Is Germany׳s energy transition a case of successful green industrial policy? Contrasting wind and solar PV

Abstract

In this paper, we address the challenge of Germany׳s energy transition (Energiewende) as the centrepiece of the country׳s green industrial policy. In addition to contributing to global climate change objectives, the Energiewende is intended to create a leading position for German industry in renewable energy technologies, boost innovative capabilities and create employment opportunities in future growth markets at the least possible cost. The success in reaching these aims, and indeed the future of the entire concept, is hotly debated.The paper aims to provide an up-to-date assessment of what has become a fierce controversy by comparing solar photovoltaic (PV) and wind energy along five policy objectives: (1) competitiveness, (2) innovation, (3) job creation, (4) climate change mitigation, and (5) cost. We find mixed evidence that Germany reaches its green industrial policy aims at reasonable costs. Wind energy seems to perform better against all policy objectives, while the solar PV sector has come under intense pressure from international competition. However, this is only a snapshot of current performance, and the long term and systemic perspective required for the energy sector transformation suggests a need for a balanced mix of a variety of clean energy sources.