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?
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:
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.