Why Policy Changes in Germany and Italy Are Good for the Future of Renewable Energy

[kristopher]

Why Policy Changes in Germany and Italy Are Good for the Future of Renewable Energy
Posted by Arno Harris of Recurrent Energy June 3, 2011

For the past two months, solar industry analysts have been glued to an Italian soap opera as the government repeatedly flip-flopped on its Feed-In Tariff (FiT) policy, a controversial tool that European governments have used to promote the rapid adoption of renewable energy through direct incentives. Conflicting reports made it very difficult to determine what was happening in Italy. The details are still not entirely clear, but the outcome will involve new limits and has significantly disrupted the solar market and prices. The response to such extreme uncertainty has been that Italian solar module orders and project construction have ground to a complete halt. The only solace for manufacturers watching this unfold was the comfort that came from knowing Germany, the country that pioneered the use of the FiT and in the process became the world’s leading solar market, was on solid ground.

Late last month, however, German Chancellor Angela Merkel provided the next plot twist in the unfolding drama. After a week that involved discussions with the chiefs of Germany’s four major electricity companies, on May 13 she made some surprising remarks that may mean Germany’s FiT is up for adjustment next. This is how Bloomberg reported it:

‘Germany’s subsidies for solar power may be too high, Chancellor Angela Merkel said. While solar receives half of the German government’s aid for alternative energy, it accounts for only 2 percent of the 17 percent of electricity generated from renewable sources, Merkel told a conference of her Christian Democratic Union party in Berlin today. “We do have to think about whether we can keep this up,” she said.’’

A major change to German and Italian FiTs could radically reshape global demand for solar modules and hasten the transition to competitive markets. Despite the challenges this presents for manufacturers, I would argue this is exactly what the renewable energy market needs if it wants to truly become mainstream.

There’s a good reason ...

http://www.greatenergychallengeblog.com/blog/2011/06/03/why-policy-changes-in-germany-and-italy-are-good-for-the-future-of-renewable-energy/