Banner
    The Solar Power Backlash
    By Hank Campbell | December 18th 2012 12:21 PM | 53 comments | Print | E-mail | Track Comments
    About Hank

    I'm the founder of Science 2.0®.

    A wise man once said Darwin had the greatest idea anyone ever had. Others may prefer Newton or Archimedes...

    View Hank's Profile
    In Europe, Spain and Germany, whose populations bought into the 'subsidize legacy technology now and it will be cheaper later' myth, there is a backlash against solar power. Politicians are seeing the financial numbers through a prism of reality and cutting subsidies, which means big companies no longer see it as worthwhile.

    The same thing is happening in America. While both Presidential candidates said wind power was terrific when they were sound-biting for votes, no one really believed it. America spent $72 billion on alternative energy in the last four years, a 14,000% increase, and all we got to show for it was bankruptcies and new tariffs on China - and China was the only part of the solar equation that made economic sense, so why Energy Secretary Stephen Chu declared we were in a 'race' with them over cheap solar panels is a mystery. 

    It's not that solar power is bad, solar power is clearly the future, it is just that our modern hubris - the 'if we throw enough money at it, it will work, because we are smarter than people 40 years ago' kind - is being tempered by the reality that we need more research, not more feel-good fallacies that cost taxpayers billions.

    California touts its green energy, for example.  While environmentalists block actual solar power plants, lots of expensive individual solar installations have gone up - because they are subsidized.  Rather than spend money making older buildings more energy efficient, which has a guaranteed benefit in both emissions and money, California has instead given rebates and subsidies for businesses and homeowners and the state forces utilities to buy the electricity at full price. As I wrote in The 1% Love Solar Subsidies Paid By The Other 99%, it isn't right that the people of East LA are paying for solar power on 6,000 square foot homes in Malibu but the 'buy back' clause makes the problem even worse.

    The people who can afford solar power love that power companies have to buy excess electricity from them - they are sticking it to The Man, even though if they have the $15,000 and up to spend on a solar installation in the first place they are The Man.  But because energy in California is the special kind of hyper-regulated deregulation social authoritarians love, utilities have to sell it at the same price they buy it. 

    A transmission and distribution system that nobody has to pay for is an economic miracle. If you believe in miracles, then California government is for you. In the real world, customers are on the hook for an extra $1.3 billion in utility bills annually.

    Christopher Martin and Mark Chediak at the San Francisco Chronicle note that San Diego Gas&Electric will be shifting about $200 million in annual costs to customers without panels. Solar customers "avoid charges, not just for energy, but also the costs of the transmission and distribution system. That's why we say it is not sustainable," Dan Skopec, vice president of regulatory affairs for San Diego's Sempra Energy, the utility's owner, told them.  

    Martin and Chediak say Pacific Gas  &  Electric will pass on about $700 million in annual costs to people without solar systems while Southern California Edison will hit people with about $400 million annually - $1.3 billion from just three utilities.

    And every time a new installation goes onto a rooftop, the costs go higher.

    To anyone who can do simple arithmetic - everyone more evidence-based than Paul Krugman, for example - the answer is simple.  We need to clean up conflicting environmental regulations that block large-scale solar installations, stop unions from greenmailing green energy companies and stop putting the costs of legacy solutions on the backs of people who can least afford it.  Solar power is going to get there, but it takes basic research and not lining the pockets of the wealthy today.

    Comments

    MikeCrow
    I'm not sure it "will get there" (as in truly replacing significant amounts of other energy sources), but I do believe it will be very useful (and even cost effective)in some locations.
    Never is a long time.
    Hank
    That's a technology issue. Right now the concern would be land mass - we can't take over a space the size of the Amazon for solar panels but as they get better, both distribution and space will be solvable. But paying a fortune for something now will not make it cheaper in the future, especially when the recipients are based on politics.
    MikeCrow
    That seems reasonable, but I do wish all of that money was spent on fission research, that has a chance to provide a significant boost to clean energy, as well as burn up a lot of nuclear waste.
    Never is a long time.
    I think you mean fusion. Fission is what we have in production now.

    Yeah but there's also a backlash against the backlash. There are people that want to see alternative energy protected so that the planet won't be gouged again when the alternatives get bankrupted. There are people that are tired of paying for endless oil wars.

    Hank
    Sure, the best argument to make for alternatives is not abstract - like that global warming will ruin is in 10-100 years - but specific; if we want totalitarian despots to have less power worldwide, they have to have less money.

