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  • The Stimulus Solar Boondoggle

    According to a press release, Energy Secretary Steven Chu says that the billions of dollars in federal stimulus money directed toward solar-power will cut solar power costs in half by 2015. It’s a grand sounding prediction, but his own Energy Information Agency projects that electricity from solar cells will cost nearly five times as much as electricity from natural-gas-fired power plants. And that’s without any adjustment for the unreliable nature of solar power or for the additional transmission costs.

    Forcing those higher costs on taxpayers and ratepayers, spells bad news for the economy in terms of lost income, lost jobs, and higher electricity prices. Families could see their incomes drop thousands of dollars per year as the labor market loses a million jobs.

    On the other hand the subsidies would seem like a great deal for the solar industry. However, before you call your broker, you might want to reflect on a previous experiment with government directed shift to the “energy of the future.”

    The Energy Independence and Security Act of 2007 mandated the use of billions of gallons of ethanol to jump start what then seemed like a promising technology. Indeed ethanol production capacity rose from 4.3 billion gallons per year in January 2006 to 12.5 billion gallons per year in January 2009—a stunning 200 percent increase in just 3 years. Too bad the investment euphoria stimulated by credits and mandates wasn’t matched by market economics. The January 2009 demand for ethanol was only 8.4 billion gallons per year.

    This 50 percent excess capacity drove many ethanol producers, including some of the largest, into bankruptcy. By January of that year the industry was hosting a conference to help match those in bankruptcy with lawyers and takeover artists.

    Energy sources that need subsidies and mandates need them because they don’t make economic sense. If they did make sense there would be no need for mandates and subsidies. When it comes to providing affordable energy, supply and demand do a much better job than lobbyists and bureaucrats.

    Posted in Ongoing Priorities [slideshow_deploy]

    5 Responses to The Stimulus Solar Boondoggle

    1. Dag Johansen, Menlo says:

      A few comments:

      -Unreliable nature of Solar? I don't know about where you live but where I live the sun rises every day. And the solar systems generate the most power when it is most needed: on hot sunny days.

      -Additional transmission costs? Actually, this is a huge ADVANTAGE that PV solar has over traditional power plants. You have to run long, hard to permit, and very expensive power transmission lines to big power plants. Residential/commercial solar power is generated right where it is consumed thus no power lines are needed!

      Sure, natural gas is cheaper than solar right now. But the solar incentives have helped the solar already drop hugely in price. And they will continue to drop because there is a business there. Someday that natural gas will run out and we will all be happy that mankind did what was needed to be done to create reasonably priced solar power.

    2. lola, ny says:

      Three words come to mind–"Five Year Plan". Anyone who knows about Stalin's "Five Year Plans" or Mao's "Great Leap Forward" will recognize many of the same characteristics in Obama's punishing, ideologically unstable policies. Though mass executions aren't on the agenda, one detects the same ruthless indifference to the hardship this Green Policy is going to cause for millions of Americans, by leaders who are essentially clueless academic theorists. Vladimir Tchernavin wrote about the destructive consequences when such people took power in USSR from a scientist/engineer's point of view in "I Speak For the Silent". It's appalling to think that a similar sabotage of America's economy and industry is already underway.

    3. Baldbarian Raleigh, says:

      Wonder why the left has so much trouble with fundamental economics?

    4. economix says:

      I agree with the Bald gentleman, why can the left accept that the best way to lower prices is to externalize costs.

      These negative externalities can then be hidden when calculating what the socialists call the true cost to society. Simply take some of the profit gained from externailzing such costs, and use it to confuse and obfuscate the public opinion. A great example of this is our use of fossil fuel derived profit to fund "climate realists"

    5. PTC says:

      Great website.PTCThough mass executions aren't on the agenda, one detects the same ruthless indifference to the hardship this Green Policy is going to cause for millions of Americans, by leaders who are essentially clueless academic theorists

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