May 2013

By Anthony Ward, CEI Research Associate

Solar industry executives are worried about the reliability of their own products. In an article this week, the New York Times reports industry executives are becoming increasingly concerned about the rising number of solar panel failures. The average expected operational lifetime of a solar panel is 25 years, but some are failing in only two years. Increasingly, it seems that solar panels are becoming defunct earlier than anticipated.

According to the article:

The solar panels covering a vast warehouse roof in the sun-soaked Inland Empire region east of Los Angeles were only two years into their expected 25-year life span when they began to fail. Coatings that protect the panels disintegrated while other defects caused two fires that took the system offline for two years, costing hundreds of thousands of dollars in lost revenues.

It was not an isolated incident. Worldwide, testing labs, developers, financiers and insurers are reporting similar problems and say the $77 billion solar industry is facing a quality crisis just as solar panels are on the verge of widespread adoption.

No one is sure how pervasive the problem is. There are no industry wide figures about defective solar panels. And when defects are discovered, confidentiality agreements often keep the manufacturer’s identity secret, making accountability in the industry all the more difficult.

But at stake are billions of dollars that have financed solar installations, from desert power plants to suburban rooftops, on the premise that solar panels will more than pay for themselves over a quarter century.

Subsidies and the associated pressures to reduce costs, boost sales, and reduce government debt are the principal cause of the decline in quality:

After incurring billions of dollars in debt to accelerate production that has sent solar panel prices plunging since 2009, Chinese solar companies are under extreme pressure to cut costs. [click to continue…]

National Journal published an article in their 18th May issue titled, “The GOP Energy Tent Is Slowly Getting Bigger.”  Reporter Coral Davenport, who is a reliable promoter of environmentalist views, writes a puff piece on House Majority Whip Kevin McCarthy’s (R-Calif.) efforts to add a green tinge to the House Republicans’ wardrobe.

In the last Congress, McCarthy, who is number three in the Republican leadership, started the House Energy Action Team (HEAT) in order to develop messaging points for the 2012 election.  Now, he is trying to broaden HEAT’s messaging to include support for subsidies for renewable energy and energy efficiency measures.  That is no surprise: McCarthy is not a movement conservative, but he does have the country’s largest concentration of wind farms in his Bakersfield-area district.  McCarthy has received many major campaign contributions from the wind industry.

Davenport’s story includes a long quote praising McCarthy’s green turn: “‘I think it’s smart,’ Republican strategist John Feehery said of McCarthy’s new tactics. Republicans’ aggressive campaigning against Obama’s clean-energy agenda was ‘an overreaction,’ Feehery said. ‘It made us seem like enemies of the environment. The idea that government has absolutely no role, that the climate is absolutely not changing—it’s not smart,’ he said. ‘It’s also not smart if you’re talking about all the farmers in red states that make money off windmills. A lot of the base is there.’  Davenport does not mention that Feehery is a top lobbyist at Quinn Gillespie, who represents clients in the renewable energy industry and started a front group to lobby for the wind production tax credit and other subsidies called the Red State Renewables Alliance.

The Congressional Budget Office this week released a study on the “Effects of a Carbon Tax on the Economy and the Environment.”  CBO admits that a carbon tax would raise the costs of producing goods and services and raise consumer prices.  On the other hand, some of the negative effects could be offset by using the revenues generated to lower the federal deficit and to lower marginal rates of other damaging taxes, such as corporate and individual income taxes.

In terms of reducing greenhouse gas emissions, the best the CBO can come up with is this: “Given the inherent uncertainty of predicting the effects of climate change, and the possibility that it could trigger catastrophic effects, lawmakers might view a carbon tax as a reflection of society’s willingness to pay to reduce the risk of potentially very expensive damage in the future.”

Professor Robert Murphy commented on the CBO study for the Institute for Energy Research here, and Dr. David Kreutzer of the Heritage Foundation posted his comment here.

Another contribution to the carbon tax debate from earlier in the month has just come to my attention.  On 2nd May, fifty-four trade groups sent a letter to the chairmen and ranking members of the House Ways and Means Committee and the Senate Finance Committee explaining why they are opposed to a carbon tax.  Attached to their letter is a study produced by NERA Consulting earlier this year for the National Association of Manufacturers that details the negative economic effects of a carbon tax.