So today news that Germany’s generous subsidies for solar are at risk because they are no longer supporting german jobs, rather mostly chinese jobs in the manufacturing of solar panels.
The fact is that subsidies will work…for a while…and only so long as you have a distinction which gives a value to your customers that others don’t. With China now making over 50% of the world’s solar panels, gone are the days where the German government (or any other for that matter) can be sure that the consumption subsidies will lead to jobs. Only by a superior product which the market demands, or quicker delivery which the market expects, can a company in Germany compete with the low labor realities across the world.
So as I like to say “the truth always comes out in the end”, its just that what one sees as “truth”, the other may not. Yet what is true in economic markets, is that the law of nature is as relevant there as anywhere. In a changing environment, you evolve or you die.
Stay tuned, its going to get more interesting if the German government takes that step. Fact is, I am not so sure that the industry, at near $1 per watt, needs the subsidies to promote jobs. I think that if the governments continue to stay focused, as hard as it is, on the savings in environmental cleanups that clean energy permits, then the business case still exists for subsidies. Its just that politicians like to have photo opportunities for their money, to show us they are spending us wisely, and standing somewhere in mid air pointing and saying “we subsidized this” is not as easy as planting a shovel in the ground and being photographed helping a new factory start up.
Stay tuned…
Sass