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Installing Photovoltaics in Germany: A license to print money?

Mark Andor, Manuel Frondel and Colin Vance

Economic Analysis and Policy, 2015, vol. 48, issue C, 106-116

Abstract: Using detailed data originating from several hundred households of the German Residential Energy Survey (GRECS), this paper empirically investigates the returns on investment in photovoltaic (PV) installations. We find that these returns were particularly high in the years 2009 to 2011, when large subsidies for solar electricity coincided with plummeting module prices. While our empirical analysis demonstrates that such investments also incur substantial risks, there is evidence that, above all, wealthy households tend to benefit from the solar subsidies, whereas the costs of financing these subsidies are borne by electricity consumers at large, not least poverty-endangered households. The resulting redistribution of financial resources raises the question of whether the burden-sharing of Germany’s transition to an alternative energy system is fair.

Keywords: Solar subsidies; Redistribution effects; German Residential Energy Consumption Survey (search for similar items in EconPapers)
JEL-codes: Q28 Q42 Q48 (search for similar items in EconPapers)
Date: 2015
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