A Tale of Three Markets: Comparing the Renewable Energy Experiences of California, Texas, and Germany

Abstract

The Obama administration has repeatedly identified the large-scale build-out of clean, renewable energy infrastructure as a key priority of the United States. The President’s calls for a cleaner energy economy are often accompanied by references to other industrialized countries such as Germany, hailed by many as a leader in renewable energy deployment. Indeed, the share of renewables in Germany’s electricity generation mix is twice that of the United States, and the ambitious “Energiewende” commits the country to meeting 80% of its electricity needs with renewables by 2050. While some praise the German renewables experience as successful proof of concept, others are concerned with the impact of ramping up renewables on electricity rates, the stability of the electric grid, and the international competitiveness of local industry. The mixed response to Germany’s commitment to solar, wind, and other renewables raises questions as to how much and what, if anything, the United States can learn from Germany’s renewable energy experiment - and vice versa.

This Article seeks to answer some of these questions by comparing the German renewables experience to that of California and Texas, two leaders in renewable energy deployment in the United States and globally, albeit with very different policy approaches and political leadership. California and Texas have had significant success in large-scale renewables but not without their own challenges. Our comparison of the renewable energy paths taken by what amount to three large and highly distinct “countries” elucidates some of the most prominent (and controversial) themes in the transatlantic renewables debate, including electricity costs, policy design, output intermittency, grid stability, and soft costs. As the Paris climate accord and the Environmental Protection Agency’s Clean Power Plan await implementation, we offer comparative insights and identify best practices to guide policymakers and regulators in the transition toward a cleaner, more sustainable energy economy.

Keywords: renewables, renewable energy, climate change, solar, wind, PV, Energiewende, carbon, greenhouse gas, RPS, feed-in tariff, electricity, intermittency, grid stability, policy design, renewable portfolio standard, CREZ

JEL Classification: D40, D62, E60, F01, H30, H51, H60, H70, K23, K32, L10, M13, O10, O32, O38, Q20, Q28, Q40, Q42, Q48