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Germany's Fine Failure

Feed-in tariffs grow green power but may fall victim to energy politics, German-style.

The village of Jühnde, near Göttingen, in the very center of Germany, became the nation's first "bio-energy" municipality in 2005, meaning it was the first town to run and heat its buildings without fossil fuels — the first town off the grid. It processes silage from local farms, as well as other byproducts like sunflowers or liquid manure, to get methane, which powers a small community power plant.

Since 2007, the town has produced twice as much electricity as it needs, meaning the energy isn't just cheap; it's become a way to earn money. The 200 or so members of Jühnde's energy co-op can sell electric current back to the German grid for an above-market price. What keeps the price high is something called a "feed-in tariff," which the German government introduced in 2000 to propel green-energy projects.

Feed-in tariffs are better known as incentives for solar energy because they've made Germany, of all places — with its melancholic weather and dribbles of winter sunshine — a world leader in solar power. Germans have installed enough panels to account for half the world's megawattage of solar power, while Americans, with their vast western deserts and subtropical southern sun, have installed the panels to produce around 10 percent.


The German feed-in tariff is simply a law that says a big energy firm has to pay an above-market rate for renewable energy, sometimes several times the market rate. Anyone with a windmill, a biomass plant or a solar panel can earn that rate for a fixed span of at least 20 years. The energy firm can then earn back the money by offering "green blends" of electricity to its customers at slightly higher rates. The overall effect has been to harness individual German angst over pollution and global warming into a national movement to build renewable power.

It sounds like a success story, and from a distance it is. The feed-in tariff — along with other initiatives, like a project at the University of Göttingen to get Jühnde off the grid in the first place — has driven plenty of scattered German innovation. But from a longer point of view, the country's ambitious green project is failing. Feed-in tariffs were introduced under Gerhard Schröder in 2000, when his government agreed to phase out nuclear power. The idea was to boost renewable energies by 2021, the deadline for Germany's last nuclear plant to go dark.

Now it's clear that renewables alone won't fill the gap left by a nuclear phase-out. The alternatives are coal and natural gas. Coal is dirty, and Vladimir Putin's pipeline politics in Ukraine and other former Soviet republics over the last few years have made natural gas a dicey option. Germans mistrust Russian gas more than they did in 2000 because the Kremlin has shown a nasty recent habit of trying to strong-arm foreign governments by threatening their winter gas supplies.


German Chancellor Angela Merkel has made noise about reversing the nuclear phase-out for precisely this reason. The debate hasn't made big headlines because her government has a binding agreement to keep the law sacrosanct — but the government dissolves this year, and nuclear power will be a campaign issue in September. She's running for re-election against her own vice chancellor, Frank-Walter Steinmeier, who not only champions the nuclear phase-out but looks nicely poised to lose.

So the whole reason for German feed-in tariffs could collapse after September. In that sense, the tariffs may fall short. But the slightly frantic German campaign to develop renewable energy has nevertheless posted impressive results. The country now pulls about 14 percent of its electricity supply from renewable sources. That's up from 9.8 percent in 2004 and compares enviably with just under 7 percent in the United States.

President Obama's first big push for green power this year was a bundle of old but hard-fought ideas, including tax credits to nudge Americans in the direction of solar panels on their roofs and Energy Star appliances in their kitchens. It belonged to the American Recovery Act, and the tax credits were considered an environmental triumph; but compared to Germany, the policies look anemic — as if the idea of harnessing market forces to drive innovation has yet to dawn on Washington lawmakers.

So it's been up to city and state governments in the U.S. to experiment with feed-in tariffs. California introduced one in 2008 —but without offering much above the going rate for brown power. A higher tariff in Gainesville, Fla., introduced earlier this year has (predictably) inspired a surge in solar-panel installation by homeowners who want some extra cash. "I'm seeing it with my own eyes," said Edward Regan, an assistant utilities manager in Gainesville, to The New York Times in March. "It's really having a good effect on our local economy, particularly in these hard times."

European Dispatch looks at innovation and policy solutions in the European Union. Contact Michael Scott Moore at:

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