A Solar Revolution May Be Coming to Your Town

By Mariah Blake, Washington Monthly. Posted April 11, 2009.

But not every nation had the luxury of cheap, abundant fossil fuels. Even in the 1980s and ’90s, when the United States was flush with energy, Germany was struggling to meet its demand -- a by-product of its scant oil and gas reserves and the groundswell of opposition to nuclear power after the Chernobyl meltdown. One of the solutions the country settled on was dusting off the feed-in tariff model. The original German bill, passed in 1991, only created an incentive for wind and hydropower. Still, it doubled the share of renewable electricity the country produced, from 3 to 6 percent, over the next nine years. In 2000, the incentive was extended to all renewable energy sources. The pricing structure was also overhauled so rates were tied to the cost of production and varied by energy source -- a key point of distinction from PURPA. The aim of the policy was to cultivate a broad enough portfolio of renewable options that Germany could one day replace fossil fuels entirely, and do so outside conventional energy markets. "Big power companies have too many vested interests against renewable energy," explains Hermann Scheer, a member of the German parliament, who championed the policy. "They will never be the driving forces behind its development."

The policy has allowed Germany not only to meet but to exceed its renewable energy goals. Initially, the aim was to get 12 percent of its electricity from renewable sources by 2010. But it passed that milestone three years early, and has since reached the 15 percent mark -- the most rapid growth seen in any country. By mid-century, Germany aims to increase that share to 50 percent. Already, the nation, which is about as sunny as Juneau, Alaska, is home to almost half the world’s solar generating capacity, and churns out more solar power than any country except Japan. Although it is half the size of Texas, and far less windy, it is also vying with the United States for the number one spot when it comes to generating capacity for wind power.

The driving forces behind this boom are local communities and small entrepreneurs. If you travel the country top to bottom, you’ll see the signs of this everywhere, from the drizzly port of Hamburg, where wind turbines are tucked between stacks of rusty shipping containers, to villages in the Black Forest, where farmers are ripping out ancient waterwheels and replacing them with modern turbines. In Freiburg, a walled medieval city full of cobbled streets and Gothic spires, there are roof-mounted photovoltaic panels everywhere, from churches and schools to train stations and factories, even the local soccer stadium. Some residents have also found more creative ways to harvest energy. Among them is local architect Rolf Disch: his home, which looks like a squat upside-down rocket, has a billboard-sized solar array on the roof and wrap-around balconies with liquid-filled railings that double as solar heat collectors. It also rotates to follow the sun. All told, the building generates five times more electricity than it uses. Disch has also designed solar gas stations and a suburban housing development, where the homes act like mini power stations. But he is careful to note that his clients are not hippies or eco-rebels. "These are doctors, teachers, engineers," he told me when I visited Freiburg last June. "In other words, ordinary people."

What inspires ordinary Germans to invest in renewable energy? Part of the answer is that it’s about as safe as government bonds -- and brings a better return. Under the German system, renewable energy producers are given long-term, fixed-rate contracts, designed to deliver a profit of 7 to 9 percent. This makes green energy a secure bet for both investors and banks.

The German system contains another ingenious feature: every year, the rate paid for new contracts falls, so a company that installs a large rooftop solar array this year will lock in a rate that is nearly 20 percent higher than one that waits until 2011. This has two salutary effects. First, it creates an incentive for would-be entrepreneurs to get in the game as soon as possible, thereby spurring a rush of investment (which helps explain why Germany was able to meet its renewable energy targets three years early). Second, it forces the green energy sector to innovate. If they want to stay in business and hold on to their margins, manufacturers have no choice but to continually seek out new efficiencies.

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Mariah Blake is an editor of the Washington Monthly. This story is part of a "Big Ideas" series published in partnership with the New America Foundation.

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