Solar Power, Climate Change, Energy - here's an oldie but a goody.

Solar Power – Not Ready for Prime Time

The View from the Middle

Before I layout the problems with the solar industry today, let me say that I am a huge believer in the long-term potential of the sun to supply power to the world.  The sun is a powerful and dependable source of energy when we figure out how to harness that power effectively and efficiently.  By most estimates, the sun will continue to shine for another five to seven billion years after which time we will have bigger issues than converting its power to useable forms.  Also, according to a study done in 2002, the sun delivers more energy in an hour than the world consumes in a year.  If the sun is so powerful and reliable, why does it deliver less than 1% of the US energy needs?  The answer is – it is not cost effective, yet!

So, what makes solar power so impractical right now?  First, It isn’t very efficient in terms of capturing the sun’s power and converting it into electrical energy.  The best solar panels are only about 17% efficient in converting the sun’s energy into electricity.  Second, it can cost $25,000 to $35,000 to install a solar energy system in an average house in the US.  Even after considering the incentives, there is a 20 to 30 year pay out on this investment, which is longer than the average time of home ownership. 

This brings us to the final straw that breaks solar power backs.  The only thing that makes this energy even remotely reasonable is the subsidies that this industry is receiving throughout the world.  Whether it is the feed-in-tariffs in Germany or the tax credits in the United States or loan guarantees in China this industry receives way more support than it deserves.  This indicates that on its own it can’t deliver two things that are essential for any successful business in the United States – an effective, competitive product and a profit. 

Solar energy is at least four times more costly than energy produced by fossil fuels.  This is why governments around the world have to force people to buy it in order to prop it up.  Next, the financials just don’t add up.  The entire global revenue for solar panels is only about $64 billion today and will probably only reach $65 billion by 2016 because of falling prices, yet China alone spent $33 billion in 2010 on solar loans.  This is why Germany, the top producer of solar power in the world by far, is planning to cut subsidies and phase out support completely over the next five years.

So, what kind of energy policy should we be pursuing in the US that would be appropriate for today AND for the future.  First, we should stop subsidizing all energy industries.   We just don’t have the money.  I agree that we should stop all tax breaks and subsidies for our oil companies, but I also would suggest that we should do the same for wind, solar and ethanol.  Save the money and let the free market go to work.  Second, if China is practically giving their solar products away, we should buy them and tax the heck out of them as they come into the US.  This would raise the costs of their solar equipment to market supported prices allowing American companies to compete fairly for that business and help us balance our federal budget at the same time.  Thanks, China!  Third, our government should support research in all kinds of renewable energy sources through our universities and agencies like NASA to find real cost efficient answers to our energy needs.  We can do this for a fraction of the cost of our current subsidy approach to this industry.  Then, in ten to twenty years we can absolutely dominate a newly created and profitable solar industry with products that make the Chinese solar panels obsolete.

Until then, however, we need to take advantage of the resources God has blessed this country with.  The US is the most energy rich country in the world.  We have more coal than Saudi Arabia has oil.  We have more oil than all of the Middle East countries combined and natural gas may be our most abundant resource.  In fact, we could supply all of our own needs for hundreds if not a thousand years depending on which projection you believe.  The point is – we are loaded!  We should work “with” not “for” environmentalists to drill and dig here and now while we develop our wind, solar and other renewable energy sources for the future.  The side benefit of this approach is that it will take money out of the pockets of our enemies around the world and employ hundreds of thousands of Americans who are looking for jobs right now.  THIS is the real “all of the above” energy strategy that we need.