IDEAS home Printed from https://ideas.repec.org/p/zbw/rwirep/353.html
   My bibliography  Save this paper

Germany's Solar Cell Promotion: An Unfolding Disaster

Author

Listed:
  • Frondel, Manuel
  • Schmidt, Christoph M.
  • Vance, Colin

Abstract

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.

Suggested Citation

  • Frondel, Manuel & Schmidt, Christoph M. & Vance, Colin, 2012. "Germany's Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 353, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:353
    DOI: 10.4419/86788407
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/61448/1/722260881.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4419/86788407?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
    2. Grösche, Peter & Schröder, Carsten, 2011. "Eliciting public support for greening the electricity mix using random parameter techniques," Energy Economics, Elsevier, vol. 33(2), pages 363-370, March.
    3. Severin Borenstein, 2012. "The Private and Public Economics of Renewable Electricity Generation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 67-92, Winter.
    4. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2008. "Germany's solar cell promotion: Dark clouds on the horizon," Energy Policy, Elsevier, vol. 36(11), pages 4198-4204, November.
    5. Frondel, Manuel & Kambeck, Rainer & Schmidt, Christoph M., 2007. "Hard coal subsidies: A never-ending story?," Energy Policy, Elsevier, vol. 35(7), pages 3807-3814, July.
    6. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010. "Economic impacts from the promotion of renewable energy technologies: The German experience," Energy Policy, Elsevier, vol. 38(8), pages 4048-4056, August.
    7. 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(01), pages 70-73, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frondel, Manuel & Schmidt, Christoph M. & aus dem Moore, Nils, 2012. "Marktwirtschaftliche Energiewende: Ein Wettbewerbsrahmen für die Stromversorgung mit alternativen Technologien. Ein Projekt im Auftrag der Initiative Neue Soziale Marktwirtschaft," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 69954.
    2. Calzadilla, Alvaro & Wiebelt, Manfred & Blohmke, Julian & Klepper, Gernot, 2014. "Desert Power 2050: Regional and sectoral impacts of renewable electricity production in Europe, the Middle East and North Africa," Conference papers 332448, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Hills, Jeremy M. & Michalena, Evanthie, 2017. "Renewable energy pioneers are threatened by EU policy reform," Renewable Energy, Elsevier, vol. 108(C), pages 26-36.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:rwirep:0353 is not listed on IDEAS
    2. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2012. "Germany’s Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 0353, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Frondel, Manuel & Schmidt, Christoph M. & Vance, Colin, 2014. ""Grüner" Strom gleich guter Strom? Warum Solarförderung ein teurer Irrtum ist," RWI Positionen 57, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Sijm, Jos & Lehmann, Paul & Chewpreecha, Unnada & Gawel, Erik & Mercure, Jean-Francois & Pollitt, Hector & Strunz, Sebastian, 2014. "EU climate and energy policy beyond 2020: Are additional targets and instruments for renewables economically reasonable?," UFZ Discussion Papers 3/2014, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    5. repec:zbw:rwipos:057 is not listed on IDEAS
    6. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2014. "„Grüner“ Strom gleich guter Strom? Warum Solarförderung ein teurer Irrtum ist," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 19, 04.
    7. Zerrahn, Alexander, 2017. "Wind Power and Externalities," Ecological Economics, Elsevier, vol. 141(C), pages 245-260.
    8. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2014. "A public choice view on the climate and energy policy mix in the EU — How do the emissions trading scheme and support for renewable energies interact?," Energy Policy, Elsevier, vol. 64(C), pages 175-182.
    9. Zipp, Alexander, 2017. "The marketability of variable renewable energy in liberalized electricity markets – An empirical analysis," Renewable Energy, Elsevier, vol. 113(C), pages 1111-1121.
    10. Paul Lehmann & Felix Creutzig & Melf-Hinrich Ehlers & Nele Friedrichsen & Clemens Heuson & Lion Hirth & Robert Pietzcker, 2012. "Carbon Lock-Out: Advancing Renewable Energy Policy in Europe," Energies, MDPI, vol. 5(2), pages 1-32, February.
    11. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2011. "Die Kosten des Klimaschutzes am Beispiel der Strompreise," RWI Positionen 45, RWI - Leibniz-Institut für Wirtschaftsforschung.
    12. Manuel Frondel & Nolan Ritter & Christoph M. Schmidt, 2011. "Die Kosten des Klimaschutzes am Beispiel der Strompreise," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, 04.
    13. repec:zbw:rwipos:040 is not listed on IDEAS
    14. repec:zbw:rwipos:045 is not listed on IDEAS
    15. Manuel Frondel & Christoph M. Schmidt & Nils aus dem Moore, 2010. "Eine unbequeme Wahrheit – Die frappierend hohen Kosten der Förderung von Solarstrom durch das Erneuerbare-Energien-Gesetz," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, December.
    16. Frondel, Manuel & Schmidt, Christoph M. & aus dem Moore, Nils, 2010. "Eine unbequeme Wahrheit: Die frappierend hohen Kosten der Förderung von Solarstrom durch das Erneuerbare-Energien-Gesetz," RWI Positionen 40, RWI - Leibniz-Institut für Wirtschaftsforschung.
    17. Sener, Can & Fthenakis, Vasilis, 2014. "Energy policy and financing options to achieve solar energy grid penetration targets: Accounting for external costs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 854-868.
    18. Christian A. Oberst & Reinhard Madlener, 2015. "Prosumer Preferences Regarding the Adoption of Micro†Generation Technologies: Empirical Evidence for German Homeowners," Working Papers 2015.07, International Network for Economic Research - INFER.
    19. Fischer, W. & Hake, J.-Fr. & Kuckshinrichs, W. & Schröder, T. & Venghaus, S., 2016. "German energy policy and the way to sustainability: Five controversial issues in the debate on the “Energiewende”," Energy, Elsevier, vol. 115(P3), pages 1580-1591.
    20. Donald N. Dewees, 2013. "The Economics of Renewable Electricity Policy in Ontario," Working Papers tecipa-478, University of Toronto, Department of Economics.
    21. del Río, Pablo, 2012. "The dynamic efficiency of feed-in tariffs: The impact of different design elements," Energy Policy, Elsevier, vol. 41(C), pages 139-151.
    22. Poponi, Daniele & Basosi, Riccardo & Kurdgelashvili, Lado, 2021. "Subsidisation cost analysis of renewable energy deployment: A case study on the Italian feed-in tariff programme for photovoltaics," Energy Policy, Elsevier, vol. 154(C).
    23. Verbruggen, Aviel & Lauber, Volkmar, 2012. "Assessing the performance of renewable electricity support instruments," Energy Policy, Elsevier, vol. 45(C), pages 635-644.
    24. Hitaj, Claudia & Löschel, Andreas, 2019. "The impact of a feed-in tariff on wind power development in Germany," Resource and Energy Economics, Elsevier, vol. 57(C), pages 18-35.

    More about this item

    Keywords

    Energy policy; employment effects; climate protection;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:rwirep:353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/rwiesde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.