Copied from: Should other nations follow Germany's lead on promoting solar power? (to archive for future reference). Written by Ryan Carlyle
The answer is the most forceful possible no.
Solar power itself is a good thing, but Germany's pro-renewables policy has been a disaster. It has the absurd distinction of completing the trifecta of bad energy policy:
- Bad for consumers
- Bad for producers
- Bad for the environment (yes, really; I'll explain)
I was shocked to find out how useless, costly, and counter-productive their world-renowned energy policy has turned out. This is a serious problem for Germany, but an even greater problem for the rest of the world which hopes to follow in their footsteps. The first grand experiment in renewable energy is a catastrophe! The vast scale of the failure has only started to become clear over the past year or so. So I can forgive renewables advocates for not realizing it yet -- but it's time for the green movement to do a 180 on this.
Some awful statistics before I get into the details:
- Germany is widely considered the global leader in solar power, with over a third of the world's nameplate (peak) solar power capacity.  Germany has over twice as much solar capacity per capita as sunny, subsidy-rich, high-energy-cost California. (That doesn't sound bad, but keep going.)
- Germany's residential electricity cost is about $0.34/kWh, one of the highest rates in the world. About $0.07/kWh goes directly to subsidizing renewables, which is actually higher than the wholesale electricity price in Europe. (This means they could simply buy zero-carbon power from France and Denmark for less than they spend to subsidize their own.) More than 300,000 households per year are seeing their electricity shut off because they cannot afford the bills. Many people are blaming high residential prices on business exemptions, but eliminating them would save households less than 1 euro per month on average. Billing rates are predicted by the government to rise another 40% by 2020. 
- Germany's utilities and taxpayers are losing vast sums of money due to excessive feed-in tariffs and grid management problems. The environment minister says the cost will be one trillion euros (~$1.35 trillion) over the next two decades if the program is not radically scaled back. This doesn't even include the hundreds of billions it has already cost to date.  Siemens, a major supplier of renewable energy equipment, estimated in 2011 that the direct lifetime cost of Energiewende through 2050 will be $4.5 trillion, which means it will cost about 2.5% of Germany's GDP for 50 years straight.  That doesn't include economic damage from high energy prices, which is difficult to quantify but appears to be significant.
- Here's the truly dismaying part: the latest numbers show Germany's carbon output and global warming impact is actually increasing  despite flat economic output and declining population, because of ill-planned "renewables first" market mechanisms. This regime is paradoxically forcing the growth of dirty coal power. Photovoltaic solar has a fundamental flaw for large-scale generation in the absence of electricity storage -- it only works for about 5-10 hours a day. Electricity must be produced at the exact same time it's used.  The more daytime summer solar capacity Germany builds, the more coal power they need for nights and winters as cleaner power sources are forced offline.  This happens because excessive daytime solar power production makes base-load nuclear plants impossible to operate, and makes load-following natural gas plants uneconomical to run. Large-scale PV solar power is unmanageable without equally-large-scale grid storage, but even pumped-storage hydroelectricity facilities are being driven out of business by the severe grid fluctuations. They can't run steadily enough to operate at a profit. [2,7] Coal is the only non-subsidized power source that doesn't hemorrhage money now.  The result is that utilities must choose between coal, blackouts, or bankruptcy. Which means much more pollution.
So it sucks on pretty much every possible level. If you're convinced by these facts, feel free to stop reading now, throw me an upvote, and go on about your day. This is going to get long -- I haven't even explained the half of it yet. There are lots of inter-related issues here, and the more you get into them, the worse the picture gets.
