As Subsidies Wane, Market Forces Drive the Growth of Renewables

This article discusses how renewable energy is moving forward, despite the fact that subsidies are being phased out.

Competitive bidding on new power installations is becoming increasingly common worldwide, with solar and wind energy now reaching parity with fossil fuels in many countries. But the rise of renewables auctions carries risks, including the elimination of smaller green energy producers.

Solar panels cover the sloping roofs of the police headquarters in Mainz, a picturesque city on the Rhine whose most famous inhabitant was Gutenberg, the inventor of the printing press. The station’s rooftop photovoltaic system was installed more than 10 years ago and is run by UrStrom eG, one of the hundreds of citizens’ cooperatives that have driven Germany’s renewable energy revolution. “It was our first project,” says UrStrom’s Klaus Grieger, a retired software developer.

The introduction of government incentives such as feed-in tariffs in the 1990s allowed citizen cooperatives like UrStrom to invest in the wind turbines and small-scale solar installations that now dot the wine-growing region around Mainz. Under the tariff policy, renewable energy producers could sell their electricity at above-market prices guaranteed for 20 years —a subsidy scheme that jump-started renewable power in the country and was copied across Europe. The share of renewables in Germany’s electricity consumption rose from less than 5 percent in 1990 to almost 37 percent in 2017, and much of that energy was citizen-owned or operated.

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