The Puzzle of Solar Energy in Iran and Germany’s Experience

Is a $15 Billion Investment in Renewable Energy Feasible?
Sayyed Taha Hussain Madani | Head of the Smart Governance Think Tank

In the late 19th century, humanity discovered that sunlight shining on the element selenium could generate an electric current. A few years later, in 1883, the first ideas for constructing solar panels using this element emerged. Finally, in 1954, the first silicon photovoltaic cell, capable of producing enough electricity to power an electrical device, was created. Since then, solar cells have found their place in various sectors and even reached space. Today, solar energy is considered a clean alternative to polluting methods of electricity generation. Germany is one of the leading countries in solar energy use, and examining its experience with solar panels can be highly instructive for us. In the early 2000s, Germany was one of the most advanced countries in solar electricity production. Companies like Q-Cells and SolarWorld were among the leading solar panel manufacturers in Germany. However, over time, these companies shifted their production abroad and were eventually acquired by the Korean company Hanwha due to financial difficulties.

The Halt in Solar Panel Production in Germany

China’s entry into the solar panel manufacturing sector and Germany’s inability to compete due to high energy and labor costs led Germany to move its production abroad. China soon saturated the global market with cheaper panels, making competition extremely difficult for German companies. This situation, coupled with changes in Germany’s support policies and reduced profitability in panel production, nearly halted domestic production. The energy-intensive nature of panel production was one of the reasons German companies lost their competitive edge. Specifically, producing solar panels, especially crystalline silicon cells, is an energy-intensive process involving raw silicon extraction, purification, slicing into thin wafers, processing, coating with electrical connections, and encasing in protective glass. All these steps require significant energy. However, with technological advancements, energy consumption in this process has decreased, and the energy payback time has been reduced to one to four years, depending on the location and scale of production.

12% of Germany’s Electricity is Solar

Apart from panel production, Germany is now one of the largest consumers of solar energy. In 2022, the country generated about 12% of its annual electricity consumption from solar energy. Despite this significant production, Germany still faces challenges such as integrating solar power into the grid and storing excess energy.

As mentioned, Germany faces storage challenges in renewable energy. The country uses various methods to store electricity and balance the fluctuations in renewable energy production. One such method is pumped-storage hydroelectric plants, where water is pumped to elevated reservoirs and released to generate electricity when needed. This is one of the most effective storage methods. Battery storage systems are another method used in Germany. Large battery systems, developed by companies like Tesla and some German firms, are used to balance short-term grid fluctuations. Converting excess electricity into hydrogen or methane, which can later be used for energy production, is another storage method in Germany, known as Power-to-Gas. Thermal storage, where excess electricity is converted into heat and later used for electricity generation or district heating systems, is also employed.

Without Storage Development, Reliance on Renewables is Impossible

A critical point about storage development in Germany is that without these advanced methods, relying on renewable energy would be extremely challenging. All forms of renewable energy face the issue of timing in consumption. For example, solar energy stops at night, which is the peak consumption time. Wind energy also has high variability and is unstable. Therefore, grid stability based on renewable energy is impossible without proper storage or backup capacities. The development of storage technologies and smart grids is essential for the success of renewable energy. Despite these challenges, the German government is serious about renewable energy development. Supporters of renewable energy in Germany view it as a necessity to combat climate change. The Green Party (Bündnis 90/Die Grünen) and the Social Democratic Party (SPD) are advocates of renewable energy in the country.

However, renewable energy in Germany also has critics. These groups are concerned about high costs, grid stability challenges, and dependence on imported renewable energy technologies. The CDU/CSU and FDP parties support a more gradual transition to renewables and emphasize the important role of gas and hydrogen in this process. The AfD party, on the other hand, strongly opposes renewable energy policies and advocates for a return to fossil fuels and nuclear energy.

Concerns of the German Scientific Community

The scientific and academic community in Germany also has concerns about renewable energy development. Scientific critics argue that battery and Power-to-Gas storage technologies have not yet reached a stage where they can fully replace renewable energy. These experts also point out that investments in power grids and storage systems impose additional costs on consumers and industries. They have also expressed concerns about Germany’s dependence on imports, noting that Germany has become reliant on imports from China and other countries in many areas of renewable energy technology.

Industry’s Concerns

The industrial sector is also not entirely confident about renewable energy development. Many industrial companies are concerned about rising energy costs and their impact on global competitiveness. For example, Germany’s steel and chemical industries require large amounts of stable electricity, making them skeptical of renewables. In the automotive sector, while companies like Volkswagen and BMW are investing in renewables, they are calling for stronger and more stable power grids. Ultimately, Germany still faces challenges in renewable energy development, particularly solar energy, due to storage technology limitations. Economically viable and efficient long-term energy storage solutions have not yet been developed. Additionally, many batteries, solar panels, and related equipment are imported from China, raising concerns about dependency on China. Financial issues are also a major challenge for renewables, as solar and wind energy production requires significant financial resources. Finally, the construction of wind and solar farms and transmission lines may face public opposition.

A 20-Year Vision for Germany to Become Carbon Neutral

Despite these issues, Germany has outlined a 20-year vision for renewable energy. The country aims to generate about 80% of its electricity from renewable sources by 2030, while simultaneously phasing out coal from its energy mix. The next step in this vision is nearly carbon-free electricity, which is expected to be achieved by 2035. Ultimately, Germany aims to become a “carbon-neutral” or Net Zero country by 2045. The success of these goals depends on technological advancements, future policies, and economic conditions.

Lessons for Our Country

Given the energy imbalance that has developed over time in our country, the government has decided to invest $15 billion in renewable energy, particularly solar power, to address part of this imbalance. Considering the importance of the issue and the resources allocated, examining Germany’s experience and challenges can be highly instructive for us.

Produce or Import Panels?

One issue highlighted in Germany’s experience is the energy payback time for manufacturing solar panels. Producing solar panels requires significant energy. If this energy is considered in terms of gas and the equivalent electricity generated by gas turbines, each panel requires four years to compensate for this equation. Therefore, we must consider whether consuming this energy for a four-year payback is economical. This is where the issue of importing solar panels arises. In Germany, this substitution is concerning due to reliance on China, but Iran may face less of this concern, especially if oil barter and panel imports are utilized.

Have We Thought About Storage?

Storage is another critical challenge that must be addressed. We saw that even Germany, with its advanced storage technologies, faces serious challenges. Our country has not developed significantly in this area, and proposing solar energy projects without considering storage is a concerning oversimplification.

Large Industries’ Skepticism Toward Solar Energy

Large industries, such as steel, require extremely high-current electricity for induction furnaces. Producing such electricity with current wind and solar technologies seems unlikely. Therefore, large industries are not enthusiastic about this.

The Need for New Collection and Transmission Infrastructure

Another important issue is the infrastructure for collecting and transmitting renewable energy to consumption sites. Solar and wind energy infrastructure, by nature, is often located far from where it is needed. Therefore, transmitting renewable energy requires new infrastructure. In addition to transmission infrastructure, local collection networks and conversion substations are also needed. All these facilities must be separately considered in renewable energy development. Moreover, collection and transmission networks should ideally use copper for lower resistance, but copper wiring and maintenance are costly. The question is, have we thought about these issues, and are we prepared for them?