Issue 1: Wrong place, wrong tech to start the green revolution
Renewables advocates constantly hold up Germany as an example of how large-scale rooftop solar power is viable. But the problem is, Germany's emphasis on solar power is bad policy. I'm pretty sure other countries can do solar better, but that isn't saying much because German solar is just awful. To be blunt, it's a stupid place for politicians to push solar panels. I was there all last week for a work meeting and I didn't see the sun the entire time. From talking to the locals, it's overcast for about a third of the year in the region near Hanover where I was staying. Their solar resource is simply bad, nearly the worst of any well-populated region in the world:
Between the northern latitude, the grey weather, and the Alps blocking much of the diffused morning sunlight from the south, Germany is a terrible place for solar power. When you put the US side-by-side on the same scale, you realize that Germany has the same solar power potential as dismal Alaska, even worse than rain-soaked Seattle:
I look at this and ask, "what on earth are they thinking?" They couldn't have picked a worse generation technology for their climate.
But most people seem to look at it and say, "if Germany is investing so much in solar power, then it's obvious the US should build solar panels too." I insist we examine the contrapositive: if solar power is only taking off slowly in the US, even with significant subsidies/incentives and one of the world's best solar resources, then the Germans should be building even less solar capacity. It's clear their market must be severely distorted for them to pursue such a sub-optimal energy policy.
You're welcome to disagree with my thought process here, but the simplest proof can be seen in the capacity factor, which is the percent of the nameplate capacity that is actually generated over the course of a year. The existence of nighttime means solar capacity factors must be less than 50%, and when you add clouds, dawn, dusk, dust, and non-optimal installations, 18% is the average capacity factor for panels in the continental US.  In contrast, Germany's total solar capacity factor in 2011 was under 9%! 
German residential solar panel installations today cost about $2.25/watt capacity,  versus a hair over $5/watt in the US.  (Numbers vary over a considerable range. Most of this is labor/permitting costs.) But German panels generate less than half as much actual power over time. So when you normalize the panel install cost by capacity factor, US and German solar power generation are already at cost parity. The payback periods for solar investments are about the same in California and Germany. This is surprising to most solar advocates, who tend to blame higher costs for the low uptake rates in the US. But system economics alone do not explain disparities in installation rates.
So why does Germany have 16 times as much nameplate panel capacity per capita as the US?  Yes, permitting is much easier there, but that's mostly captured by the $/watt costs since installation companies usually pull the permits. And I don't think the German people are that much more pro-environment than the rest of the world. There's no good reason for the disparity that I can find -- it ought to swing the opposite way. Solar just isn't a good power source for a cold, dark country that has minimal daytime air conditioning load. Solar in Phoenix, Arizona makes sense, but not in Frankfurt. The only conclusion I can come to is that Germany's solar power boom is being driven entirely by political distortions. The growth of solar is not economically justified, nor can it continue without massive political interference in power markets.
Many people are surprised to hear that Germany only gets a tiny 2.0% of its total energy / 4.6% of its electricity from solar power (in 2012). [5,13] All the headlines about new records on peak summer days make it seem more like 50%. Despite all the cost and pain and distortions, PV solar has turned out to be a very ineffective way of generating large amounts of energy. They could have generated at least four times as much carbon-free power via new nuclear plants for the same cost.  (Nuclear would have been a better option for a lot of reasons. I'll get to that later.)
With subsidies for new solar systems phasing out over the next 5 years, solar growth has already started to decline. The installation rate peaked and is now dropping. [13, 15] Despite falling panel and installation costs, the majority of new German solar projects are expected to stop when subsidies end. They're already on the downward side of the technology uptake bell curve:
(Data after 2008 from , prior to 2008 from Wikipedia)
If you pay close attention, all the pro-solar advocates are still using charts with data that stops after 2011. That's because 2011 was the last year solar was growing exponentially. Using data through July 2013 and official predictions for the rest of this year, it's now clear that solar is not on an exponential growth curve. It's actually on an S-curve like pretty much every other technology, ever. Limitless exponential growth doesn't exist in the physical world. 
Also note the huge gap on that graph between the actual generation and the nameplate capacity. That's where the miserable capacity factor comes in. (I think this is the source of a lot of misplaced optimism about solar's growth rate.) Green media outlets only report solar power either in peak capacity or as percent of consumption on sunny summer days. Both of these measurements must be divided by about 10 to get the true output throughout the year.
