Solar energy heads for bright future in chilly Germany

By Mike Swanson Jun 30, 2006, 4:00 GMT

Berlin - With the high monetary and environmental cost of fossil fuels, Germans are investing in the sun for alternative energy, thanks to generous government subsidies that pay people for solar power they feed into the national grid.

Although hardly ideal with its northern location and less than generous sunlight, Germany is Europe's biggest producer of solar energy and home to the world's largest solar plant.

Solar energy installations are sprouting rapidly and everywhere, heating water and augmenting systems in 200,000 private households and community facilities such as public swimming pools.

The latest plant, a 20-million-euro (28-million-dollar) installation in the small eastern town of Borna, was hooked into the grid May 24, with a capacity of 3.4 megawatts, sufficient to provide electricity for 1,800 homes.

Close by in the sleepy village of Espenhain is the world's biggest solar energy plant - a field of 33,500 panels tilted towards the sun at 30 degrees, the best angle for collecting the sun's rays.

This plant also meets the electricity demand of 1,800 households and saves about 3,700 tons annually in carbon dioxide emissions, according to a spokesperson for its Berlin-based operator, Geosol.

Germany's pioneering Renewable Energy Act, passed in 2000 and amended in April 2004, decrees that any electricity producer - including private individuals - receive payment for what they feed into the national grid.

In the case of the Borna plant, operators are guaranteed 43 eurocents for every kilowatt-hour (kWh) until 2025. By contrast, consumers in the capital of Berlin pay between 16.5 and 19 cents per kWh for conventional electricity, which comes mainly from oil, gas and nuclear power.

Such generosity led Andy Karsner, a US official responsible for renewable energy, to describe solar power as 'a luxury good for affluent nations paying an environmental premium.'

In fact, an average household installing solar panels on its roof could expect an annual return of 5.6 per cent on an initial investment of 27,500 euros, according to the daily newspaper Frankfurter Allgemeine Sonntagszeitung.

German firms have been quick to cash in on the boom in the sun's unlimited, pollutant-free power source.

Bonn-based Solarworld, one of the country's leading manufacturers of solar cells, recently became the biggest player in the US solar energy market with its purchase of Shell's loss-making US silicon operations.

Silicon is a key component in solar cells and photovoltaic modules which harness sunlight and convert it into electricity.

Founded seven years ago, Solarworld is the world's third largest solar company after Japan's Hitachi and oil-multi BP, and was a top performer on the German stock market in 2005.

Three other solar energy firms made their stock debut last year, including Q-Cells AG, where an initial public offering was oversubscribed 40 times, a company spokesman said.

Most of the new companies are based in the economically-depressed region of eastern Germany, bringing a welcome infusion of cash and jobs. Across the nation some 40,000 people are employed in the solar industry, according to the German Association of Solar Energy BSW.

That figure could grow to 200,000 people in 20 years, when solar's role is expected to grow five-fold to fulfill 5 per cent of Germany's energy needs, according to BSW.

'Solar firms' order books are full. More and more citizens are coming to realize that heating costs can be reduced with the help of solar energy,' says BSW managing director Carsten Koernig.

Professor Joachim Luther, head of the prestigious Fraunhofer Institute for Solar Energy Systems in Freiburg, says that solar industry 'today is at a stage in its development where the automobile industry was around 1920.'

In fact, the cost of one kWh of solar power could drop to 23 cents by 2020, while private customers could have to pay 28 cents per kWh for conventional energy, according to a study from the Friedrich Ebert Foundation.

'Renewable sources of energy,' says Professor Luther, 'will in the long term form the basis for a sustainable global energy supply.'