Solar Valley Rises in an Overcast Land (Germany)

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THALHEIM, Germany — This sad stretch of eastern Germany, with its deserted coal mines and corroded factories, epitomizes post-industrial gloom. It is a place where even the clouds rarely seem to part.

Yet the sun was shining here the other day — and nowhere more brightly than at Q-Cells, a German company that surpassed Sharp last year to become the world’s largest maker of photovoltaic solar cells. Q-Cells is the main tenant among a flowering cluster of solar start-ups here in an area known as Solar Valley.

Thanks to its aggressive push into renewable energies, cloud-wreathed Germany has become an unlikely leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, which convert sunlight into electricity, with roughly half of the world’s total installations. And it is the third-largest producer of solar cells and modules, after China and Japan.

Now, though, with so many solar panels on so many rooftops, critics say Germany has too much of a good thing — even in a time of record oil prices. Conservative lawmakers, in particular, want to pare back generous government incentives that support solar development. They say solar generation is growing so fast that it threatens to overburden consumers with high electricity bills.

Solar-energy entrepreneurs warn that reducing incentives will deprive Germany of its pole position in an industry of the future. As proof, they point to the United States and Japan, which were once solar stars but have faded as their government subsidies became less enticing.

The debate over solar subsidies is a test of how an environmentally minded country can move from nurturing a promising alternative energy sector to creating a mass-market industry that can compete with conventional energy sources on its own footing. It is a tricky transition, even with a sympathetic population.

At the heart of the debate is the Renewable Energy Sources Act. It requires power companies to buy all the alternative energy produced by these systems, at a fixed above-market price, for 20 years.

This mechanism, known as a feed-in tariff, gives entrepreneurs a powerful incentive to install solar panels. With a locked-in customer base for their electricity, they can earn a reliable return on their investment. It has worked: homeowners rushed to clamp solar panels on their roofs and farmers planted them in fields where sheep once grazed.

The amount of electricity generated by these installations rose 60 percent in 2007 compared with 2006, faster than any other renewable energy (solar still generates just 0.6 percent of Germany’s total electricity, compared with 6.4 percent for wind).

This, in a country that gets an average of only 1,528 hours of sunshine a year, less than a third of the total daylight hours. That figure is comparable to London’s but it is one-third fewer sunshine hours than in Florence, Italy, and only half San Diego’s, making German solar installations less efficient, and their growth all the more remarkable.

With wind, biomass and other alternative energy also growing, Germany derives 14.2 percent of its electricity from renewable sources. That puts it ahead of a European Union target for countries to generate 12.5 percent of electricity from alternative sources by 2010.

More: http://www.nytimes.com/2008/05/16/business/worldbusiness/16solar.html?hp