    But it is hard sledding when activists vilify and demonize everyone who doesn't agree with their anti-science agenda.
    blue-green

    All of the negative articles by Hank make my own unsubsidized 5-year-old off-grid installation sweeter every year. That's right Hank, I took no rebates and no one is buying my power. It works and has been maintenance free. I also have no water bill and no sewer bill for the site. This is in an area where closer to town, the tap fees alone for water and sewer will set one back $15,000 plus you have to dig down as far as a backhole can reach and work your way through rock for up to 400 feet to reach the central lines. It's the law. If anything goes wrong any when, its your problema. Got to love those utility companies … The bid for running electricity a mile to my site was $100,000 up front plus monthly bills forever. It ain't Malibu … probably a lot better.

    Thor Russell
    Yes, when going off grid becomes cheaper for someone in a residential area there will be trouble. Its certainly possible with the required maintenance costs, which aren't going to get cheaper while batteries etc will.What do you do about seasonal variation? Do you have a surplus of energy in the summer, or do you still have to burn fossil fuels in the winter to get by? 
    Thor Russell
    Hank
    Yes, the issue (in the US anyway - I don't know where you live) is they want so badly for this alternative to take they make the incentives a little crazy.  Forcing a utility company to buy the power - yet in California they can't own the transmission lines, they have to pay another company for those - is just a boondoggle.  

    I'm all for solar power and I don't think energy needs to be done at a profit by the private sector. It is a strategic resource and can be a negative just like food and the military. But what we are doing now is the worst of all worlds. We subsidize for-profit companies and then force others to buy from consumers who just got the technology at taxpayer expense, and then taxpayers have to pay to buy the energy.
    MikeCrow
    Let me note, this is the kind of situation where i think Solar does work.

    But blue-green, what do you do for High-Speed Internet access?
    Never is a long time.
    blue-green

    It's a construction site, so not fully tested, yet all of the high amperage tools run off the solar panels. Here is a link with a preview of what's coming. Great place for meetings!

    http://www.mountainlake.com/mlp/inn/chateau1.html

    Three 1000 Watt arrays and 32 deep-storage batteries. Each array is on its own pole with passive tracking. It's one mile from my home. I designed and installed it myself. Yesterday, I checked to see if the snow was accumulating on the panels during our short and weak December period for sunlight … and voila … all of the powder had already slid off. The solar electricity is ideally for just electronics and LED bulbs and a few demanding motors for the well and to push fluid through the in-floor heating season (which is not completed). Most anything can be handled so long as it is not on for long periods. The 450' deep well is setup with two stages. Submersible pump first fills tanks with no back pressure. A second pump charges a pressure tank. Most of the water pumping demand will be in the summer for landscaping purposes when the days are long and the sun is high. All of the other energy demands from heating to cooking to refrigeration can be handled quietly and efficiently using propane. No need for air-conditioning at 8800 feet. 

    For high speed internet I might just use a Verizon cell service. That's the future. At home, I currently have a wireless setup to a small antenna about three miles away. The ISP for that has asked about using my solar site to set up an antenna to increase his coverage. I'm not sure what his equipment's power demands would be. It can't be much since solar panels are routinely used in high and remote areas to run scientific instruments and relays while communicating with their home base.

    Surplus energy is wasted for now. By next summer, if there is any surplus energy, it can be used to pump water into a buried 2500 gallon tank that is set high enough that one can then do light watering for landscaping on the 5 acres below it by gravity. That tank is also for fire protection. One of course has to not get carried away with using surplus energy. You never want to run down your battery bank. So far, I have not had to use a generator even once in over two years to replenish the batteries. If even more power is needed, a few things have been done to make it all easy to expand.


    MikeCrow
    I saw them before, a beautiful place! And if you do have any meetings there, please send me an invite :)

    And at 8,800 feet you really need a telescope to match the house.
    Never is a long time.
    blue-green

    Yes a big invite indeed. Delays in completion are due to labor issues …. picking a general contractor who dismissed his crew, spent the building funds and then insisted that I pay for new work to get prepaid work completed. I'm still working through that high-jacking. If I don't meet his demands, he declares bankruptcy .... kind of like being held hostage. And then there is the flight of affordable labor back across the border to Mexico which Hank can update us on later as Latin America rises. As Gerhard might note, the weakness is not in the engineering but in the humanities and man-unkind.

