A decade ago, Germany launched a renewable-energy plan on an unprecedented scale. Its parliament, the Bundestag, enacted a law obligating the nation's electric utilities to purchase green power at sky-high rates--as much as 60 cents per kilowatt-hour for solar--under fixed contracts lasting up to 20 years. (German market prices for electricity, largely produced by coal and nuclear plants, were about 12 cents per kilowatt-hour.) The idea behind this "feed-in tariff" was that anyone would be able to build a renewable-power plant--or install rooftop solar panels--and be guaranteed predictable profits by feeding energy into the grid, where utilities would buy it at premium prices. The higher costs would be passed on as monthly surcharges to ratepayers, spread out among all homes and businesses in a country of about 80 million people. Fossil and nuclear fuels amount to "global pyromania," said Hermann Scheer, the German politician who championed the policy. "Renewable energy is the fire extinguisher."
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Author: Evan I. Schwartz