Germany and Solar Subsidies

Government support for solar is seeing one of its standouts slide backwards, as Germany is cutting back on solar subsidies. This is obviously extremely disappointing, and while this isn’t entirely new news, the human end economic cost of the goverment’s change in policy is becoming much more apparent. Solar installers are having to deal with cuts from 50-98% (98%!) on their orders as a result of the change in the pricing structure.

That being said, Germany did have an extremely generous policy, and there was great concern that Germany’s program was having such success in adoption that funding the program might actually destabalize the country’s finances. Certainly, solar isn’t worth plunging a country into an economic quagmire.

But if the problem was an overly generous policy, and now cutting back on it is having a vicious backlash, then maybe the lesson here isn’t that subsidizing solar is a bad idea. Far more likely, it shows that governments should not underestimate the potential demand for solar, if they provide assistance in making it viable. There are a huge amount of individuals and corporations out there that understand the benefits of going solar that go well beyond economic efficiencies, and when subsidies make the adoption even more attractive a whole host of interested parties are going to go in for the new technology.

Governments looking to Germany shouldn’t see potential disaster, but rather understand that more modest, financially prudest subsidies can be introduced, without the need to radically re-adjust them and clip the wings of an emerging market later on in the process.