Photovoltaic power stations in Germany and the United States: A comparative study by data envelopment analysis

Abstract

This study compares Photovoltaic (PV) power stations between Germany and the United States to examine which country more efficiently provides renewable energy in their usages. For the comparative analysis, this study utilizes Data Envelopment Analysis (DEA) as a methodology to evaluate the performance of PV power stations from the perspective of both solar and land usages. A total of one hundred sixty PV power stations (eighty in Germany and eighty in the United States) are used for this comparison. The demand for sustainable energy and energy security has been rapidly increasing over the past decade because of concerns about environment and limited resources. PV solutions are one of many renewable technologies that are being developed to satisfy a recent demand of electricity. Germany is the world's top installer and consumer of PV power and the United States is one of the top five nations. Germany leads the way in installed PV capacity even though the nation has less solar resources and land area. Due to limited solar resources, low insolation and sunshine, and land area, the United States should have a clear advantage over Germany. However, the empirical result of this study exhibits that PV power stations in Germany operate more efficiently than those of the United States even if the latter has many solar and land advantages. The surprising result indicates that the United States has room for improvement when it comes to utilizing solar and land resources and needs to reform the solar policy. For such a purpose, Feed-In Tariff (FIT) may be an effective energy policy at the state level in the United States because the FIT provides investors such as utility companies and other types of energy firms with financial incentives to develop large PV power stations and generation facilities for other renewable energy. It may be true that the FIT is a powerful policy tool to promote PV and other renewable installation and support a reduction of an amount of greenhouse gases. However, the FIT poses a large financial burden to consumers with a massive increase in renewable energy installation like in Germany and Spain. Therefore, it is necessary for the United States to consider how to align a policy with a speed of technology innovation to balance between the benefit and the cost derived from the policy implementation on renewable energy. In addition, this study discusses policy issues regarding cost allocation due to FIT among stakeholders related to the electric power industry. At the end, this study proposes a new type of wholesale electricity market that provides simultaneous trading on electricity and greenhouse gas emissions by fully utilizing modern computer science technology that exists in universities and national laboratories of the United States.