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Germany will remain a strong market after 2010, Jäger-Waldau says, thanks to new rules that peg the further adjustments to the German feed-in tariffs to the pace of photovoltaic installation. “What Germany’s Environment Ministry wants is a corridor between three and 3.5 gigawatts installed annually,” Jäger-Waldau says. If demand drops below that range, the feed-in tariff will automatically rise to “reprime” the pump. By 2020, he says, Germany should have 40 to 50 gigawatts of solar photovoltaics in operation, which is about half of the peak output of all of its nuclear, coal, and gas-fired power plants. (Of course, in an average year, the solar panels will provide the equivalent of roughly 1,000 to 1,500 hours of full-capacity operation per year, a capacity factor of just 11 percent to 17 percent, whereas conventional power plants can run at peak capacity most of the time.)

Meanwhile, as leaders such as Germany and Spain trim incentives, other E.U. countries such as France, Italy, and the United Kingdom are aggressively boosting their own. The U.K., which must multiply its renewable energy capacity fivefold to 15 percent by 2020 under the E.U. Renewable Energy Mandate, began offering a feed-in tariff in April for power generated by households and small businesses installing solar panels and other small-scale renewable systems.

The coalition government elected in the U.K. in May is considering a feed-in tariff for utility-scale power projects. These feed-in tariffs would supplement, rather than replace, its already eight-year-old Renewables Obligation for electricity distributors, a renewable portfolio standard set to roughly triple to 30 percent of delivered power over the next decade.

Jäger-Waldau admits that a second economic downturn, which many economists foresee for the coming year, could tempt governments to cut back supports for renewable energy. But he says the job-creation benefits offered by renewable energy should check that instinct. Depending on the estimate, he says, renewables provide between 500,000 and 700,000 jobs in Europe. Less than 20 percent of those are manufacturing jobs at risk of moving overseas. “Compared to jobs in installation and services, it’s marginal,” says Jäger-Waldau.

The bigger concern, say both Pelosse and Jäger-Waldau, is that governments will not muster the political support to reform Europe’s transmission systems. Europe’s power grid remains a patchwork of national grids with limited interconnections, thanks to entrenched monopolies and local opposition to new power lines. It is thus ill-equipped for the tsunami of intermittent renewable power that the European Commission anticipates. Strong interconnections let regions share excess renewable energy with their neighbors during times of plenty, and to import power when the wind is in a lull and the sun isn’t shining.

A crucial power link between Spain and France is going forward thanks to high-level intervention–but only after French president Nicolas Sarkozy and his Spanish counterpart agreed to split the cost of putting the power line underground. “We have been fighting 20 years for this bloody line between France and Spain. We came to a solution because Sarkozy and the European Commission pushed very hard for that,” Pelosse says.

That one line is just a beginning, Pelosse says: “We have to do this massively.”

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Credit: Vattenfall

Tagged: Business, Energy, renewable energy, solar, business, wind, economics, finance, Europe

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