In reality, solar is scaling up much slower than conventional energy sources scaled up in the past, despite solar receiving more government support. This graph shows the growth rate of recent energy transitions in the first 10 years after each source reached grid scale (1% of total supply):
I think this chart is the best way to make an apples-to-apples comparison of uptake rates. Only about a quarter of the "renewables" line is due to solar (the majority is biomass, wind, and trash incineration). So the true solar growth rate from 2001-2011 is only 1/4th as fast as nuclear from 1974-1984, and 1/6th as fast as natural gas from 1965-1975. 
When a new energy source is genuinely better than the old energy sources, it grows fast. Solar is failing to do so. Yet it's had every advantage the government could provide.
What this all implies is that without government intervention, PV solar can't be a significant source of grid power. The economics of German solar have only made sense up til now because they tax the hell out of all types of energy (even other renewables), and then use the proceeds to subsidize solar panels. Utilities are forced to buy distributed solar power at rates several times the electricity's market value, causing massive losses. The German Renewable Energy Act directly caused utility losses of EUR 540 million in August 2013 alone.  It's a shocking amount of money changing hands. When you strip away the well-intentioned facade of environmentalism, this is little more than a forced cash transfer scheme. It's taking from utilities (who are losing money hand over fist on grid management and pre-existing conventional generation capacity) and from everyone who doesn't have rooftop panels, and shoveling it into the pockets of everyone who owns or installs panels. Which means it's both a massive market distortion and a regressive tax on the poor.
This explains why per-capita solar uptake is so high in Germany. The government has engineered a well-intentioned but harmful redistribution system where everyone without solar panels is giving money to people who have them. This is a tax on anyone who doesn't have a south-facing roof, or who can't afford the up-front cost, or rents their residence, etc. People on fixed incomes (eg welfare recipients and the elderly) have been hardest hit because the government has made a negligible effort to increase payments to compensate for skyrocketing energy prices. The poor are literally living in the dark to try to keep their energy bills low. Energiewende is clearly bad for social equality. But Germany's politicians seem to have a gentleman's agreement to avoid criticizing it in public, particularly since Merkel did an about-face on nuclear power in 2011. 
Issue 2: Supply Variability
One major problem with all this solar-boosting, ironically, is oversupply. It's mind-boggling to me that a generation technology that provides less than 5% of a country's electricity supply can be responsible for harmful excess electricity production, but it's true. On sunny summer afternoons, Germany actually exports power at a loss compared to generation costs: EUR 0.056/kWh average electricity export sale price in 2012,  vs EUR 0.165/kWh average lifetime cost for all German solar installed from 2000 to 2011.  (This is optimistically assuming a 40 year system life and 10% capacity factor -- reality is probably over EUR 0.20/kWh.) German utilities often have to pay heavy industry and neighboring countries to burn unnecessary power. On sunny summer days, businesses are firing up empty kilns and furnaces, and are getting paid to throw energy away.
You can argue that this excess summer solar generation is free, but it's not -- not only is this peak summer output included in the lifetime cost math, but excess solar power actually forces conventional power plants to shut down, thereby lowering the capacity factor of coal & gas plants. Yes, this means large-scale solar adoption makes non-solar power more expensive per kWh, too! On net, excess solar generation is a significant drag on electricity economics. You're paying for the same power generation equipment twice -- once in peak conventional capacity for cloudy days, and again in peak solar capacity for sunny days -- and then exporting the overage for a pittance.
Why would they bother exporting at a loss? Because the feed-in-tariff laws don't allow utilities to shut off net-metered rooftop solar. Utilities are forced by law to pay residential consumers an above-market price for power that isn't needed. Meanwhile, Germany's fossil-burning neighbors benefit from artificially-low EU energy market prices. This discourages them from building cleaner power themselves. It's just a wasteful, distorted energy policy.
