Germany Shows Government Role is Key to Thriving Solar Industry

By Henry Chu of the Los Angeles Times on December 12, 2009

Home to some of the world's largest solar parks and dozens of companies that manufacture, distribute and install photovoltaic panels, Germany proves you don't have to be blessed with Hawaii's weather to grow a thriving solar industry.

What you do need, energy experts say, is a national government willing to foster the development of renewable energy. Leaving it purely to market forces -- or piecemeal local incentives, as in the U.S. -- doesn't work as well.

In Germany's case, a renewable-energy law passed in 2000 offered solar-power proponents the foothold they were looking for. The law compels utility companies to buy energy from solar plants at higher rates and to feed the energy into their grids, joining the general flow of electricity around the country. The added cost is then passed along to consumers.

The so-called feed-in tariff virtually guarantees solar plants financial returns of as much as 15% per year -- appealing in normal times, eye-popping during a global recession that has hammered German industry. The result has been a rush of start-up companies and the creation of thousands of jobs in a sector that now employs about 50,000 people.

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