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The Proposed Adjustment of Germany's Renewable Energy Law: A Critical Assessment

Author

Listed:
  • Jochen Diekmann
  • Claudia Kemfert
  • Karsten Neuhoff

Abstract

Support through the German Renewable Energy Sources Act (EEG) has led, in the past few years, to an unexpectedly wide expansion of systems for generating solar power (photovoltaics) because the system prices for photovoltaic (PV) systems have fallen at a faster rate than the solar power feed-in tariffs guaranteed by the law. This has also contributed to a substantial increase in the EEG surcharge to be paid by consumers. Also in order to slow down the rise in the surcharge, the federal German government has rapidly agreed on major changes to its support for solar power. The article critically reviews the elements of the initial legal proposal by the coalition government, concluding that proposed reductions of the expansion course for photovoltaic capacities are too extreme, the one-off reduction of the solar power feed-in tariffs is at least in parts too drastic, the envisaged rigid future degression of the tariffs is incompatible with market dynamics, and the model for integrating power from renewable energy sources into the market has not been properly thought through. An accompanying innovation strategy should also be considered.

Suggested Citation

  • Jochen Diekmann & Claudia Kemfert & Karsten Neuhoff, 2012. "The Proposed Adjustment of Germany's Renewable Energy Law: A Critical Assessment," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 2(6), pages 3-9.
  • Handle: RePEc:diw:diwdeb:2012-6-1
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.401744.de/diw_econ_bull_2012-06-1.pdf
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    Citations

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    Cited by:

    1. Hille, Erik, 2014. "Pollution havens: International empirical evidence using a shadow price measure of climate policy stringency," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100551, Verein für Socialpolitik / German Economic Association.
    2. Pegels, Anna & Lütkenhorst, Wilfried, 2014. "Is Germany׳s energy transition a case of successful green industrial policy? Contrasting wind and solar PV," Energy Policy, Elsevier, vol. 74(C), pages 522-534.
    3. Wilhelm Althammer & Erik Hille, 2016. "Measuring climate policy stringency: a shadow price approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 607-639, August.
    4. Würzburg, Klaas & Labandeira, Xavier & Linares, Pedro, 2013. "Renewable generation and electricity prices: Taking stock and new evidence for Germany and Austria," Energy Economics, Elsevier, vol. 40(S1), pages 159-171.
    5. repec:spr:empeco:v:54:y:2018:i:3:d:10.1007_s00181-017-1244-3 is not listed on IDEAS

    More about this item

    Keywords

    Feed-in tariff; photovoltaic; renewable energy;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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

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