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Smoke Filled Clouds Won’t Cast A Shadow on the Solar Industry

RP Siegel | Monday November 8th, 2010 | 4 Comments

With a new, well-oiled regime coming to power in Washington, it is not surprising to see the assault on all things green already beginning. A number of articles questioning the economic viability of solar power recently hit the streets.

One article, entitled The Hidden Costs of Solar Power, expresses surprise that the solar industry is expected to double in 2010 despite the fact that it is more expensive than any other form of energy at an estimated price of roughly 30 cents per kWh, several times more than the national average.

An Arizona TV station cites a developer’s claim that “solar electric panels are far too expensive to provide a sustainable energy alternative to homes and businesses already connected to the electric utility grid. The solar industry and solar jobs are artificial and only exist because of large government subsidies.” This attitude is pretty ironic in a place where the sun shines 300 days a year. People buying solar in places like NY must really be nuts.

The problem is that these arguments are both overly narrow and simplistic. In a way, saying that we should continue to use coal instead of solar because of the cost of installing solar is too high is not that different than saying we should take showers using bottled water because the cost of installing indoor plumbing is too high. (One might wonder if perhaps someone selling bottled water would encourage such claims.)

Is it really necessary to point out that once the system is in place, everything that comes after that is essentially free? These simplistic cost analyses don’t take into account the inevitable rate increases, driven both by increasing demand, diminishing supply and the inevitable need for some kind of carbon tax to reflect the previously externalized impacts of burning fossil fuels on the environment, the costs of protecting the supply of oil in unstable regions of the world, as well as the cost of cleanup and health care that accrue from the apparently unavoidable spills and accidents.

Then there is the oft-mentioned complaint about subsidies. According to the Dept of Energy, in the year 2007, fossil fuels received 66% of all source-specific subsidies, while all renewables received 59% (nuclear received the rest). During the period from 2002-2008, the fossil fuel industry received $72.5 billion in subsidies vs. the $29.0 billion that was given to renewables. This is despite the fact that the fossil fuel industries have been around for quite some time and are not exactly still working out the kinks the way renewables are. It’s a well-known fact that as industries mature, they drive costs down in any number of ways. Incidentally, the US government has seen the nurture of newborn businesses as a good idea ever since George Washington authorized the patent office in 1790.

The bigger problem is that these complainers fail to see the big picture. What about, for example, the fact that distributed generation of power is far more stable and secure than centralized plants. Or that China has outspent the US in renewable energy by a margin of almost two to one. This could have been an enormous growth industry and a huge source of job growth for Americans, who developed much of the technology. Apparently those only concerned with the immediate costs are content to let other countries take the lead.

This type of short-sighted thinking seems to be popular at the moment, but if we look at the big picture we can see that it will eventually be repudiated. I’m just not sure that can happen fast enough.

RP Siegel is co-author of Vapor Trails.

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  • http://www.homerenergy.com Marilyn Walker

    Very well said. In areas where diesel has been the primary fuel source, or the grid is either non-existent or so unreliable as to be effectively non-existent, renewables and distributed generation are growing. Their ability to assure greater reliability and security will eventually catch on in the developed world. But developing areas are likely to be the leader here.

  • Jim

    Yep! As these systems get cheaper they somehow get more expensive?! Hmmm…

    I especially love the “China has all the Rare Earth” example of not investing in solar.

    Or, the “China is building 1,000 coal fired plant per year, so it is a futile project anyway” reason to not invest in solar.

    Or, “I love solar panel idea, but not today. It is much, much too expensive today. Perhaps later”. This is a classic arguement of the foot-draggers among us. Sure, let’s just kick the can down the road to a time when our children have to deal with it.

    You rarely hear the GOP side of the equation say “Hmmm…perhaps it would be a good idea to become more energy independant.”.

  • http://www.greenbusinessowner.com Scott Cooney

    This says it best: “The bigger problem is that these complainers fail to see the big picture.” If it’s not coal subsidies it’s public health issues or long term ROI. The right has failed to see the big picture, probably on purpose because their political contributors want them to fail to see the big picture, and it costs us all.

    • Jim

      Scott,

      Yep, they get paid to ignore the big picture.

      Follow the money (as usual).

      I love my home solar panels. They sit on top of my roof quietly pumping electricity onto the grid for all to enjoy (after I take my share of course).

      No moving parts, very low maintainence, and boy do they look cool. Not to mention, I have increased the value of my home around $15,000, and this is on top of not paying an electric bill (well, okay, I pay $9.20 a month to APS for them to lick the stamp and send me the bill).