    With the whole Milky Way stretched out and turning by the minute .... 'tis best to see it all .... without instruments.

    MikeCrow
    You watch the Milky Way while you take pictures like this


    And from 8,800 feet away from city lights, you'll get much much better pictures than I do from my driveway under a light dome
    Never is a long time.
    Superb photo!
    Hank, how can you say that there is no benefits to end users in Germany, when peak time tariffs went down from EUR0.40+/kwh to less than EUR0.20/kwh? The only reason for these price reductions to end users is due to increased feed in of solar PV into grid. It was win for people installing solar, it was win for other people who have to pay less now. government has paid for it dearly, but i think benefits well cover the costs bore by government. the only loser in long term are energy companies, but we are rooting for small person rather that huge corporations, aren't we?

    Hank
    I have never worked for a large company but I have no special preference for small over large - you are guaranteed to have more inefficiency if you have a small company or a large government. 

    You seem to think having taxpayers buy down the cost of electricity is a good idea. I suppose it is not terrible, I have said energy does not need to be profitable, but Germany is just as silly as the US for paying companies to do so instead of just setting up a nationalized energy system. In energy, it would not be cheaper than the private sector producing it, but it would be cheaper than government subsidizing the private sector.

    Why is Siemens losing so much money when General Electric and ABB are not?  Because they made a populist effort to become a solar energy company and when subsidies dried up in Italy, Spain and Germany, they could not afford it. A division with only 700 employees was so unprofitable it made a $70 billion company look incompetent.

    Anyway, Germans can subsidize what they like, it's their money, but that does not mean the world should copy it.  I am all for subsidizing solar energy - when it is ready. Until then I would rather subsidize basic research into making it better.
    Previous commenter indicated: the only loser in long term are energy companies, but we are rooting for small person rather that huge corporations, aren't we?

    I would not be so sure reading the article from The Chronicle - how does that qualify as unbiased reporting?

    And Science 2.0 - what is this, some sort of industry-driven mouthpiece that ignores actual science?

    If your opinion as an expert is being sought by those in our country who make important decisions that impact everyone now and generations in the future STOP TELLING LIES!

    Hank
    It's a mistake to assume anyone who disagrees with your pet project is lying or being paid by a corporation.  Solar power is a business just like anything else so they pay their own people, they are sure not paying me - but if it is going to rely on public financing, it has to be accountable just like any government-controlled project.

    I see no reason to regard the San Francisco Chronicle as any more or any less biased than every other newspaper in the world. They didn't invent those numbers. Are energy companies exaggerating? Maybe, but why would they?  It is not like they are going to lose money either way - they are instead pointing out that people in California are being taxed three times for solar energy: They pay federal taxes which go to subsidies, state taxes which go to subsidies, and then higher utility rates at their homes.

    A rich person put in a $1.45 million dollar solar installation and taxpayers in California paid $319,000 of it. And then they get a federal tax break too.  If you think that is a good thing, you are one of the rich 1%.  If you don't think poor people should be paying for that, I can't see why you are complaining that I write against it.



    This appeared in the Wall Street Journal last August:

    Thor Russell
    Those numbers are highly suspect. $775 per megawatt is 77c per KWh! That is way above the cost of solar power anywhere in the world now. No FIT is that high, even Japans new one isn't. Energy numbers can be spun so many ways. The German FIT is much lower than that, less than retail electricity now I think.
    Thor Russell
    Brent1178
    I Guess they get those figures by comparing the total money invested to the total cumulative output up till that time. Since most of the installations would have been pretty new, maybe one or two years old, the cost per kWh is high. If you recalculated the same investment after 10 or 15 years of output, the cost per kWh would be a fraction of that.
    Thor Russell
    Yes they are probably doing something like that. The numbers are designed to mislead like many things in the WSJ.
    Thor Russell
    Hank
    You read the Wall Street Journal?  It is the most respected paper in America so the idea that they are biased against your pet beliefs is a little silly.
    Thor Russell
    HAHA! Have you read the nonsense they publish regularly on global warming?
    Thor Russell
    MikeCrow
    Have you read the nonsense the IPCC publishes regularly on global warming?



