On June 13, the German municipality of Lüchow-Dannenberg in Lower Saxony granted planning permission for a 10 MW utility solar PV plant on the site of a former sawmill. The first phase of 4.7 MW has just been completed. German company ib vogt (capitals fashionably omitted) built the thing in 15 days.
This is certainly a carefully planned stunt. The rest of the plant will be ready in September, which I take it to represent a more normal pace (3 months). Clearly vogt had every reason to expect the permit would be forthcoming, and drilled their own staff and their suppliers. Still, the feat is real; like the Liberty ship SS Robert E. Peary that Henry Kaiser built in November 1942 from keel laying to launch in 5 days instead of his typical 14, and the British Wellington bomber built by Vickers in 1943 to first flight in 24 hours. These are stunts that demonstrate a formidable everyday technical capability: and in causes of similar importance.
Solar PV panels are a global commodity and prices don’t vary much between countries. Where Germany stands out is its lower installation costs. The German Solar Industry Association’s index of installed cost of PV per watt, for systems up to 100kw, stands at €1.78 ($2.24).
ib vogt is a typical German Mittelstand company, except that the patriarch is a matriarch (Dagmar Vogt). It’s highly specialised - all they do is build PV plants; big enough to be stable (annual turnover €48m) but not too big to lose the cohesiveness of a family business. What is of wider interest is that vogt is much too small, unlike Kaiser and Vickers, to internalise many of the economies of scale we are looking at. The economies are spread throughout a thriving solar PV ecosystem: every stage in their German supply chain - pile drivers, mount and panel frame makers, module and inverter manufacturers - has built up a lot of experience and can evidently respond quickly and economically to a rush order.
There is no magic to any of this. It is surely being replicated today in China, California, Australia, and Italy; and it will be replicated in Mexico, India, South Africa, Florida and Brazil, as long as they do not frustrate it by protectionist regulation.
The current wave of bankruptcies of higher-cost solar panel manufacturers is not the sign of an industry in real trouble, just the invisible hand at work in a cyclical slowdown marking optimistically purchased assets to market and changing their managements. It won’t reduce overcapacity: the scenario of massive capacity reductions only makes sense under an international cartel, which doesn’t exist and would have to be organised in the worst possible conditions. I’m therefore much more inclined to believe the same forecaster’s prediction of a 40% cut in panel production costs by 2015, realistically benchmarked on the most efficient Chinese producers today. Prices will continue to drop fast, well below grid parity in many markets. The vagaries of subsidy policy - though not regulatory obstacles - will become widely irrelevant.
¡Viva la revolución!
BTW, whatever happened to hard-driving but decent and public-spirited American tycoons like Henry Kaiser?
“BTW, whatever happened to hard-driving but decent and public-spirited American tycoons like Henry Kaiser?”
Gordon Gekko ate them.
It was a rhetorical question.
Bill Gates, Warren Buffett, T Boone Pickens, Ted Turner … we might still have a few.
Corporate raider T. Boone Pickens? Seriously? Apart from investing in wind energy because he believes in peak oil, he looks to me quite like Gordon.
An interesting thing about solar is the raging desire of the current power oligopoly to use it to keep centralized power generation and so to keep their pricing power and institutions going. Thus, the heavy push to put in solar “farms” (in a more truthful setting they would be called, as they are, power generation plants) while trying to ignore the fact that there are hundreds of square miles of rooftops in, e.g., L.A. that could and should be generating power. But this would eviscerate the claimed need to build centralized plants in the Mojave-along with vast, unneeded transmission lines from Mojave plant to L.A. users.
If the L.A. Department of Water and Power could be forced to drop its opposition to effective implementation of rooftop solar, L.A. could move ahead on this.
Solar could be great. But, we do not need to protect the current (pun intended) oligopoly.
I did point out that regulatory barriers like this (and in Spain) are becoming more important than subsidies, which are going to fade away in the next few years. If you want to follow this, John Farrell runs a readable single-issue blog on community renewable energy.
There is a fairly serious problem in the US that might be better addressed in other countries: installing decentralized solar may be a win for consumers, but (taken by itself) it does absolutely nothing to reduce the transmission-infrastructure and peak-capacity costs of electric utility companies. In the worst-case scenario, utilities will even be paying retail to consumers whose solar installations occasionally feed power back to the grid.
Of course, there are any number of solutions (including taking advantage of utilities’ better, cheaper access to large amounts of capital to put solar installations on people’s roofs without requiring them to own those installations up front) to this problem, but that kind of thing would require the folks who currently have piles of capital to stop using it primarily to speculate in one another’s securities.
I remember doing an analysis back in 1980 or so showing that it would be cheaper for urban utilities to pay customers to mount solar panels on their roofs than to buy peaking generators. Still hasn’t happened.
