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First Solar, Inc. (Nasdaq: FSLR) today announced it reduced its manufacturing cost for solar modules in the fourth quarter to 98 cents per watt, breaking the $1 per watt price barrier.

The purchase price of a two megawatt turbine has been pushed up from about $3 million to about $4.4 million as a result. The actual turbines represent from 20 to 50per cent of the final installed cost of any new wind farm, the rest being spent on site investigation, assessment and testing, as well as the installation and infrastructure costs required to connect to the grid, often from remote locations. ...Optimal sites require constant wind speeds of about eight to 10 metres per second. A wind capacity factor of about 35 per cent -- the amount of time the wind actually blows over a year -- is needed to make a site viable.

This article demonstrates that the large feed-in tariffs currently guaranteed for solar electricity in Germany constitute a subsidization regime that, if extended to 2020, threatens to reach a level comparable to that of German hard coal production, a notoriously outstanding example of misguided political intervention. Yet, as a consequence of the coexistence of the German Renewable Energy Sources Act (EEG) and theEUEmissions Trading Scheme (ETS), the increased use of renewable energy technologies does not imply any additional emission reductions beyond those already achieved by ETS alone. Similarly disappointing is the net employment balance, which is likely to be negative if one takes into account the opportunity cost of this form of solar photovoltaic support. Along the lines of the International Energy Agency (IEA 2007:77), we therefore recommend the immediate and drastic reduction of the magnitude of the feed-in tariffs granted for solar-based electricity. Ultimately, producing electricity on this basis is among the most expensive greenhouse gas abatement options.