    Never is a long time.
    Hank
    We spent $72 billion on green energy in 4 years.  If you compute how much actual energy production we added for money spent, that chart looks about right.
    Brent1178
    If the total cost of a grid connected solar installation is $2-3 per watt including hardware, electronics, installation etc, then spread over a 25 year timespan, the cost would be $0.044-$0.066 per kWh based on average 5Wh per W per day. Even if you lived in an area with lower solar radiation and got only 4Wh per Watt per day, the cost would be $0.055-$0.082 per kWh. If you base it on a 2.5 year timespan, then the figures quoted on that chart look about right. Admittedly, these figures don't allow for maintenance costs, but these are very low for solar installations. 
    Thor Russell
    How many KWh per year per KW peak do you get from your array? 4-6c is a lower number than I have seen quoted, more like 6-10c. Still significantly lower than residential costs anyway. Storage is an issue of course, have you seen EOS energy storage? http://www.eosenergystorage.com/

    Their claim of $160 per KWh storage would be a real game changer and make the whole debate about solar getting the grid for free almost irrelevant. 
    Thor Russell
    Brent1178
    My own system is off grid, currently 720W but about to be upgraded to almost 3kW. As it stands, I get up to 5.2 kWh on a good day in summer, and about 3.7kWh on a good day in winter. The other day it rained all day and I got 1kWh The average if I only look at days when the batteries haven't come up to full charge and limited the input, is about 3.5 or 3.6 kWh per day. My 720W panel puts out up to 1100W in some conditions, particularly partly cloudy days where there is a lot of reflection. 
    The figures I stated above are my own calculations base on current costs and a grid tied installation. If  you factor in interest on borrowed money, the cost would also increase. If the money was borrowed at 5% the interest on $3.00 per watt would equate to about $0.08 per kWh. as with all these things it depends how you work it out.  

    Thanks for the note on eos storage, I'll watch with interest. 
    MikeCrow
    The issue that put the nail in my considerations was that having been involved in the reliability of electronic systems, leads me to believe most of the power electronics will not last that long. Thermal cycling, and high temps are death to electronics.
    Never is a long time.
    Brent1178
    That's a fair comment. Most of the inverters currently in use haven't been around long enough to prove their reliability over a 25 year period. There will no doubt be many cheaper inverters which won't last that long, but even if the inverter needed to be replaced or repaired after, say, ten years, it's only about 30% of the total system cost  and the numbers would still look reasonable. You mentioned in a comment on another solar article about life expectancy of electronics in the high temperature cycle environment in the sun on a roof top, but the power electronics are usually installed inside in a relatively stable environment. There is some thermal cycling with the heat generated during use of course, but a well made unit with sufficient cooling shouldn't be under any undue stress. I guess I'll discover  eventually just how long my inverters and controllers will last, but so far so good. I expect the better quality gear will do the distance.
    Other good news, it's the 21st here today and the world seems... well... much the same as yesterday.
    I have a feeling they are reasonable, not just given the source, but because the wind power subsidy in my province is $0.125/kWh = $125/MWh, greater than the American subsidy.
    You are making the mistake in thinking that subsidies directly purchase panels. In reality many subsidies produce zero capacity, Solyndra being the highest profile example - millions were spent and nothing was produced. There's no reason why the subsidy can't be more than the market price, gasoline costs around 25c/gal in some middle eastern countries because their governments subsidize it by about $3/gal. We do the same thing with solar.

    blue-green

    In case Hank or Enrico think I have delusions about the ultimate efficiency of solar energy, here is a link to an article I wrote for the Colorado Engineer way back in 1977!!! See Table #1.

    http://www.mountainlake.com/mlp/CE77.pdf

    With the right place and right time, solar electricity makes sense, even if it just a driveway marker … or the next generation of street lights. Be that as it may, my solar panels were obsolete before there were even installed, and yet they are doing their job. I am the kind of guy who once paid 5 grand for a personal computer and 10 grand for a laser printer …. so that the unappreciative masses can now have the same for pennies on the dollar. One more detail Hank, there is no loan on the project, so again, you'll be hard pressed to find the subsidies. Thanks for scare-factor to make it all the more rare and valuable. It's been fun!

