Following negotiations between the two houses of the German parliament, the feed-in rate will be reduced by up to 13% as of July 1, followed by a further 3% cut in October. Actual rate reductions will depend on the size and type of installation. Under the original plan passed by the Bundestag this spring, the full 16% cut would have taken effect this month.

The German Solar Power Association immediately blasted the legislation, an amendment to the Renewable Energy Act (EEG). System manufacturers such as SolarWorld AG have complained that the rate reduction is greater than can be offset by declining production costs. The new regulations will also bar building of solar power plants on farmland, a move the Solar Association called “unacceptable”.

Representatives of the governing coalition countered that the amendment eliminates a burden that “bestows dream returns on investors and rising electricity prices on consumers.” They also noted that the rates in effect until now have favored foreign manufacturers, who supply 60% of all solar modules installed in Germany.

The legislation does include a few bright spots for solar advocates. Generation for the operator’s own use will be subsidized for the first time, although support will be less generous than proponents had hoped. The legislation also explicitly opens brownfield sites and strips alongside roads and railways to solar development and establishes a €100 million research and development fund.

Researchers from the Baden-Württemberg Center for Solar Energy and Hydrogen Research and the Fraunhofer Institute for Wind Energy and Energy System Technology have developed a process using electric power from renewables to first “crack” water to obtain hydrogen, then convert it to methane through a chemical reaction with carbon dioxide.

The methane can then be fed into the existing natural gas infrastructure, potentially eliminating the need for enormous investment in new facilities for hydrogen or other forms of energy storage.

Solar Fuel Technology of Austria has already completed a small demonstration plant in Stuttgart and is currently building a 10 MW pilot facility scheduled for completion in 2012.

While the report doesn’t exactly toe the enviro line — it promotes expansion of nuclear power and R&D investments in “clean coal” technology — green-minded readers can only applaud its call for enhanced energy efficiency and modernization of the electric power grid to better accommodate renewable energy. Encouragingly, Roundtable President John Castellani explicitly acknowledged that a sustainable transition to a low-carbon economy must be a national priority.

The legislation governing Spain’s feed-in tariff system provides for adjustments based on quarterly approvals of rooftop and stand-alone installations. Since new approvals in the latter category amounted to 95 MW, slightly above the adjustment threshold of 94.5 MW, the new tariff for stand-alone PV installations will drop from 30.7 eurocents to 29.9 cents per kWh.

The amendment, which must be implemented in national law by member state legislatures, also calls for increased financial support for energy efficiency measures and sets standards to upgrade the energy performance of existing buildings.

The power plant, if it can be called that, consists of a trailer parked on the corner of someone’s property, loaded with super-efficient batteries and a generator that runs on biodiesel or ethanol. Inside the trailer, a computer monitors the power as it flows to each home, sending the data in real-time to Xtreme’s headquarters in Kyle. Perched on top of the trailer is a panel of photovoltaic cells that capture solar energy. A 30-foot-tall wind turbine whirs nearby. Biofuel, wind, and solar work like three legs of a stool, providing a continuous supply of energy, about 2 kilowatts to each home. Each setup costs between $50,000 and $100,000.

The bad news for residents: electric power, free so far, could soon cost over twice as much as grid power in Laredo. And water and sewer service are still years away.

I’ve been thinking for a long time now that a long, flat oil peak is really our best hope for a relatively smooth transition to a renewable energy future, as it gives us more time to do the research, development, engineering, and infrastructure rollout we’ll need than a sharp peak followed by a steep decline. So if production has been flat for over two years and the industrialized world is slipping into recession, that’s actually good news from a big-picture perspective. (If I wanted to be more rigorous here I’d also look up the most recent Chinese GDP figures, but hey, this is just a blog.)

To me the big picture is about two cost trend lines that are closer to intersecting than people seem to realize. The first is the marginal cost of producing a unit of energy by extracting, refining, and burning fossil fuels, which has been low but is rising rapidly due to peak oil and growing demand from China. The second is the marginal cost of producing energy by investing in renewables, which has been high but is falling with advancing technology and economies of scale. The important point is that once the latter drops below the former, peak oil (and peak gas and even peak coal) no longer matters. The economy will seek energy inputs from the cheapest available source, which will no longer be fossil fuels.

Thus energy cost can only be a long-term brake on economic growth if you believe renewable energy is subject to the same “peak” logic as fossil fuels, and I don’t see any prospect of that in the foreseeable future. One does hear that a few European countries are beginning to exhaust their wind power potential because the best onshore wind farm sites have already been developed. I personally don’t believe it, but I haven’t looked into it closely enough for any confidence either way. Even if it’s true, the US is nowhere near that point. And, Dyson spheres and Ringworlds aside, we won’t even need a framework for thinking about a “solar plateau” for a very long time (and no “peak” even then since solar energy won’t actually decline for hundreds of millions of years).

When you break it down by energy source (oil, gas, coal, wind, solar, etc.) and type of energy use (basically electric power generation, heating, and transportation), you get different trend lines and different intersection points. The renewable trend lines are likely to be kinky as various bottlenecks come into play. Storage seems to be the big one right now, and transitions from research to development to production engineering to infrastructure investment for various technologies will all play a part. But the overall trends are basically the same, and we’re not that far from the intersection points in a growing number of areas — that is, renewables are already becoming price-competitive with fossil fuels in many cases, electric power from wind being the most prominent example.

The thing is, responding to price signals is exactly what the market is best at. The higher the price of oil, the greater the incentives to conserve and develop alternatives, and there’s plenty of potential for both. There may be other crises looming that are simply beyond the capacity of human ingenuity to deal with, but I just don’t see that being the case for energy.

The other huge energy-related concern is global warming. For some odd reason the climate crisis and peak oil conversations don’t seem to overlap much, but if you believe as I do that climate change is a bigger threat than economic dislocations from high energy costs, then rising fossil fuel prices, like anything else that discourages CO₂ emissions, are a good thing. My guess is that we will end up burning the rest of the (conventional) oil, and we’ll have to deal with that additional CO₂ in the atmosphere one way or another — but the fact that the total supply of oil is limited means the problem is at least not open-ended. What the climate consequences will be I don’t know, but (fingers crossed that no runaway positive-feedback loops are triggered) they’re at least finite.

What I’m much more worried about is coal, since global coal reserves are generally thought to be much greater than oil reserves. I’m extremely skeptical about “clean coal” and carbon sequestration, so in my opinion the great challenge facing the human race is bringing down the cost of renewables for all our various energy uses fast enough to keep coal from becoming the default source. I sincerely hope the article I linked to above is right, though it generally presents “peak coal” as one more thing to worry about, not celebrate.

(After I wrote the above, Roger pointed me to a 2005 paper known as the Hirsch Report that addresses the costs and lead time requirements of potential peak oil mitigation responses. We’ve been in denial on energy supply issues ever since Reagan tore Carter’s solar panels off the White House, and we’ve lost a whole generation when we could have been working on new energy tech. It’s going to be a much rougher ride than it needed to be, but I remain cautiously optimistic that we’ll ultimately get through it. Maybe I’ll have more to say here after I’ve finished reading the Hirsch paper.)