Germany is by far the world’s leading producer of solar energy with total solar power generating capacity of more than 31 GW on September 30th 2012, according to the German Federal Network Agency. Germany began to actively develop its solar power industry in 1990. Since then, the industry has grown more rapidly in Germany than in all other countries worldwide. Here is an overview of the main developments in the German solar power sector.

Germany began its first program to develop the use of solar energy in September 1990. It was called the 1,000 Roofs Program (1,000 Dächer Programm). It involved the installation of photovoltaic (PV) equipment on the roofs of homes connected to the national grid throughout Germany. The program was a success with PV equipment having been installed on the roofs of over 2,000 homes by 1995.

A second government initiative to increase the number of PV installations in Germany began in 1999. It was called the 100,000 Roofs Program (100.000 Dächer Programm). Running until the middle of 2003, it was part of the Renewable Energy Act (see below).

Under the 100,000 Roofs Program, homeowners and owners of small and medium-sized businesses (SMEs) were offered low-interest loans to enable them to install PV equipment on their roofs. At the end of 2003, the government declared this program a success with more than 300 megawatts of installed solar energy capacity.

On April 1st 2000, the Renewable Energy Act (Erneuerbare-Energien-Gesetz – EEG) came into effect in Germany. It introduced favorable feed-in tariffs (FiTs) for the supply of electricity generated by several different forms of renewable energy, including solar power, wind power, and biomass, to Germany’s national grid.

The Renewble Energy Act encouraged many companies, especially SMEs, to invest in the production of renewable energy, including solar energy. Consumers effectively paid for the FiTs through higher energy prices. Under the principle of “the polluter pays,” those who consumed more energy paid more.

The main aims of the Renewable Energy Act were to protect the environment, reduce Germany’s dependency on energy imports, and, in the medium term, to create a less expensive energy production system than a system based on conventional methods of power generation.

The Renewable Energy Act has been successful in increasing the amount of energy generated from renewable sources (including solar power) from just 6.8 percent of Germany’s total consumption in 2000 to over 20 percent in 2011.

Solar energy accounted for 6.1 percent of Germany’s total energy production in September 2012, increasing from 4.1 percent in September 2011, according to the German Association of Energy and Water Industries (BDEW).

However, in 2012 and early 2013, the German government proposed a variety of funding cuts in a bid to achieve savings of Euro1.8 billion in one year. These proposed cuts are likely to affect the solar energy sector. One of the initial measures was to reduce FiTs by 2.5 percent in November and December 2012 and January 2013.

A new government initiative to encourage householders and businesses with PV equipment to install solar power battery storage systems was due to start on May 1st 2013. However, the initiative was put on hold in February 2013 amid concerns that insufficient money was available due to losses from emissions trading.

Although Germany plans to continue to expand its production of solar energy, it remains to be seen how quickly the sector will develop in future, given the current funding constraints.