    Further up I forgot to mention the walk-around sit-around tulikivi wood-burning fireplace. If it wasn't just a construction site, I would not have forgotten to note how well it will remove the heat load from the entire dwelling and have a fully functional pizza oven to boot! We haven't fired it up yet since we are still using temporary construction infrared propane heaters. Everything is super-insulated with foam insulation and special tricks in the soffits and eaves to keep icicles from forming on the roof (which I plan to never ascend except for an occasional chimney sweep ((i even designed little steps in the chimney for that eventually and built in hooks on the turrets for a safety harness)).  Intelligent design is what is all about. Quality is the New Energy. We have more beetle-kill firewood than we can burn … meanwhile, at my current home (which I built for pennies), I've been burning waste construction material for years ….. Science buffs can appreciate the energy efficiency in burning wood from on-site directly versus going through a half-dozen energy conversions to get high entropy heat via other means. Isn't that true Enrico?


    In case Hank or Enrico think I have delusions about the ultimate efficiency of solar energy ..

    No, I hadn't assumed that.

     With the right place and right time, solar electricity makes sense

    I agree. 

    blue-green
    Enrico! I really wish you of combustion fame could say much more, a full article for Christmas or the new year on the physics and entropy of energy conversion.

    One more side note on my project:

    Concerning the land I'm developing …. my own real estate company had it listed on the open market for years, and no one would even look at it … even though there were already two houses further up the road on solar electricity. The Chinese fellow who owned it would call my office almost every day to inquire about showings. Eventually, I bought it myself (I could see it right out my window) and let the spineless and visionless mountain property real estate seekers tough it out with the utility companies and sky-rocketing tap fees in town.

     could say much more, a full article for Christmas or the new year on the physics and entropy of energy conversion. 
    It's not my specialty, but I appreciate your suggestion.

    Brent1178
    Politicians are seeing the financial numbers through a prism of reality and cutting subsidies
    Is this really a backlash or just common sense to cut the subsidies? A few years ago we were paying US$5-6 per watt for solar panels. The ones which currently power my home cost NZ$8.00 per watt (and weren't subsidised) when I bought them nearly four years ago. At that time some governments (not ours) wanting people to invest in PV solar power were subsidising installations to encourage people to take them up. Now the industry has boomed, especially in China and manufacturing has become much, much cheaper. It is now possible to buy solar panels for US$0.50 per watt. In fact I've just bought some at that price. 8 280W panels totalling 2240 watts cost US$1100+ freight and tax (a fraction of what I've been spending per year on fuel) and will provide enough power to drive my electric car 50 km per day and also power my business with machine shop. To me, that's great value! 

    If Governments were subsidising solar panels in the past to get the cost to the consumer down to $2-3 per watt when the real cost was $5-6 it makes no sense whatsoever to continue those subsidies when the cost has fallen by 90%. people will continue to buy them without the subsidies because they'e still better value than they were a few years ago with the subsidies. You can now make a typical home a net producer of electricity for less than $10k including all the hardware. What will that buy you in efficiency mods? I'm not saying efficiency modifications to your home are a bad idea, they're a great idea, but compare the costs or maybe do both.


    Right now the concern would be land mass - we can't take over a space the size of the Amazon for solar panels
    Why take over any land mass? there's plenty of space on the roofs of the buildings and homes which use the power, and all the energy which lands on them is otherwise wasted.
    Thor Russell
    Where/how did you buy those panels? I'd like to keep that in mind for when we replace our roof etc. 50c is less than the quoted 70c for the international price now.
    Thor Russell
    Brent1178
    http://www.sunflowersolar.cn/Products.html 
    Sunflower sell polycrystalline panels for US$0.50 per watt and Mono for US$0.60 with a minimum order size of 5000 watts. I got some interested friends together so we could buy in bulk and share the shipping cost.

    MikeCrow
    They don't list prices on their website(well I didn't find them), But @$0.60/w, 8,500watt's would cost $5,000, How much are the inverters these would require (they'd have to be ~$14k to price out the same as HD)?
    Never is a long time.
    MikeCrow
    In the spirit of this blog, I repriced a 720 Kwh/month system (A 6000 watt system @ 3000w/hr avg @ 8hr's per day (I live in Ohio (41 Latitude), and only have east and west facing roof panels). This is about half my monthly usage. Even including the reduction of distribution costs (~40% of my monthly bill), it's still a 35 year payback for a $33k (US) system. And I see no way the system will operate that long without 20-30% of the system cost in parts failure.

    I did not include any rebates, or tax incentives.

    As I also mentioned, If I built a home out in the southwest in the middle of nowhere, it would be a cost effective solution.

