Subsidies for Solar – Getting It Right

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Here’s an interesting piece by Marc Gunther, suggesting that subsidies for solar have been misapplied and have created weird market conditions. No argument from me there. Handing people money to do a certain thing is a guarantee that they’ll do exactly what you’ve asked them to do – and no more. Thus the imperative to be very sure you’ve been precise in that request. I’ll be the first to admit that, in the case of solar, we haven’t done that.

Simultaneously, the author discusses the need for innovations across a wide range of cleantech that needs to be rolled out over the coming 20 years, and suggests the need for a carbon tax.

Fair enough. But a stick with no carrot? Simply because our incentives have been applied imprecisely doesn’t mean the whole concept should be discarded. And if you honestly want to encourage innovation that takes decades to come to fruition, the dynamics of the “cash is king” market economy are not going to get the job done.

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

  • http://www.dulaney-solar.com Harry

    Maybe we can learn from Germany how to get the Solar PV market going?

  • http://www.segregationholding.com Jeff Hobbs

    While I love solar energy and believe it can be the energy of the future, today is not tomorrow. Our tax dollars do not need to subsidize solar or any other endeavor because that is not what the federal government is about. It matters not whether subsidies have been “misapplied” or not.

    Solar is not a viable solution for today…it is too expensive and not efficient in the sun’s energy conversion. Clean energy from solar, wind, or wherever cannot supply what we need in any credible sense and it will not in our lifetime. Taking my tax dollars and putting it into solar subsidies is ridiculous and a poor use of the money.

    Cash IS king…but it isn’t going to make solar work for us today!

    • Sabrina Hill

      Well Jeff, you are sadly mistaken. I am typing you this on my nuclear powered computer, in my nuclear powered house here in far west Texas. The fusion breeder reactor that powers my house is 93 million miles away.

      I am not even hooked into the FILTHY power grid, and when it goes down on an average of five times a year from the wind, or a drunk knocking down a pole, I never even find out about what shut off most of the people in the area’s power, till the next time that I go into the little farming hamlet of 225 people 30 miles away.

      NO Jeff, solar WORKS, our house is PROOF of it.

      • http://www.SegregationHolding.com/mobile Jeff

        Sabrina,

        I believe you mistake what I said. I am not against solar energy. My home is designed and constructed around using passive solar to heat/cool it.

        Of course solar works…however, it does NOT work on a large scale due to it’s cost/benefit ratio. As I stated, without government subsidies (yours and my tax dollars), solar would crash and burn. Our technology for solar isn’t “there” yet. Our PV cells are still not able to convert the sun’s energy efficiently, or at least efficient enough, for mass production. If it were there would be a mass stampede of investors seeking to be “first” in line to make the “big bucks” in solar.

        Your comments are somewhat funny, however, in that you claim solar works yet say you’re hooked into a fusion reactor on the moon. If, in fact, you have your own small solar system, well, congrats to ya! Even more so that you’re “off grid” as it appears you are really “off grid.” :)

  • http://Www.completesolarco.com Aaron

    Jeff

    I agree solar and other renewables is far from being today’s energy solution but it can play a role.

    We deal with residential customers who have used utility rebates and tax credits to invest in solar for their home( http://www.completesolarco.com ). The rebate is a subsidy in a way from the power company since it is funded by all the utility customers but it does help utility companies get power production at the point where it is used instead of transmitting it a hundred miles and loosing the voltage.

    Also the tex credit is not a subsidy it is a credit that gives taxpayers their taxes back. I think getting your taxes back is better then letting the gov pay it out to more welfare programs that don’t create wealth for anyone.

    I am not for gov giving large amounts of money to companies for them to get their feet wet in a market. But giving a proven company a loan is different because most of the time it is paid back and the gov gets the interest.

    In the end the private sector will get solar or any technology to be successful in the market when the demand is there.

    • http://www.segregationholding.com Jeff Hobbs

      Aaron,

      So you understand, I am a big proponent of solar energy…I simply believe, rightfully so, that the federal gov’t shouldn’t “subsidize” anything because it’s not constitutional.

      That said, local governments are different, as are utilities and they are free to do so, although again, it comes back to who’s pockets were lined in order to get the subsidies. While I was in architecture school at UT-Knoxville, I studied solar and integrated it into many design projects. I was also involved in the TVA solar water-heating program where they financed 100% of the system cost and spread it over 10 years on the electric bill. That was an awesome program and it resulted in thousands of homes being outfitted with the American Solar King system. My parents still have it working today and it covers 98% of their hot water needs all year.

      Regarding how tax credits work, my business IS tax credits through cost segregation, so I know them all too well. In fact, we consider solar a 5-year asset and it qualifies for accelerated depreciation giving the purchaser of solar an additional tax “credit” on top of the solar tax credit.

      Agreed…the private sector is where all technology originates from!

      • http://www.completesolarco.com Aaron

        Jeff,
        Agreed, our utility charges all customers additional amounts to cover their solar rebate program(approved by state commission) It just so happens that a 70%+ of the rebate money was allocated in the last 2 years to be used on Gov properties and Gov schools, and less funds for private commercial and homes.It is definitely a rub my back and ill rub yours between the gov and utility.

        Depreciating the systems as a 5yr asset? Is that for businesses only or can residential properties take advantage of that?

        Aaron

  • http://www.segregationholding.com Jeff Hobbs

    Hey Aaron,

    The depreciation is for businesses…only those who can depreciate it as an asset. Homeowner occupied houses don’t qualify.

    Do you know of any businesses using solar? I can help ‘em!

    Jeff