When Pew Charitable Trusts published its big 2014 report touting solar energy’s rise in North Carolina, they probably didn’t know that every single page in their report discussed a government program, incentive, purchase mandate, or grant. But it did.
So instead of being a document on the emergence of a new powerhouse industry, then, Pew’s "Clean Economy Rising: Solar shines in North Carolina" was a chronicle of the industry’s heavy dependence upon public policies, state and federal.
Which meant it was a document in weakness.
A close reading provided a sobering assessment of this weakness:
The very next sentence underscores this definition of success as getting government rather than market support: "New solar capacity additions and investment will slow in 2016 due to the looming expiration of the federal investment tax credit."
Page 4 illustrates how much this investment will slow: from over $1.6 billion expected this year to under $800 million in 2016, then to just over $400 million in 2017.
In other words, when the federal tax credit expires, the report predicts a 75 percent reduction in investment in solar energy in the next two years. That ought to be the news coming out of this report. Wonder what would happen if the state RPS mandate and tax incentives also expired?
Depend upon it: news stories, industry studies, and especially lobbyists’ materials all frame the success and future importance of solar in terms of government programs. Not consumer demand and certainly not lower rates. The same can be said for the other big nondispatchable energy source, wind.
As demonstrated here last fall, anything endangering one of these government programs is translated as an "attack" on the industry. As if ratepayers and taxpayers exist to serve the renewables industry.
MIT Technology Review recently took note of what happens when another favorable government program, net metering, is changed: suddenly, the "solar boom" looks like a "solar bubble":
This week shares of U.S. solar leader SolarCity tumbled to a new low, while several other solar companies also took a pounding. Last month Nevada introduced sharp cutbacks in its program for net metering–the fees paid to homeowners with rooftop solar installations for excess power they send back to the grid. California and Hawaii, two of the biggest solar markets, have introduced changes to their net metering schemes as well. Across the country, as many as 20 other states are considering such changes, which would dramatically alter the economics of rooftop solar.
The uncertainty has cast the solar providers’ business models into doubt. Without net metering payments, residential solar "makes no financial sense for a consumer," SolarCity CEO Lyndon Rive recently admitted to the New York Times.
The rosier projections for grid parity usually assume that both net metering fees from utilities and government subsidies will continue. GTM Research this week released a report saying that rooftop solar is now at parity with grid power in 20 states, and will be in 22 more by 2020–if subsidies are included. Without subsidies, the picture looks a lot bleaker.
The article attempts to end on a positive note. "All the recent turbulence aside, it’s likely that solar’s longer-term future in the U.S. remains bright," it begins, and that’s because "Renewable portfolio standards, the state-level mandates that establish minimum renewable-energy requirements…." A government mandate. Without fail.
Click here for the Rights & Regulation Update archive.
You can unsubscribe to this and all future e-mails from the John Locke Foundation by clicking the "Manage Subscriptions" button at the top of this newsletter.
