Germany's Experience: How Effective Are Renewables, Really?

The Principle

In solar cells, the energy of the sun's rays are transformed directly into electricity. The advantage is that even small solar cells can generate power on a localized level. Every roof is a potential mini-power plant and can produce electricity even in a country like Germany, which is not exactly known for its sunshine. Larger facilities, however, only make sense in sunnier climates, for example in deserts where there is plenty of space for the panels to be installed.

The Market

Solar power plays a much smaller role in Germany energy mix than wind power does. Its share of the country's energy needs is lower than 1 percent and the energy-conversion efficiency of mass-produced solar panels is between 16 and 20 percent.

Nevertheless, Germans spend a lot of money on solar power. The installation of photovoltaic facilities generated a turnover of €6.2 billion in 2008 against just €2.3 billion spent on new -- and much more efficient -- wind power facilities.

The difference also makes itself noticeable in the price per kilowatt hour of power generated. The EEG mandates that power generated by solar panels be purchased at 43 cents per kilowatt hour, against just 9 cents for wind power. "From an economic standpoint, photovoltaic is much less attractive," says Bardt.

But generous subsidies have resulted in marked growth in the photovoltaic market. From 2001 to 2008, the production of solar power has risen from 76 gigawatt-hours to 4,300 gigawatt-hours. Solar panel manufacturers in Germany, however, have profited relatively little from the growth, with producers in China and elsewhere flooding the market.

The Potential

Solar power has huge potential. The sun, after all, is free, and there are plenty of roofs to put panels on. The problem is the costs. The facilities already installed will require an additional €27 billion for maintenance, and each year, new panels are installed.

There is plenty of silicon available, the resource necessary in the production of solar panels, but production is difficult. That means depending on the type of panel and the amount of sun in the region where it is installed, it takes between four and nine years before it produces as much energy as was used in making it. Subsidies, on the other hand, mean that the facilities have generally paid for themselves after just four years. The life span of a solar cell is between 30 and 40 years.

The situation, of course, would be dramatically improved if the solar modules could be produced more cheaply. And recent years have shown that the process is underway. Just last year, prices fell by 25 percent, a trend driven primarily by Chinese manufacturers.

Should solar power one day become as cheap as conventional electricity, it would be nothing short of a revolution. Consumers would no longer have any reason not to buy solar panels and demand would explode -- meaning that solar power would begin to play a substantial role on the energy market. But most experts believe that it will be decades before such a process takes hold.