Falling prices and falling subsidies are a clear sign of success. These trends show us that these programs are working exactly as planned.
Opponents of renewable energy can't make up their mind. One moment they claim the cost of green energy subsidies programs is too high, the next they claim that lowering these subsidies is somehow a sign of failure.
In fact, falling prices and falling subsidies are a clear sign of success. These trends show us that these programs are working exactly as planned.
It's arguable that Germany's renewable policy in particular has far exceeded early expectations. 12 years after their program first started, Germany now uses renewable energy for more than 20%
of its electricity and the sector now employs over 370,000
people. Public support hasn't wavered either. Recent polling shows Germans are more than happy
to pay for green power. Germany has lowered its rates repeatedly since its program started in 2000. The program has been such a success that the costs of installing solar are now 3 times lower than they were when the program started.
Globally, renewable energy isn't showing signs of slowing down either. Driven by solar, total renewable energy investment worldwide increased by 5%
in 2011, in spite of a weak global economy.
According to Michael Liebreich
, chief executive of Bloomberg New Energy Finance, "the performance of solar is even more remarkable when you consider that the price of photovoltaic (PV) modules fell by close to 50% during 2011, and now stands 75% lower than three years ago, in mid-2008. The cost of PV technology has fallen, but the volume of PV sold has increased by a much greater factor as it approached competitiveness with other sources of power."
With the cost of solar panels falling, it only makes sense to reduce price subsidies along with them.
The goal of renewable energy programs like Germany's EEG or Ontario's FIT (Feed-In Tariff) program has always been to level the playing fuel with older, dirtier forms of generation like coal. In order to prevent further catastrophic global warming, we have needed to make switching to renewable energy a top priority. Places like Germany, Spain, and Ontario created their programs to get this transition started. The long-term plan has always been for subsidies to be ramped down until they are no longer needed.
Over the past few years, the price of the parts that are used to make solar panels have dropped rapidly as production ramped up worldwide, particularly in China. This means that the cost of putting up solar panels has dropped significantly. In turn, places with solar programs have decided to reduce their subsidies accordingly. This is a sign that solar power is increasingly cost competitive with traditional sources of power. Over time, the industry can rely less and less on these programs, somewhat like taking the training wheels off a bike.
Ontario will likely make similar reductions
to its solar rates in its FIT program in the coming weeks as part of its planned review of the program. Industry and environmental groups are among those asking for these price decreases, because lower prices make renewable energy even easier to build.
The fact remains that even with lowered rates, Germany, Spain and Ontario will continue to install large amounts of new solar panels in coming years, at a lower cost for everyone. Lower prices are good for our climate and good for our pocketbook. We needn't listen to the doomsayers; renewable energy is win win, and it's here to stay.