Installing Photovoltaics in Germany: A License to Print Money?

RUHR Economic Papers, No. 590

28 Pages Posted: 25 Jan 2016

See all articles by Mark Andor

Mark Andor

RWI – Leibniz Institute for Economic Research

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Date Written: November 25, 2015

Abstract

Using detailed data originating from several hundred households of the German Residential Energy Survey (GRECS), this paper empirically investigates the returns on investment in home-equipped photovoltaics (PV) installations. We find that these returns were particularly high in the years 2009 to 2011, when large subsidies for solar electricity coincided with plummeting module prices. While our empirical analysis demonstrates that such investments also incur substantial risks, there is evidence that, above all, wealthy households tend to benefit from the solar subsidies, whereas the costs of financing these subsidies are borne by electricity consumers at large, not least poverty-endangered households. The resulting redistribution of financial resources raises the question of whether the burden-sharing of Germany’s transition to an alternative energy system is fair.

Keywords: Solar subsidies, redistribution effects, German Residential Energy Consumption Survey 1 Mark

JEL Classification: Q28, Q42, Q48

Suggested Citation

Andor, Mark and Frondel, Manuel and Vance, Colin, Installing Photovoltaics in Germany: A License to Print Money? (November 25, 2015). RUHR Economic Papers, No. 590. Available at SSRN: https://ssrn.com/abstract=2721661 or http://dx.doi.org/10.2139/ssrn.2721661

Mark Andor

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://en.rwi-essen.de/mark-andor

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

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