Germany Notes - Thoughts On Government in Industry

I didn't have a picture of the Bundestag, so an 1700's church will have to suffice!

Today I wanted to spend some time reflecting on what I learned about the role of government in the solar industry.

Due to its fundamental importance to human society, energy is an industry deeply influenced by the government, regardless of what country you are in. Whether it is government regulation of utilities,  public standards, or private lobbying, the government plays a role in shaping the energy industry.

One frustration I had while on the fellowship was to see the power that vested interests have within governments. I have two previous blog posts on this area - here and here. I will dig deeper into the role of vested interests when I come to my notes on Spain.

I did one to touch on certain ideas raised after reviewing some notes during a meeting with SAG Solarstrom (I just learned SAG went insolvent and was bought out by Shunfeng PV - the reincarnation of Suntech). I wanted to reflect on the interaction the PV industry should have with the government.

One approach would be to try to engage in lobbying and forming interest groups like TUSK and CASE. Another would be to stay out of politics and devote your capital and resources to making your solar business more profitable. The choice of political tactic may depend on the political issue at hand.

With anything in life there needs to be some balance. It is naive to think the solar industry can wield as much political power as traditional energy companies, but with the proper message, they can rally supporters around certain political issues (like the fight over a solar charge in Arizona).

However, in Europe as many government have had to scale back FIT due to budgetary issues, the scope for keeping these policies in place is more limited. Many of the European solar markets are transitioning from being a policy driven to a market driven. Conscious of this transition, many solar companies see the government as gradually playing less of a role in the industry as companies are able to build projects without subsidies.

This background makes some companies less interest in engaging the political process because in the long-term the government will be less relevant to their day-to-day business.

I will leave you hanging here with on additional consideration. The government does have a role to play when it comes to shaping the electricity market and utility regulations. By opening up the utility market, the government can allow for the adoption of new technologies like distributed generation and demand-side management. As I saw in many countries, the solar industry is very much shaped by the regulatory environment.