    Update: I did a little more shopping, and found a 1Mwh/month system (8,500watt) at Home Depot (go figure) that with mounting rack priced out @~$26k (+installation and engineering), that had a payback of 21 years. That's better, but still not quite there. Consider that I save zero money for those 20 years, because any reduction in my electricity bill will be more than offset by the monthly payment for the system plus interest.
    Never is a long time.
    Brent1178
    I looked up a price from a US distributer for a well known brand sunny boy grid tie inverter, 7000W as I believe it's worth having some headroom above your solar output; US$3139.00 http://www.wholesalesolar.com/products.folder/inverter-folder/SB7000US.html . Ok, so I'm not sure how import tariffs  and taxes will effect the price on those $0.50/W panels once you get them into the U.S., perhaps it's realistic to make the landed and taxed price $1.00 per watt, (The site mentioned above have some at about that price,) so the price is up to $9139.00 for a 6000W system, add to that mounting, wiring and installation, it should be possible to complete the system for $12,000-$13,000 with a significant portion of that money having gone to the government in the form of tariffs and taxes (so they give with one hand and take with the other, go figure).
    Your estimate of 720kWh per month from 6000 watts is very realisitic. What do you pay for power? if you pay $0.20/kWh which is roughly what we pay, that's $1728.00 per year savings or 13-14% return on investment, or 7.5 year payback. That seems pretty good to me.

    Alternatively, if you would prefer to buy a complete system from a U.S supplier, check out this 6000W system for $9675.00 ; http://www.wholesalesolar.com/system/solaredge-24-astronergy-panel-gridt...

    When I see some of the prices of installed systems in the U.S (Like the 33k you quote) and I know the real cost of the components,  I can't help but think that some of those companies are making a huge profit on the back of those subsidies, just because the subsidies are there. I mean if you owned a company installing solar systems and you could mark up your prices 100% or 200% and have people pay it happily because it's government subsidised, you would wouldn't you?

    I actually agree with Hank that the subsidies should be cut and that poor people shouldn't be paying for covering the costs of wealthy peoples solar installations, I just don't agree that solar power is impractical or a waste of money, or that cutting the subsidies would represent a "backlash".
    MikeCrow
    Those are the most reasonable prices I've seen, they're getting in the range to be worth it. Payback would be in the 10-12 year range, long enough that I might actually still be living (in my house) when it's paid off.

    And yes, if I had people paying 100-200%, absolutely.
    I pay about 6 cents/Kwh, plus about say 4 cents/Kwh for distribution costs (call it ~$ 0.10 US). Which is about half your energy cost.
    Never is a long time.
    I pay about 6 cents/Kwh, plus about say 4 cents/Kwh for distribution costs (call it ~$ 0.10 US). Which is about half your energy cost.
    That's pretty good. I pay a little less than 8 cents/kWh because my province has ample hydroelectricity, enough to sell a surplus to neighboring states and with the potential to produce even more, which makes their 12.5 cent/kWh subsidy for wind power all the more mysterious.
    Brent1178
    That's seriously cheap power! I wondered how that could be possible in a country which relies so heavily on coal, but I see that coal power is also subsidised; http://www.sourcewatch.org/index.php?title=Federal_coal_subsidies

    A 12.5 Cents per kWh subsidy for wind power does seem excessive when wind power done right can produce power for  about 7 cents per kWh;  http://www.nrdc.org/energy/renewables/wind.asp. 
    but again, if someone comes along offering to subsidise your costs by nearly 200%, you'll take it with both hands.

    I strongly believe in the importance of growing renewable energy production and decreasing dependence on fossil fuels, and I believe that the existing technologies are good enough to move ahead with even if they're not perfect, but it does seem that the subsidies are a costly and ineffective way to achieve that, with most of the money going into the pockets of a few private companies. There must be a better way than subsidising renewables to compete with fossil fuels which are also being subsidised. Looking from the outside it's a bit of an eye opener and it makes you think. I'm still not sure what the right answer might be.
    Hank
    Calling a tax break a subsidy is part of the disingenuous nature of activists in the US.  If I give you money to build something, that is a subsidy. If you say, I can't build a plant in your town because your taxes are too high and I say I will give you a break on taxes so people here can be employed, that is not a subsidy.  But the anti-coal lobbyists call it a subsidy anyway. 

