Guest article by Mathias Aarre Maehlum. Read more of his work at Energy Informative, a website that focuses on promoting renewable energy sources and improved energy efficiency.

Germany is fast becoming the world`s first developed country that generates more electricity with solar cells than with wind turbines. In 2012, the country`s solar capacity increased more than 7,100 MW, putting their total capacity at 32,000 MW –1,000 MW more than wind.

Germany has set the ambitious goal to source 35% of all electricity production from renewable energy sources by 2020. The first half of 2012 looks very promising for Germany with 25.97% of it’s electricity came from renewable energy sources – a tremendous increase from last year`s number of 20.56%.

Note that in terms of total amount of energy produced (not in power capacity), solar is still behind wind, but if the trend we are seeing remains unchanged, it likely won`t be many years before solar is number one. The amount of electricity produced with photovoltaics has increased 47% compared to last year.

Why Germany?

We know that Germany is not blessed with a lot of solar energy, so why is the technology of photovoltaics flourishing?

A lot of the changes in the last couple of years have to do with the falling prices of solar panels. No one had thought that solar manufacturers in China would be able to drop their prices this low this fast.  This has become the main reason why so many businesses in the solar industry have had to shut down or gone into bankruptcy lately.

In addition to the ongoing industry trend towards lower prices, Germany has put excellent financial incentives in place to promote solar growth. A feed-in tariff scheme (similar but better than net metering) was introduced way back in 1991. The FIT-scheme requires power utilities to purchase electricity from renewable energy operators at a 20-year fixed rate, which is the foundation for a stable investment environment for banks, entrepreneurs as well as homeowners.

Numbers taken from EEX Transparency and BDEW.