Stimulating sustainability: Trends in government policy

Anne L. Fischer, Senior Editor, anne.fischer@laurin.com

Germany previously was known for its automobile industry. Now it is solar. Not bad for a country with more clouds than sun.

The country achieved its title as the world leader in the solar industry largely through its ambitious feed-in tariffs. When the new government took over last fall, however, there were concerns that feed-in tariffs would be slashed by 30 percent. That did not happen. Tariffs already were set to drop between 9 and 11 percent this year, so the new government’s reduction of 15 percent is not hard to swallow.

The results of Germany’s gross feed-in tariffs are many: jobs, a strong solar industry and an increase in energy generated by the sun.

Not all feed-in tariff programs remain robust, however. Spain’s solar industry suffered a crash last year, with many blaming it on an overambitious tariff program. There was so much interest in solar installations – 3 GW installed in 18 months – that the government committed payments of more than $26 billion, far more than it had bargained for. Unlike Germany, there was no planned reduction in tariffs if targets were met or exceeded.

In response to the crash, the Spanish government upped its target and reduced tariffs, but a backlash rippled throughout the industry with excess supply, price cuts, job losses and more. In the end, much was learned. Spain has a revised tariff program, and rooftop installations remain strong.

In the US, the long-term extension of the federal Investment Tax Credit (ITC), coupled with new rules that allow utilities to take advantage of the tax credits, has spurred growth. And individual states now have their own programs and incentives, most notably California, with its 10-year $3 billion Go Solar California Campaign.

As part of the ITC program, utilities offer rebates and performance incentives. According to the Interstate Renewable Energy Council, the capacity of photovoltaic installations completed in 2008 grew by 63 percent over 2007, with California leading the way with a 95 percent increase.

Although China was once the world’s largest producer of photovoltaic modules, it exported more than it kept for its own energy needs (see “Forecast: partial sun in China,” Photonics Spectra, June 2009, page 31). The country now has set an ambitious goal for installed solar capacity: 2 W by 2011 and 20 GW by 2020.

The Indian government also has made the move, announcing the National Action Plan on Climate Change, which calls for 20 GW of electrical power to be generated by solar by 2020 (see “Solar in India,” Photonics Spectra, August 2009, page 31). Not surprisingly, India also recently announced a feed-in tariff program.

There is no denying that government incentives, done right, boost investment in green and clean technologies.