Spain and Germany: two very different approaches to renewable energy

Enrique Dans
Jun 25, 2016 · 2 min read

Germany, a country not noted for its sunshine, is now able at certain times of the year to produce more than half its energy needs through solar power. The German government, which obviously understands Swanson’s Law, having bet on the steady improvement of technology, has been able to apply the world’s most advanced energy policy: the cost of solar panels has fallen drastically over the last 40 years, particularly in the last decade, by around 60% since 2011 and 99% since 1977. Today, it costs between €15,000 and $40,000 without incentives or tax breaks, and within the right frameworks, investing in solar power can be a better proposition than many financial gambits.

Germany has developed a legislative framework that has allowed it to produce 6,000% more solar energy than the United States, which receives 3,900% more solar radiation. The German government offered financial incentives to households and businesses to install solar panels, offering to pay €0.40 per kilowatt per hour for the next 20 years (the average price per kilowatt was around €0.08). With a guaranteed government contract like this, anybody could go to their bank and ask for a loan to finance installing solar panels, with the monthly savings sufficient to cover the principal and the interest.

After around 10 years, the installation loan is paid off and the owners can then benefit from it for a further decade. The cost of the subsidies has steadily fallen to the point where prices are now set by auction, making Germany a world leader in solar power generation, even though most Germans go abroad each summer in search of sun.

Sadly, Spain, one of the sunniest countries in the world, has instead chosen to flim-flam on the issue, allowing the energy utilities to call the shots. Those responsible should be hauled in front of the courts.

Spain goes to the polls on Sunday, and whichever government emerges, it should immediately overturn the ridiculous polices of taxing households and businesses that install solar panels, and instead set up a legal framework to promote renewables and end this country’s absurd dependence on imported oil and gas.

A country with more and more wind power and with the right incentives for people to install solar panels could soon do something about its balance of payments by reducing energy imports. By creating the right conditions, Spain could have a competitive, efficient energy distribution market, with old players trying to remain competitive and new players driving change.

It’s time Spain realized which way the wind is blowing, and started to make hay while the sun shines.

(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at since 2003)

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