The Suryashtakam is an eight-verse Octet, extolling Surya or the Sun God. While Indians chant the mantra, Germans are building solar panels on their rooftops, dominating the world stage as the leader in solar technology and, accounting for half the world's megawattage of solar power. Germany sees solar energy as the energy source of the future. After all, the amount of solar energy reaching the earth is around 10,000 times more than the amount of energy we use.

Govt backing

In a country such as Germany, which is not exactly known for its sunshine, every roof has become a potential mini-power plant and can not only produce electricity but also make money. Even agricultural fields are transforming rapidly, despite grey, gloomy weather and dribbles of winter sunshine. Thanks to the generous subsidy programme, land that used to produce sugar beet, potatoes and corn has now been replaced with bluish glistening modules mounted on automated stands and slanted toward the sun.

It is the government's generosity towards solar power that has encouraged thousands of ordinary Germans to invest in solar panels on their rooftops. German rooftops today account for over 1.8 GW of solar that was installed last year. German solar power has been rapidly expanding, because it has generous ‘Feed-in Tariffs' that pay solar owners to make power for the grid. What was once a niche industry has turned into a sector of global magnitude. The solar industry is responsible for almost 80,000 jobs in Germany.

Feed-in tariffs

Around the world, many look to Germany as the birthplace of feed-in tariffs. Germany got many aspects of the FITs scheme right. That is why India could take the best learning from Germany.

German banks have set aside over 100 billion euros in support of green power and smart grid projects — for just the next five years. The overall effect has been to harness individual German angst over pollution and global warming into a national movement to build renewable power. It is estimated that the total subsidy payout over the last 10 years has been over ¤60 billion. What also seems clear in Germany is that the old grid network model which saw electrons flow only one way from colossal, expensive, and often hazardous power plants, is out.

This is now being reinstated by an interactive, collaborative electron flow which reacts in milli-seconds to user demand and supply preferences.

Safe investment

Thanks to the Feed-In Tariff law enacted in 2000, operators of solar systems collect a fixed payment of (now) 39 euro cents for each kilowatt hour that they feed into the grid, at prices guaranteed for 20 years. By comparison, the producer price of electricity is approximately 5 euro cents per kilowatt hour. The rate paid to solar power producers, in the system known as net metering, will be reduced each year in a sliding scale. This is prompting a rush among homeowners to have solar panels installed on their roofs. Many installers have their order books sold out for the next 24 months.

Let me explain. A 2kWh system costs around ¤10000-12,000. This system typically gives a return of ¤700-800 per year and will recover the cost of installation in 12-14 years. This represents a return on investment of over 7 per cent. For many Germans, feed-in tariff is a safer investment than putting your money in the stock market.

The subsidies have led to fantastic growth in the photovoltaic market. There are now more than 3,00,000 photovoltaic systems in Germany — the energy law had planned for 1,00,000. Spread out across the country, they are owned by legions of homeowners, farmers and small businesses who are capitalising on the government-backed march into renewable energy.

The feed-in tariff has been vital in developing Germany into the world's leading and most successful solar energy producer. Currently, Germany has an installed PV capacity of 9 GW and the government targets achieving 66 GW by 2030.

The results are visible across the country today. Germany has more than 12 million sq.m of roofs and fields covered in solar panels.

The Chancellor, Ms Angela Merkel's vision of completing Germany's conversion to provide 25 per cent of the nation's electricity from solar by the year 2050 is bold, ambitious but well on its way to becoming a reality.

(The author is a former Europe Director, CII and lives in Cologne, Germany.)

(This article was published on March 6, 2012)
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