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Germany’s Solar Cell Promotion: An Unfolding Disaster

  • Manuel Frondel


  • Christoph M. Schmidt
  • Colin Vance

This 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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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0353.

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Length: 23 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:rwi:repape:0353
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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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  1. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2009. "Economic Impacts from the Promotion of Renewable Energy Technologies - The German Experience," Ruhr Economic Papers 156, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  2. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2008. "Germany's Solar Cell Promotion: Dark Clouds on the Horizon," Ruhr Economic Papers 40, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  3. Frondel, Manuel & Kambeck, Rainer & Schmidt, Christoph M., 2006. "Hard Coal Subsidies: A Never-Ending Story?," RWI Discussion Papers 53, RWI - Leibniz-Institut für Wirtschaftsforschung.
  4. repec:zbw:rwirep:0040 is not listed on IDEAS
  5. Johann Wackerbauer & Jana Lippelt, 2012. "Photovoltaics: Boom of the Rising Sun," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 70-73, 04.
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