How the German System of Feed-in Tariffs is More Egalitarian than the US System of Tax Subsidies

By Jeffrey Michel

The constant necessity for federal investigations to prevent fraud (see Treasury watchdog probes solar tax grant program) in the US tax credit and grant program would generally not arise under a feed-in tariff system, since tax credits are not part of the financing mechanism involved in Germany.

The dependence on tax credits makes solar installations more affordable to households with greater income. The less affluent may thus be excluded from participating in the transition to a solar society. Germany illustrates the reverse effect that ensues with the employment of feed-in tariffs. Rooftop solar installations are abundant in poorer regions of the country. They also provide added social security income for retired people.

The school building in the eastern German town of Deutzen in which I lived before moving to Hamburg remains exemplary for the advantages provided by feed-in tariffs. After Berlin and Bremen, Deutzen had the third highest indebtedness per inhabitant of any German municipality. The solar installation on the town’s school could nevertheless be paid for by feed-in tariffs, enabling the roof to be repaired from the income received, while still making a profit for the private company that operates the facility.