News and analysis about energy in California with an eye toward renewables.

Why California is Way Behind Germany In Solar Development

An increasingly typical roof in Germany | Photo: Maryellen McFadden/Flickr/Creative Commons License

By all rights, California ought to be the solar capital of the world. We've got the sun, the rooftop space, the long history of environmental awareness, and the appetite for clean power. And yet when the state reached a record 1 gigawatt of solar power coming into the grid this month, that long-anticipated benchmark was woefully smaller than the amount of solar power now online in Germany -- about 30 times California's capacity, and four fifths of it on rooftops. Why does the sunny state of California lag so far behind Germany in the solar power arena?

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Germany is smaller than California, has about as much sun as Seattle, and in general seems less well-suited to rooftop solar than the Golden State. And yet Germans have gone mad for solar. The country had 29,000 megawatts of photovoltaic generating capacity installed by the end of July, 2,000 megawatts of which came online in June alone. That's about 350 watts of PV capacity per German.

California, on the other hand, has less than 1,300 megawatts of solar projects of any kind installed as of this week, which works out to about 34 watts per Californian. So even correcting for the fact that California has about half Germany's population, we've still got less than one tenth the solar per capita of Germany, and that's being liberal and letting Californians count their concentrating solar thermal toward the total.

Part of the reason is that Germany has made drastic cuts in the red tape needed to install a solar project. As John Farrell of the Institute for Local Self-Reliance reported this year, Americans pay more than twice what Germans pay for a typical small solar installation. Electrical equipment is slightly cheaper in Germany, and the profit margin slightly narrower, but the whopping majority of the higher cost in the U.S. comes from steep supply chain markups and permitting costs:

gchart-US-vs-German-solar-cost-2012.png

That smaller German profit margin per installation is more than made up for by the speed of installation. Farrell describes a typical German installation of a 4.6 kilowatt solar array on a private home as taking eight days from the initial phone call. The equivalent period in the U.S. can be months or even years.

The biggest difference between the German and California solar scenes, though, is in regard to incentives. Germany's feed-in tariff is widely credited with the astonishing growth in that country's rooftop solar capacity. A homeowner with the above-mentioned 4.6 kilowatt PV array on her roof this spring could expect to sell each kllowatt hour of power to the grid at a rate of about 25 ct. -- a quarter of a Euro, about $.30 U.S. For each hour her setup was producing power, she could expect an income of up to $1.40 or so, not counting the avoided costs of buying power from the grid.

That's a considerable incentive right there. Not counting savings on your electric bill, if California had a feed-in tariff comparable to Germany's, a 4.6-kilowatt PV setup could bring in $3,000-5,000 per year. It doesn't take many years of that kind of payback to make shelling out $20K for a solar system seem like a no-brainer.

And of course, the question arises: where does the money come from to fund the feed-in tariff? In Germany, the money comes from a ratepayer surcharge, a policy that is not without its detractors. There's been some criticism of Germany's feed-in tariff as a subsidy by the poor to those who can afford solar installations. And indeed the cost of electrical power has gone up somewhat in Germany since the advent of the feed-in tariff. Though only about a third of the increase is due to the tariff, and the rest due to decommissioning nuclear power plants and other expensive transition policies, it's still hard to argue that the feed-in tariff isn't a significant expense.

It's really a question of what kinds of power infrastructure we decide to spend our money on. Coal and oil power benefit from massive subsidies that just happen to be earlier in the supply chain, so that they don't show up as a discrete line item in your power bill: instead, you get billed for those subsidies on April 15 by the IRS. Generating remote renewable power has its ratepayer costs as well: the $1.9 billion Sunrise Powerlink, ostensibly built to channel Imperial County's renewable energy to San Diego, will be paid for by California ratepayers.

In the meantime, the example of Germany is worth keeping in mind when you hear utilities laud their cooperation with California's pilot feed-in tariff programs (while fighting their expansion in Sacramento). In California, we're talking about 750 megawatts here, 190 megawatts there of feed-in tariff programs, and critics talk about the cost. As long as we trade in such penny-ante programs, Germany is far outracing us in solar development, even as it rethinks and retools its own programs, expensive precisely because they work.

Fossil-fuel-derived energy is going to get more expensive, as is long-distance transmission and other aspects of the power grid business as usual. The inevitable and increasing disruptions to our lives as the grid fails are expensive too. Using feed-in tariffs to promote a shift to renewables is a case where -- like the guy said in the old transmission repair television ads -- California can pay now, or pay later.

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About the Author

Chris Clarke is a natural history writer and environmental journalist currently at work on a book about the Joshua tree. He lives in Joshua Tree.
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Great article. I would note--since it makes the contrast between California and Germany even greater, to the former's rooftop-solar shame--that I was told by solar installers here in Seattle that Germany gets 15% less sun than we do!

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Excellent points, and I love the graphic.

Want to remind people of another important point about German style FITS, which is that the "subsidized" feed in tariff cash flows straight into the pockets of regular families and small businesses right in the community, which means a net economic GAIN for communities, which is the opposite of subsidies going to Chevron Solar and BP Wind, which take money out of communities, then take more money out, then take more money out, ad infinitum. Talk about ripping off low income people!

FITs are an incredible economic policy, as well as an incredible environmental policy, and have also proven to REDUCE the price of all power, including fossil fueled power in Germany at the same time they are reducing overall energy bills because the spot market for peaker power has always had the highest cost, and it has been all but eliminated, much to the utilities' disappointment, since it was a place they could really gouge ratepayers. Due to the merit-order effect, even fairly-subsidized FITs like Germany's pay for themselves several times over, so the whole argument that the poor are subsidizing the rich is made by people who either don't understand the numbers or who have a Big Energy agenda.

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Good points! According to PVinsights, solar panel prices are much less than USD 1.0 per watt now. However, solar system investors can not enjoy the low solar component prices.

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Great article...and, lest the reader think that CA is not responding to the permitting challenges, let me assure everyone that local and state government is attacking the permitting problems on a couple of different fronts. First of all, the California County Planning Directors Association (CCPDA) coordinated the development of a statewide Model Solar Energy Facilities Permit Streamlinig Guide and Model Ordinance. This information is being used by cities and counties in CA to streamline their land use policies and ordinances for the different Tiers of solar...from rooftop to large scale. These documents are available at http://www.ccpda.org/solar . On the Building Permit side of the equation, the Governor's Office of Planning and Research (OPR) coordinated a project with Building Officials and Industry to streamline the Building Permit process. The outcome of that effort is the California Solar Permitting Guidebook, which is also available at http://www.ccpda.org/solar . Finally, there are many cities and counties in CA that have very streamlined permitting processes for rooftop solar. For example, in Butte County, we take applications for rooftop solar online and the permit is issued immediately...I believe this is the model for cities and counties in CA. Our goal is to create the opportunity for a solar revolution in CA and to 'be the best in the world' at solar...we are on the path to getting there.