After I posted my wonderment at the decision of the German Economy Minister to call for severe cuts in the country’s solar subsidies, reader Brian Ballek offered this insight into the German politics that might explain a few things:
Two bits of background may help put Minister Roesler’s statements in perspective. Firstly the Ministry of Economy has been openly partisan against renewables for quite some time. The renewable energy industry must regularly take them to task for blatantly miscontruing fact and then misinforming the public. A characteristic example is the insistence of the economic ministry on publicizing the COSTS of subsidies without weighing against them the BENEFITS brought about by the “merit order effect”.
The second thing worth noting is that Germany’s subsidies, while effective and IMHO excellent public policy, do not flow evenly from state to state. German states that produce a lot of renewable power get a net inflow of capital into their economies. States like Bavaria that do so with lots of solar power, get LARGE net inflows of capital because subsidies for solar are (still) so high compared to onshore wind power. And then there is Nordrhein Westphalia — coal country — which uses lots of electricity (and pays the RE surcharge that finances the subsidy program) but produces next to ZERO kWh with renewable sources. So they are stuck with HUGE capital OUTFLOWS. This infuriates them and their powerful coal lobbyists, who are well represented at the Ministry of the Economy.
NOTE members of German Parliament can and do perfectly legally sit on the boards of advisors of major corporations. About a third of them serve on the boards of energy companies including coal producers.
So when you see statements like this from the Ministry of the Economy, just realize that it isn’t about long term public policy and the greatest good for the greatest number; it’s about short-term economics.
Thanks to Brian for his insights. Germany’s decision makes more sense to me now. I still think it would be a mistake to cut the subsidies, of course.
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