    They don't understand even the simplest economics. Instead, they are like those record companies that insist every .mp3 some kid downloaded and never listened to should be counted as a lost sale - they think taxes they never collect are the same thing as taxes that are given to their pet project.
    Brent1178
    Good point, it's not the same, although it has a similar effect in that it lowers the operating cost to the plant making it harder for the renewables to compete. It would be interesting to see how solar would go if the subsidies were limited to tax breaks and the import tariffs were lifted on imported solar products. I suspect it would still grow quite well with current pricing (perhaps with lower profits to some of distributers and installers), and there would be a lot less resistance from people who resent the way the tax dollars are being spent. People seem to be incredibly polarised over renewables in the U.S and most of the people speaking out against them appear to do so mainly because of the subsidies.
    Perhaps a more effective form of government intervention would be direct investment, where the government actually owns the installation or a share of it and eventually benefits from the payback... or provides low interest loans which would have to be repaid instead of grants which don't.
    Thor Russell
    Yes a tax break is not identical to a subsidy. However it makes sense to ask if they can be equivalent from certain points of view. If you take the energy company that has the tax break and is trying to optimize value for shareholders then you can ask what subsidy in c/KWh for electricity they would trade it for to keep the same profit/company health etc. Increasing what they get paid for electricity could be made to offset to the tax increases caused by a loss of tax breaks. So the question is what c/KWh would that be? After calculating the value, you can then say that from the companies point of view the tax break is equivalent to a subsidy of x c/KWh. If the activists made this more specific statement then the same criticism wouldn't apply.

    From the governments point of view, it can be the same also. For the company in question they could pay in subsidy what they gain in tax, a cashflow neutral change. And if it was a worker payroll tax not profit tax, then it could still be equivalent for all parties by paying the workers more with money from the new subsidy to make up for the tax increase. 

    It gets more complicated when trying to apply that equivalent c/KWh subsidy to a company in a different situation. (e.g. renewable with higher cost to produce electricity) At the moment its like you have a company that can produce electricity for 4c/KWh, sell for say 6, make a profit and get a tax break competing with a company that would make no profit. There is no equivalent subsidy (it is 0.0c/KWh) for the company that makes no profit as they are getting no tax break. 

    So you won't get agreement between the two companies about what is fair, however the tax break has the effect of favoring the status quo, and of course being a needlessly market distorting thing. It simply makes sense to get rid of the tax break, even if renewables weren't in the picture. Yes it may increase power prices, but that is what the free market would "want" anyway. Given that electricity usage is stable or declining in most developing countries, there are many sources of electricity etc I really don't think there is a case for a tax break.
    Thor Russell
    Hank
    I guess I have said it before but I regard energy as a strategic resource.  I don't actually think it has to be profitable but we don't want to have it under the control of other countries either.  Like food. So if tax breaks make one area of a state more competitive than another, that is fine.  In a subsidy taxpayers lose but with a tax break a region wins; they go from no taxes to something.

    At some point it might make sense to have energy nationalized. I know fiscal conservatives recoil at that notion, but I regard energy as that important.  We nationalize defense and have basically nationalized food staples.

    So I would really prefer if we were spending the money on basic research rather than subsidies that cost a million dollars per job and do nothing.

    That's seriously cheap power! I wondered how that could be possible in a country which relies so heavily on coal,
    I think you're confusing the country I live in (Canada) with the United States. Most of our electrical energy does not come from coal. 



    In our province, 0% of electricity is from coal and 187.9 TWh out of the 193.8 TWh (96.96%) is from hydroelectricity. We almost have as many dams as hockey rinks and poutine-covered French Fries! As I have written, it's where Quebec's true power lies!
    Brent1178
    Enrico, I beg your pardon, I was thinking of the United States, not Canada. Particularly Mi Cro's example of 6cents/kWh + distribution costs in Ohio, which as I understand produces about 80% of it's power from Coal. In New Zealand, coal is one of the more expensive sources of electricity. Wind competes directly and without subsidies and I think when the statistics come out for 2012 we will find that wind power has surpassed coal power production for the first time. Most of our power still comes from hydro which is relatively cheap to produce, but we still pay about double what you guys are talking about. 
    New Zealand electricity production by sector 2011 (ministry of economic development)
    [image] click to view full screen version.


    Unfortunately, while you would think that national ownership of of strategic assets like power companies would be a logical way to go, our rather short sighted government is currently busy  trying to sell off our state owned electricity producers to private investors to make a quick buck, another reason for some of us to take electricity production into our own hands.



    Anyway, I'm off. Merry Christmas!