Across Europe, governments are slashing public spending to cut their deficits, and green-energy subsidies are a target, too, even as solar power accelerates in the United States, helped by sympathetic federal policies and an increase in subsidies that came as part of the federal stimulus program.
German policymakers indicated last week that they planned to cut once-generous subsidies as much as 29 percent by the end of the month, on top of a 15 percent cut in January, although some details were still being negotiated after protests from the solar industry. Britain and Italy have made similar moves, and in January, Spain abandoned its subsidies altogether, prompting outrage from the solar industry.
Just months ago, a solar firm planting a field of solar panels atop one of Hanover’s many sprawling warehouses would have been sure to turn a profit. Now, one solar developer who plans to do that says he’ll be lucky to break even now that the subsidies are drying up.
Advocates say that in sunny regions, solar energy is within several years of becoming cost-competitive with fossil-fuel power — if solar companies can stay in business in the meantime. Several companies have already declared bankruptcy. Others say they’ll give up on Europe and focus on developing countries, where poor infrastructure makes solar panels that work off the grid a cost-effective competitor to diesel generators.
While many concede that the subsidies have become overly generous at a time when solar panels have dropped dramatically in price, they insist that governments are reneging on their pledges to go green and argue that the rollbacks are happening too abruptly. Some question whether countries will still be able to boost renewable energy’s share of the power supply in 2020 to their goals of 20 percent in Britain and 35 percent in Germany.
“This whole development has been made possible by Germany and a few other European countries,” said Richard Schlicht, the head of Geosol Germany, the company that is building the project on top of the warehouse in Hanover. Solar power “is becoming cheap only through mass production. And this has happened only through creating the demand. To stop it now makes no sense.”
The warehouse in Hanover — just across a river from a massive coal-fired power plant — will hold parts for the Volkswagen utility vans that are manufactured in a nearby factory. The solar panels won’t put a dent in the factory’s electricity needs, but on a sunny day they will generate enough for most of the 120-house development where Volkswagen workers live next door.
‘A very easy business model’
In December alone, Germany installed nearly as much solar capacity as the United States has in total, fueled by the subsidies that solar companies admit sometimes made it possible not to worry whether there was sufficient demand in a given area for the power they would produce. Germany’s hardscrabble East turned old Communist-era military bases into power plants. Some solar companies became experts at digging up unexploded munitions to make way for fields of photovoltaic panels.