As the ancient Greek philosopher Heraclitus once memorably observed: “Everything is in a state of flux.” If a modern-day proof of this axiom were required, we need look no further than the renewable energy industry where it looks like a paradigm shift – involving the US and Europe – is about to take place …
From the outset the industry has always been controversial – a sector led as much by political machinations as it is from the economic effects of supply and demand. Coupled with seemingly ever-increasing global requirements for low carbon energy sources and fears surrounding damage to the environment caused by over-consumption of fossil fuels, governments in the developed world have made proactive efforts on behalf of the renewable energy industry, notably in solar power and photovoltaic (PV) energy.
Historically, this was more so in Europe than the US where a left-leaning, liberal bias, meant governments were more than happy to subsidise the sector in the hope of underpinning a fundamental shift into renewable energy sources. Simultaneously, a more conservative and oil-based US economy meant that comparatively less effort was made there to push towards renewable energy sources and solar power.
All of which brings us to our power shift. Two significant events have now begun to filter through to the solar energy sector. Firstly, the Democrat Barack Obama came to power, bringing with him a more liberal agenda which included substantial efforts to support renewable energy sources. Moreover, in Europe particularly, problems surrounding sovereign debt and budget deficits this year, have spurred the need for renewed efforts by governments to cut spending, and acknowledge some drastic austerity measures are required. For proof of this, one need look no further than Greece – a country which was recently all but declared bankrupt and had to go, Spartan helmet in hand, to Angela Merkel’s Germany for a drastic bail-out procedure.
These major developments are now beginning to have effects in the PV industry, with Spain and Germany announcing a reduction in subsidies. Simultaneously, in Obama’s US, several loan guarantees have recently been put in place to benefit fledgling solar energy companies, not just via efforts to boost renewable energy sources but also thanks to funds set up to provide economic stimulus.