Image Source: Stock.Xchng. By: Dynamix.

Germany has talked about cutting back on solar energy support and withdrawing wind power supplied to Taiwan as of late. The question is: Why?

According to a member of Chancellor Angela Merkel’s CDU party, their reasoning for cutting back on supporting the solar energy industry is because they don’t want the market to overheat. Germany is the world’s leading market for solar panels. They guarantee decent prices for solar panel owners who also sell electricity; however, over a 20 year period the subsidies would diminish and eventually be eliminated completely—if they fall under certain circumstances listed under a new law. There is also the matter that Chinese solar panel producers are starting to rival Germany and in turn, also raise the global market.

Next week, Merkel’s cabinet is to consider a draft law that would cut state guaranteed prices by 15-16% for roof and ground panels. Unfortunately for farmers, they would not receive any further support for panels used to aid in crop growth. This decision stems from Environment Minister, Norbert Roettgen’s suggestion of cutting subsidies for panels on arable land by 25%. However, they are still pushing for solar collectors to be installed in industrial zones and alongside highways.

On top of international rivals and possible law changes, there are also the matters of cost and lack of benefit. Q-Cells, for example, had a 2009 net loss of 1.36 billion Euros. Thanks to decreased prices and raised competition, their sales fell by 35%. They were also forced to cut a total of 2,600 employees down to 2,100, plus move some production to Malaysia.

Their wind power situation in Taiwan doesn’t seem to be any better. InfraVest, a German-based wind power company, is the largest private wind power supplier in Taiwan. Apparently, they plan on leaving the small island nation because they lack faith in Taiwan’s governmental energy policies. Though, it seems this may have more to do with cost than policy.

Taiwan recently announced a new government purchasing price for wind power. The price in question—2.38 Taiwan dollars (7 cents USD) is less than what it costs to supply the power in the first place—2.8 Taiwan dollars. So, due to a paltry difference of 42 Taiwan cents (one US cent), InfraVest is now focusing on supplying power to China’s mainland. According to the company’s vice president, Wang Yun-yi:

“InfraVest will incur losses on such a low purchasing price. We can’t help but doubt the government’s determination to develop renewable energy.”

Is it a really a matter that the government lacks determination though, or do they simply lack the funds? All the government panels on climate change, especially COP-15 have made it more than clear that developing nations are struggling with the whole climate change issue. They need funds and help when it comes to sustainable living or renewable energy projects. I can’t say for certain, but I wouldn’t be surprised if Taiwan fell under that list.

Right now, there are 3 wind farms on Taiwan that are run by InfraVest. Two more are currently going through trial operations. At the very least, Taiwan certainly seems interested in renewable energy projects and rather determined to keep them running. Though, it seems they may have to search for another supplier if things with the German company don’t work out.

It certainly seems strange that a country that has become so well-known for their renewable energy efforts and suppliers is suddenly starting to cut back on them so much. Could there be other motives or underlying reasons for these decisions? Perhaps. One thing is for sure: the world needs more renewable energy sources, not less of them. If the markets are growing, it may not be long before customers of the German-based companies switch to somewhere else and then what will they do?