Solar Energy – a Growth Engine for Germany

Solar energy is growing at a dynamic pace, even despite the economic crisis.  According to information released by the German Solar Industry Association (BSW), new output of around 1500 MWp¹⁾ was installed in Germany in 2008. New production and research facilities for solar technology are being built all over the country. Last year, the investments that suppliers and the industry made toward research and development accounted for approximately 190 million euros²⁾. Here, companies are investing at a particularly high level in regions with poor infrastructure in the east of the country.

How can this development be explained? In principle, two main growth drivers are responsible for the continuing surge. First, renewable energy has received a tremendous boost from the current climate debate because it represents an attractive alternative to conventional energy sources. Protecting both the environment and the climate represents a powerful argument in persuading Germans to switch over to renewable energy sources. According to recent surveys by the Emnid and Allensbach research institutes, solar power is an extremely popular source of energy, compared with the other options, and offers an unbeatable alternative to escalating oil, gas and coal prices. Allensbach surveys indicate that over 90 percent of the people asked support intensifying the use of solar energy³⁾. The second driver is Germany’s Renewable Energy Act (EEG) which has had the positive effect of leveling the playing field for suppliers of renewable energy. It requires operators of electrical power networks to connect up with systems that provide renewable energy, and subsidize this environmentally friendly electricity for a fixed period at rates that have been predetermined through legislation. For electricity from photovoltaic plants, this period is 20 years, in addition to the year in which the plant went into operation. As a result, producers of solar electricity already have buyers for the power they generate and are thus able to plan over the long term.

Germany’s key role in the global market

Solar technologies made in Germany are in great demand on the global market. The market share of German companies is around 20 percent on average with respect to the value creation phases. German photovoltaics manufacturers are increasingly benefiting from the investments that they have already made in research, and are using their good innovative and technological position to their advantage in international markets. The BSW reports that both the export quota and export turnover rose significantly between 2002 and 2008. Experts are expecting quota and revenues to continue to rise until 2010 and say it is quite likely that German solar companies will be able to maintain a global market share of around one-fifth in the years to come, despite growing competition from the Far East⁴⁾. German solar cell manufacturers, in particular, are benefiting from the increasingly dynamic market. According to BSW figures, they have grown twice as fast as their strong international competitors over the last two years and have pushed their share of the global market from around seven percent in 2000 to about twenty-five percent of the total capacity installed in 2005.

In addition to the U.S. and Japan, southern European countries such as Spain, Italy, France and Greece, are increasingly following a strategy of expanding utilization of their solar energy capacities and are already starting to show dynamic growth rates.

Renewable energy sources create jobs

According to the German Association of Renewable Energy Sources (BEE), the number of job offerings in the area of renewable energy continued to increase during the first quarter of 2009, in comparison with previous years⁵⁾. Compared with 2008, vacant positions increased by roughly one-quarter. Considering the current condition of the global economy and the decline in the number of jobs in Germany since the beginning of 2009, it is quite astounding that solar companies have been able to continue to add personnel. As this shows, the field of solar energy is leading the way when it comes to creating new jobs. According to data released by the BMU, the number of employees who work for the solar industry doubled over a period of only two years⁶⁾. The German Solar Industry Association counted approximately 50,000 employees already in 2006. Thus far, some 5,000 to 10,000 new jobs were added each year. If demand remains high and the strong export quotas continue, the Federal Ministry for the Environment has indicated that more than 200,000 additional jobs could be created by the year 2020. Here, too, photovoltaic makes up the lion’s share. The BMU projects that the number of employees, approximately 30,000 in 2006, will more than triple to over 100,000 by the year 2020⁷⁾.

Industry and consumers are demanding planning reliability

Although it is still dependent on state subsidy measures, experts say the solar sector will be capable of growing independently, even without support for the market, in the foreseeable future. Given the rising prices for oil and the falling costs for renewable energy, the European Solar Industry Association (EPIA) and Greenpeace International believe this to be achievable in the next 10 to 15 years⁸⁾. Until then, however, only reliable legal provisions, similar to those stipulated in the Renewable Energy Act (EEG), can bolster the German solar industry in the face of strong international competition.

Sources: 1), 2), BSW, statistics, 03/2009; 3) Allensbach study on energy supply and energy policy 11/2003; 4) BSW, statistics, 01/2008; 5) BEE, monitoring of the renewable energy sources job market 2009; 6) 7) German Ministry for the Environment and Nuclear Safety (BMU), report on the EEG, 07/2007, BSW, Export, 2007; 8) Greenpeace/EPIA, Solar Generation III, 12/2006.