana Lippelt, 2012. "Photovoltaics: Boom of the Rising Sun," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(1), pages 70-73, 04.
- Alvaro Calzadilla & Manfred Wiebelt & Julian Blohmke & Gernot Klepper, 2014. "Desert Power 2050: Regional and sectoral impacts of renewable electricity production in Europe, the Middle East and North Africa," Kiel Working Papers 1891, Kiel Institute for the World Economy.
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