The Solar Bubble’s Growth Only Worsens the Inevitable Burst

by William Yeatman on June 17, 2011

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Earlier this week at Climate Progress, an energy and environment site run by the liberal Center for American Progress, a blogger made a sensational claim about the growth of the American solar industry. Stephen Lacey wrote,

“With roughly 93,500 direct and indirect jobs, the American solar industry now employs about 9,200 more workers than the U.S. steel production sector, according to 2010 Bureau of Labor Statistics.”

However, in making this comparison, the author omitted mention of the fundamental difference between these two sectors: The steel industry exists because people want to buy steel, while the solar industry exists only by the grace of favorable politics. That is, without taxpayer giveaways and Soviet-style production quotas, there would be no solar industry in America. The same is not true for the steel sector.

Don’t take my word for it. Every time a state or federal taxpayer handout to the solar sector comes up for renewal, industry lobbyists warn of dire consequences if lawmakers fail to extend the subsidy. The last time the Congress voted on whether to continue the primary federal solar subsidy, in 2008, Solar Energy Industry Association President Rhone Resch warned, “Unless Congress promptly returns to complete their unfinished business, the solar industry will suffer with the loss of 39,000 jobs.” Back then, the American solar industry was about a fourth the size it is now, so if it employs about 93,000 people today, it’s a safe bet that the loss of 39,000 jobs in 2008 would have wiped out the solar sector. The loss of this one subsidy would have bankrupted the entire industry!

More recently, in Colorado, Xcel Energy tried to eliminate an especially cost-ineffective solar subsidy known as the Solar*Rewards program. In 2011, Xcel ratepayers will spend 4% of their utility bills on the Solar*Rewards program to generate about .3% of their electricity. This is a bad deal. Xcel tried to end this bad deal, and the State’s solar industry threw a fit, claiming that they would lose 3,000 jobs virtually overnight if Xcel ended the subsidy. As it always does whenever its perks are threatened, the solar industry sought help from sympathetic State legislators to nudge Xcel to the negotiating table, and the wasteful Solar*Rewards program was continued.

For as long as the solar industry is a function of government favoritism—and not market forces—it will remain one unfavorable vote away from bankruptcy. It is a bubble, and a precarious one at that. As such, the industry’s growth is no cause for cheer. It only increases the harm that will be wrought when the taxpayer money spigot is turned off, as eventually must occur.

Tom June 17, 2011 at 3:36 pm

You say this without noting the continuous double-digit percentage cost reductions in solar that should eventually make the industry self-sustaining. Are you seriously implying that utilities are market-based? In many states, they are highly regulated government-backed companies, sometimes having guaranteed returns by the state. Some policies are better than others, but acting like we should just strip away solar policies altogether is irresponsible.

Douglas Hvistendahl June 18, 2011 at 11:46 am

Many think all solar is the same. Solar thermal pre-heat will pay now in cold climates without subsidies.

But if you want real cost-effectiveness, either put in a backyard garden, or else arrange some fans to blow summer air up into the house for cheap cooling. If you do the latter, be sure to use a dehumidifier. The ROI for these two is larger than any other investment we’ve made yet.

Doug Hanes June 20, 2011 at 10:01 pm

Solar should not be subsidized. The jobs are make up jobs. Rubber room jobs where people actually work but produce a greatly reduced value, ergo the subsidy.
Meanwhile, in the real world Qing-Bin Lu has proven CFCs caused all the warming and the world banned them in 1996 thus solving the warming problem. Global cooling began around 2002 spawning climategate. Lu’s CFC explaination fits the data and CO2 does not. Check out Facebook page “Free CO2…the CFCs did it!” or just Google Lu. You’ll be glad you did.

Robert June 23, 2011 at 9:35 am

Of course all renewable energy sources should be subsidized, in favor of fossile, primitive technology. I would never put my trust in the market to solve the climate- and energy problems for current and future generations. Slowly solar and wind power becomes competititive – what a relief, isn’t it? It is time to reduce the impact of the big oil companies….concerns of future generations is of none importance to them.

Robert June 23, 2011 at 9:40 am

How can anyone be a friend of the old bulb? Have you never heard of LED’s? It is in many situations a perfect substitute for the bulb. And the low-energy-bulb is not that bad either. So support the ban and reduce energy consumption.

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