By Jeffrey Ball | Germany's High-Priced Energy Revolution | Fortune | March 2017
By Jeffrey Ball
As many generations of Dieter Dürrmeier’s family as he can track have grown vegetables and tended livestock here in Opfingen, a hilly corner of southern Germany near the French and Swiss borders. Over the decades the Dürrmeiers have adapted, ever on the lookout for new ways to make money. In 1963, Dürrmeier’s father exploited cheap government loans to move his 136-acre farm from the crowded village to the outskirts of town. In 1986 the Dürrmeiers stopped raising cows and shifted to the less cyclical business of boarding wealthy city dwellers’ horses. But the family’s current shift has been its most lucrative yet. Though they still grow asparagus and grapes and tend to the equines, the Dürrmeiers today harvest their fattest earnings from sunshine. Thanks to generous checks from the German people, that crop from the sky spins off cash more reliably—and at higher margins—than anything the Dürrmeiers have ever grown in the ground.
On a recent frigid winter night, wearing a red-and-green flannel shirt and mud-caked boots, Dürrmeier takes a break from feeding the horses and chats under the eave of a barn, one of four work buildings on whose roofs he has installed subsidized solar panels. The glass-and-metal sheets, whose production he monitors in real time on a computer in his office, fetch him a steady profit of about 40,000 euros (about $42,000) annually. That equates to about 40% of the earnings from his entire farming operation. As he describes his solar windfall, the balding, barrel-chested 62-year-old is both proud and embarrassed.
“For us it’s a very good business, but for the German people it’s very bad,” Dürrmeier says of the government policy that has turned intermittent sunshine into an all but sure thing for his wallet. Germany’s solar-subsidy scheme pays him a set price for every kilowatt-hour of electricity he produces with his solar panels and sells into the grid. It guarantees him that price, which when he started was several times the prevailing electricity rate, for 20 years.
When he learned of the subsidy more than a decade ago, he says, “I was at first skeptical because it was a bit too good, and I personally objected because I thought that subsidies were generally bad for the economy as a whole. But if it was offered, I had to take it. It was against my beliefs, but as an entrepreneur it was the right thing to do.”
Germany has launched a renewable-energy revolution, and it’s paying a fortune to achieve it. In the past decade its green-minded politicians, backed by green-minded voters, have undertaken an extraordinary energy transition known in German as the Energiewende. At the center of the transformation has been a slate of renewable-energy subsidies that have dramatically scaled up once-niche solar and wind technologies and in the process have slashed their cost, making them competitive in some cases with fossil fuels.
Thanks to Germany’s lavish first-mover spending, a raft of second-mover countries, from the U.S. to China to India, are now installing solar and wind power on a huge scale. If renewable energy ends up significantly helping curb climate change, then history may judge the Energiewende as a remarkable example of global leadership.
The raw ambition of the Energiewende is both mind-boggling and quintessentially German. It reflects the engineering prowess of a country that built the Autobahn, pioneered modernist architecture, and cranks out sleek BMWs and Mercedes. It evokes the environmental ideals of a society that idolizes the Black Forest, led the way in organic farming, and still celebrates Goethe’s nature-loving poems. It bespeaks the moral confidence, both wrong and right, of a culture that created Romanticism in the late 18th century, Nazism in the 1930s, and one of the world’s most generous campaigns to welcome refugees today.
But all that ambition is bleeding Germany. The mounting costs are testing its resolve. Leading politicians, even those with strong environmental credibility, are racing to rein in spending. If they can’t achieve that, then Germany’s near miracle may be remembered as the environmental equivalent of, say, heart-transplant surgery: a worthy endeavor, undoubtedly, but one that remains unattainable for all but the very wealthiest.
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