Remember, electricity must be used in the same moment it's generated.  The technology for grid-scale electricity storage does not yet exist, and nothing in the development pipeline is within two orders of magnitude of being cheap enough to scale up. Pumped-hydro storage is great on a small scale, but all the good sites are already in use in both Europe and the US. The only plan on the table for grid-scale storage is to use electric car batteries as buffers while they're charging. But that still won't provide anywhere near enough capacity to smooth solar's rapidly-changing output.  And if people plug in their cars as soon as they get home from work and the sun goes down, the problem could get even worse. California's regulators have recently acknowledged that the generation profile at sundown is the biggest hurdle to the growth of solar power. The classic illustration is the "duck chart" (shaped like a duck) that shows how solar forces conventional power plants to ramp up at an enormous rate when the sun stops shining in the evening:
People often complain about wind power being unreliable, but when you get enough wind turbines spread over a large enough area, the variability averages out. The wind is always blowing somewhere. This means distributed wind power is fairly reliable at the grid level. But all solar panels on a power grid produce power at the same time, meaning night-time under-supply and day-time over-supply. This happens every single day, forever. At least in warm countries, peak air conditioning load roughly coincides with peak solar output. But Germany doesn't use much air conditioning. It's just a grid management nightmare. The rate of "extreme incidents" in Germany's power grid frequency/voltage has increased by three orders of magnitude since Energiewende started. 
The severe output swings have even reached the point where Germany's grid physically cannot operate without relying on neighboring countries to soak up the variability. The ramp-down of solar output in the evening happens faster than the rest of Germany's generation capacity can ramp-up. (Massive power plants can't change output very quickly.) Which either means blackouts as people get home from work, or using non-solar-powered neighbors as buffers. Here's one day's generation profile for German solar power, showing how net electricity imports/exports are forced to oscillate back and forth to smooth out the swings in production:
If Germany's neighbors also had as many solar panels, they would all be trying to export and import at the same time, and the system would fall apart. The maximum capacity of the entire EU grid to utilize solar power is therefore much lower than the level reached by individual countries like Germany and Spain.
Solar boosters often say people need to shift their energy consumption habits to match generation, instead of making generation match consumption. That's feasible, to an extent -- perhaps 20% of power consumption can be time-shifted, mostly by rescheduling large consumers currently operating at night like aluminum electrosmelters. But modern civilization revolves around a particular work/sleep schedule, and you can't honestly expect to change that. People aren't going to give up cooking and TV in the evening, or wait three hours after the sun goes down to turn on the lights. And weekends have radically different consumption profiles from weekdays.
It all adds up. PV solar output doesn't properly sync up with power demand. That severely limits the maximum percentage of our electricity needs it can provide. Germany hit that limit at about 4%. They are now finding out what happens when you try to push further.
Issue 3: Displacing the wrong kinds of power
You may have noticed in the daily generation chart above how wind power is throttled back when the sun comes out. Residential solar has legal right-of-way over utility-scale wind. A lot of the power generation that solar is displacing is actually other renewables. Most of the rest is displacing natural gas and nuclear power. Coal power is growing rapidly. [6,8]
Here's what the weekly generation profile is predicted to look like in 2020:
Notice the saw-tooth shape of the big grey "conventional" (coal/gas) category. What all this solar is doing is eating into is daytime base load generation, which seems good for displacing fossil fuels, but in the long run it's doing the opposite.
The majority of electricity worldwide comes from coal and nuclear base load plants. They are big, efficient, and cheap. But base load generation is extremely difficult and expensive to throttle up and down every day. To simplify the issue a bit, you cannot ramp nuclear plants as fast as solar swings up and down every day. It takes several days to shut down and restart a nuclear plant, and nuclear plants outside France are not designed to be throttled back, so nuclear cannot be paired with the daily oscillations of PV solar. Supply is unable to match demand. You end up with both gaps and overages.
