Solar Subsidies Make Electricity Bills More Expensive?

Renewable energy supporters have been emphatic in calling for the United States government to provide subsidies comparable to those offered by foreign “competitors,” yet it is worth noting that the foreign experience with renewable energy subsidies has not led to especially effective results. One of the most striking examples is Germany—the world’s largest solar power producer whose energy industry is facing serious economic problems now that the German government is imposing massive cuts to its solar subsidies.

In 1990, Germany enacted a feed-in tariff law that requires utilities to purchase electricity generated with renewable electricity at a fixed price that is guaranteed for 20 years. These subsidies, which were then boosted in 2000 and 2004, led to Germany becoming the world leader in solar power. However, after the initial growth that led the country to become the world’s first solar energy producer, today its solar manufacturing and production industry is crashing rapidly due to cuts in these generous subsidies.[ia]