Feed-In Tariffs for Photovoltaics : Learning by Doing in Germany

This paper examines the potential effects of Germany’s feed-in tariff policy for small roof-top solar PV systems installed between 2009 and 2030. Employing a partial equilibrium approach, we evaluate the policy by weighing the benefits from induced learning and avoided environmental externalities against the social costs of promoting residential PV. We use a dynamic optimization model that maximizes social welfare by accounting for learning-by-doing, technology diffusion, and yield-dependent demand. We find a wide range of effects on welfare, from net social costs of 2,014 m€ under a “business as usual” scenario to 7,586 m€ of net benefits under the positive prospects of PV’s development. All scenarios reveal that the federal policy’s current remunerations are higher than the modeled feed-in tariffs