Most people think Germany is decommissioning its nuclear fleet because of the Fukushima accident, but the Germans didn't really have a choice. They are being forced to stop using nuclear power by all the variability in solar output. That's a big, big problem -- Germany gets four times more electricity from nuclear than solar, so the math doesn't add up. The generation time-profile is wrong, and the total power output from solar is too low. They have to replace nuclear plants with something else.
The normal way to handle variable power demand is via natural gas "peaker" plants. But Germany has minimal domestic natural gas resources and load-following gas plants are very expensive to operate, so what they're doing is building more coal plants, and re-opening old ones. [6,8,22] It's expensive and inefficient, but you can run a coal plant all night and then throttle it back when the sun comes up. It has better load-following capabilities than nuclear (although worse than gas). The German Green Party has been fighting nuclear power since the 1970s, and has finally won. Nuclear is out, and coal is in.
If you're a regular follower of my writing, you'll know what a terrible idea this is.  Replacing nuclear power with coal power is unquestionably the most scientifically-illiterate
In comparison, coal power kills about a million people per year, fills the oceans with mercury and arsenic, releases more carbon dioxide than any other human activity, and is arguably one of the greatest environmental evils of the industrialized world. 
This is counter-intuitive, but second-order effects are enormously important. Expansion of photovoltaic solar power past 1-2% of total electricity demand means less nuclear, and more coal. The amount of damage this does completely overwhelms the environmental benefit from the solar panels themselves. You have to avoid building so much solar power that it destabilizes and eliminates other clean power sources. When you get to the "duck chart" stage, things start to get bad. Otherwise you'll end up worse off than when you started, as Germany has found out to its dismay.
So that all sucks a lot. German solar power is hurting people and the planet. But there's more.
Issue 4: The kicker
The category for "biomass" power you see in all these charts is actually firewood being burned in coal plants. 38% of Germany's "renewable energy" comes from chopping down forests and importing wood from other countries.  Effing firewood, like we're back in the Middle Ages or something. Due to overzealous renewables targets, and a quirk in the EU carbon pricing system that considers firewood carbon-neutral, Europe is chopping down forests at an alarming rate to burn them as "renewable biomass." The environmental movement has spent most of the last 200 years of industrialization trying to fight deforestation, and that noble goal has been reversed in an instant by bogus carbon emission calculations.
In the very long run, over 100 years or so, firewood is close to carbon neutral because you can regrow the trees and they absorb CO2 as they grow. Unfortunately, using firewood for fuel destroys a living carbon sink and releases all its carbon to the atmosphere right now. When you consider that you're destroying a carbon sink as well as releasing stored carbon, firewood is actually much worse than coal for many decades thereafter.  The next few decades is humanity's most critical time for reducing carbon emissions, so this policy is mind-boggling lunacy.
Germany is so focused on meeting renewables targets that it is willing to trample the environment to get there. They've managed to make renewables unsustainable! It's tragicomic.
To summarize: Energiewende is the worst possible example of how to implement an energy transition. The overzealous push for the wrong generation technology has hurt citizens, businesses, and the environment all at the same time.
I want to make it clear that I'm not saying we should abandon solar. It should definitely be part of our generation mix. Due a mix of bad climate and bad policy, Germany ran into problems at a very low solar penetration, and other countries will be able to reach higher penetrations. But even if we ignore cost, there is still a maximum practical limit to solar power based on the realities of grid management.
- You can't build more PV solar than the rest of the grid can ramp up/down to accept. The necessary grid storage for large-scale solar power is a "maybe someday" technology, not something viable today. Calls for 50% of power to come from solar in our lifetimes are a fantasy, and we need to be realistic about that.
- You can't force utilities to buy unneeded power just because it's renewable. The energy and materials to build the excess capacity just goes to waste. That is the opposite of green.
Every time a renewables advocate holds Germany up as a shining beacon, they set back the credibility of the environmental movement. It's unsupported by reality and I think even gives ammunition to the enemy. We have to stop praising Germany's Energiesheiße and figure out better ways to implement renewables. Other models should work better. They have to -- the future of the world depends on it.
 (source link in original article is broken, here is an updated link: )