How Fracking Is Paying Back Germany's Solar Investment

Germany doesn't mind that its citizens have borne a disproportionate cost for developing the solar industry, a German energy official said Friday, because Germans benefit from developments in other countries, notably fracking in the United States.

Natural gas prices have fallen in Europe because of hydraulic fracturing of shale in the U.S., said Thorsten Herdan, a director general for energy policy at the German Federal Ministry for Economic Affairs and Energy. And that will help Germany transition away from coal.

"Other countries are profiting from what we did, but that is fine," he said at the Dirksen Federal Senate Building in Washington D.C. "As we are profiting from the shale revolution right now in the U.S. as the price of gas is going down dramatically in Europe. So that’s also some sort of helping each other."

Germans launched their Energiewende, or energy transition, by paying solar electricity producers 50 eurocents per kilowatt hour. That's about 59¢ American, almost five times the average cost of electricity to a U.S. consumer. But in the last two years, thanks to plunging solar prices spurred in large part by the German market, that level of support has fallen to 4 eurocents for solar PV. Wind also costs Germany about 4 eurocents, and a recent offshore-wind proposal seeks no government support.

"We went into a not-at-all mature technology—in terms of PV, in terms of wind energy, in terms of bioenergy, in terms of geothermal energy—and said we’ll pay whatever is necessary in order to make the projects bankable and in order to make the projects fly," Herdan said at a briefing sponsored by the Environmental and Energy Study Institute.

"We found at the end of the day that we have two winners in Germany. The one is wind, be it onshore, be it offshore. The other is photovoltaics. The others didn’t decrease in cost as much as those two did."

But Germany will fall short of its 2020 climate pledge of a 40 percent reduction in emissions, and Herdan blames coal.