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Why Solar Needs a Climate Bill

RP Siegel | Wednesday October 13th, 2010 | 1 Comment

One Block Off the Grid, recently ran an article asking What if Solar Power had Fossil Fuel-like subsidies? The answer would involve a ratio of 72 to1, which is how fossil fuel subsidies compare with solar today. From an average taxpayer perspective, that means that over the past five years, you would have contributed $521.73 towards fossil fuels subsidies, but only $7.23 towards solar. If the tables were turned, 100% of Americans could soon be receiving their power from solar sources.

Take the example of Germany, which only receives 2.6% of the sunlight that the US does, but still produces 60 times as much solar power. That means they are utilizing solar energy at a 2340 times higher rate. How is that so?

It was done through a  government-introduced mechanism called a feed-in tariff (FIT) that was first initiated twenty years ago. The tariff requires utilities to connect renewable energy generators to the grid and buy the electricity produced at a rate of 65 to 90% of the retail cost. Other countries, including the UK have now replicated this model.

Now, the German government is going to reduce the incentive rate in accordance with the original plan. Germany now has 9GW of solar power capacity, a good start towards their ultimate target of 66GW by 2030. The solar industry in Germany has also produced over 40,000 jobs to date.

Back home, SEIA® President Rhone Resch is calling for an increase of solar PV to a level of 10GW per year by 2015. That’s enough to power 2 million homes and will create 220,000 new jobs in the process. This is ambitious, considering we will have just about achieved the one giga-watt mark by the end of this year. But given solar’s 100% growth rate, even in this tough economy, it is certainly not out of the question. Still, this is relative to a US electrical demand that runs between 600GW in winter and 800GW in summer, which means that 10GW would be less than 2%. So we still have a long way to go.

America’s appetite for solar energy could certainly use a little stimulation regardless of whether you look at our consumption or if you look at what the rest of the world is doing. Our implementation of photovoltaics last year represented only 7% of the global total. So how do we get bridge that gap?

Up to this point, governments have been the major drivers of the solar industry. The European market has been dependent on Feed-In Tariffs to sustain demand. Spain’s leeway policy on solar led to installations to the tune of more than 3GW. So it would seem that government support is important at this stage for solar power is critical, especially in light of the economic climate where capital funding is so difficult to obtain. But why should solar be any different from coal, oil, natural gas, and nuclear, all of which have received tremendous subsidies in their early stages and continue to do so.

Advent of a federal Renewable Portfolio Standard, Investment Tax Credits and some form of carbon trading system or carbon tax here in the U.S. would go a long way towards closing the gap.

So why are we still paying billions in subsidies to the energy dinosaurs and feeding peanuts to the renewable we will need to secure our children’s future? Same reason why we didn’t get an energy bill passed in this last Congress. Al Gore explained it well last week. When we were kids we used to play king of the mountain. If you got to the top you tried to keep others from getting up there. But we knew it was just a game. These guys are playing for keeps.

RP Siegel is the co-author of Vapor Trails. Like airplanes, we all leave behind a vapor trail. And though can we can easily see others’, we rarely see our own.

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  • wk

    If you give same tax incentive for oil and solar “Big Oil” will shift to Solar, but remember, oil wells on federal land is owned by the government, so they get 10% or so of revenue offsetting the subsidies and incentives