As far as I can tell, generating the most power on site via home roof-top solar at the time of greatest demand for AC (hot and sunny weather) would indeed reduce need for transmission infrastructure. The powers generated ten feet from the air conditioner, no need for off site transmission. This would also reduce the peak-capacity requirements of the grid since peak demand is at the same time as peak solar generation.
Problem is more that the power oligopoly insists that all power must go into grid rather than just being used on site in order to protect the present system from homeowner competition.
It reduces the typical demand, but not the worst-case. So one those days that are hot and horribly humid and overcast, or the winter nights in areas where that’s the demand driver, the utility still has to provide the power. Or any time when the solar installation isn’t providing enough watts — none of the last-mile stuff can really be downsized at all, for example.
What is the difference in German and US planning/permission systems?
It seems that more and more, it’s the permissions system that makes US infrastructure projects so difficult. I’d love a look at a system that (seems, from a distance) to protect the environment without crippling infrastructure improvements.
Honestly, in Germany you have just as much (if not more) red tape to cut through. Germany is not a country renowned for a lack of regulations. And it can be very difficult to get a controversial infrastructure project off the ground in Germany. The infamous Stuttgart 21 project only barely survived (and still toppled the government of the state of Baden-Württemberg in the process). A couple of weeks ago, the citizens of Munich voted in a referendum against adding a third runway to their airport. And let’s not even start talking about nuclear waste deposal sites (an ongoing saga with already over three decades of history). The Yucca Mountain controversy pales in comparison.
Germany also has basically the same eminent domain rules (not surprisingly, since they’re based on the French “déclaration des droits de l’homme et du citoyen” which was inspired in this regard by the US constitution). Property can only be taken for public use and against just compensation. If anything, these principles see somewhat stricter enforcement in Germany. So, that’s not a decisive difference, either.
If there are differences that matter, I’d list the following two.
One, Germany has a parliamentary system with fewer veto points than the United States. That makes it easier for the federal government to implement policy ideas and to provide the incentives it wants. If the CDU/CSU decide that wind power is the wave of the future, there’s very little stopping them, other than getting kicked out of office in the next general election. Germany also has only 16 states instead of 50, which makes it much easier to create coherent nation-wide policy, even though the federalism reform that was enacted a few years ago moved more powers to the states. In short, the political system is encumbered by fewer veto points (and, obviously, fewer veto points also have their risks).
Second, in Germany, the average business tends to be much smaller (see James’s reference to ib vogt being a “Mittelstand company”). This is actually very typical for a Western European country, and while it has some downsides (such as not being able to exploit economies of scale as much), it also has benefits, such as less corporate bureaucracy and more flexibility. I suspect that a major economic reason why Germany has been investing in renewable energy sources rather than nuclear power is that the former is a much better fit for the typical German high-tech business model (not that Siemens appears to be crying over the billions that they’re making annually from renewable energy technologies).
Thank you; that’s interesting.
One difference that stands out to me is it seems you are saying that the federal government is only one veto point. That is very different-for the US, the courts, the administrative agencies, and the political portion of the federal government are independent veto points.
Compare the Stuttgart 21 project (which has faced major opposition, but construction is now in progress) to the Southeast High Speed Rail Corridor, which was started two years later, and for which the permitting process has not even started yet-the initial environmental review is still ongoing.
Just to clarify, there are more veto points than just the federal government in Germany in several cases.
For one, if a law infringes upon the constitution, it can be struck down or constrained in its use by the Federal Constitutional Court. Obviously, if a law is constitutional, that is not an actual veto point, but it happens often enough that a law isn’t. For example, right now, the EU fiscal pact is being challenged for infringing too much on the rights of the legislature [1].
Second, for laws that affect the states, it is generally necessary to have the consent of the Bundesrat (the upper chamber of the German parliament). Because state elections are spread out through the federal election cycle, it is not uncommon for a midterm swing to produce a different majority in the Bundesrat compared to the Bundestag, so that is another potential veto point (though the aforementioned federalism reform, by moving more powers to the states, also made fewer federal laws subject to Bundesrat consent).
In general, however, the biggest veto player for any German government (federal or state) is the electorate. Because there are relatively few veto points in the executive and legislative, governments tend to “own” the laws they pass and are being held accountable for them. As a result, laws that would result in an election loss and then be rolled back by a new government may not even see the light of day.
[1] That is actually a bit complicated, because the law establishing the fiscal pact was passed as a constitutional amendment, so an outsider may be surprised to find it being subject to judicial review. However, constitutional amendments passed by the legislature may not touch upon the essence of article 1 (the core of fundamental human rights) and article 20 (the basic democratic and federal structure) of the constitution; such changes would require a referendum, and the plaintiffs argue that the law does infringe upon article 20.