“Before maybe the end of this decade, I see wind and solar being cost-competitive without subsidy with new fossil fuel.” — DOE Secretary Steven Chu, 2011
President Biden’s Build Back Better—another subsidy lifeline for solar power—remains in legislative limbo. Such caution is merited for a technology that has always been uneconomic as a grid electricity.
Solar is no infant industry. The “photoelectric effect” effect was discovered in 1839. But as American engineer John Ericsson noted in 1878, after numerous costly experiments: “Although the heat is obtained for nothing, so extensive, costly, and complex is the concentration apparatus that solar steam is many times more costly than steam produced by burning coal.”
But entrepreneurs kept trying. In 1911, Sun Power Company of Philadelphia built a 10,000-foot collector surface plant that soon proved uneconomic. Micro-solar, on the other hand, would find a niche in sunny areas with water heating, as well as off the grid where plug-in power was unavailable (offshore drilling rigs were the first major market).
The 1954 demonstration of a photovoltaic cell at Bell Telephone Laboratories brought new hopes. A 1971 proposal in the Bulletin of the Atomic Scientists (October, p. 32) was for a “solar power facility of national scope” capable of supplying a million megawatts from a 5,000 square-mile solar collector in the desert southwest. But no entrepreneur would take the bait.
Politics came to the rescue in the 1970s when oil and gas shortages from federal price controls made solar “the thing.” President Carter’s National Energy Plan of 1977 announced: “Solar hot water and space heating technology is now being used and is ready for widespread commercialization” (p. 75). The first solar federal tax credit that year was joined by a PR moment when 32 solar panels were installed by Carter on the West Wing. (President Reagan would remove them.)
The federal tax credit expired in 1985. Solar went quiet. But with climate alarmism, solar politics and media PR reemerged.
In 1993, a group of more than 60 U.S. utilities, backed by the U.S. Department of Energy, unveiled a plan to install 50 megawatts of solar cells by 2000. The next year, the New York Times excitedly reported that photovoltaic rates “competitive with those of energy generated from oil, gas and coal” was finally at hand. But Enron’s $150 million, 100-megawatt central-station facility in northern Nevada would never eventuate.
In 1997, President Bill Clinton announced the Million Solar Roofs Initiative (by 2010) as part of the buildup to the international negotiation on climate change held in Kyoto, Japan. President Obama and California Governor Jerry Brown kept the solar subsidies going, and Hillary Clinton in her 2016 Presidential run boldly upped the ante to increase solar seven-fold.
Subsidies, Subsidies
Government lit the solar boom in 2006 with the generous federal Investment Tax Credit (ITC). The dollar-for-dollar tax reduction covered 30 percent of residential or commercial solar installation costs. In fiscal year 2020 alone, the federal government handed over a combined total of $2.4 billion.
The ITC would be extended in 2016, 2018, and 2020. In 2019, a new provision allowed the U.S. Treasury to grant cash in lieu of the tax credits.
Loan guarantees from the U.S. Department of Energy joined the subsidy parade. The most infamous was to Solyndra, which declared bankruptcy to leave $536 million to taxpayers.
Renewable Portfolio Standards (RPS) required utilities to produce or buy electricity from qualifying renewables. More than 20 states and the District of Columbia enacted an RPS or a similar provision. In addition, states and utilities have offered tax breaks and rebates for solar installations, respectively.
Late-2020 legislation extended the current 26 percent ITC for two years (2021 and 2022), while scheduled reductions were postponed through 2023. But the solar lobby feverishly wants another extension for 2024 and beyond.
Conclusion
Solar (and wind) are dilute, intermittent energies trying to compete against dense, reliable mineral energies. And so Biden’s BBB proposes open-ended generous subsidies to “grow domestic supply chains in solar, wind, and other critical industries in communities on the frontlines of the energy transition.”
On-grid solar is a niche technology, not a primary energy for high-energy civilization. Taxpayers and ratepayers have been conscripted to bridge the competitive gap, but government largesse for the “energy transition” now means greater deficits and monetary inflation. Sooner, rather than later, a let-the-market-decide policy is called for.
The post Build Back with Solar? appeared first on IER.
