Solar Power Usage in US and EU Builds, Policy Innovation Falters

By Walter Borden

Here at the midpoint of 2014, solar power technology continues its advance while its marketplace momentum builds. Economic policy and commercial efforts designed to induce commercial innovation must keep apace.  And there are pockets of progress in the political economics of deploying solar. Take for example this post from Clean Technica: “Solar Energy’s Quiet Invasion Into Professional Sports“. Or consider the Regional Greenhouse Gas Initiative (RGGI), a market-based regulatory program in the United States that reduces greenhouse gas emissions.

And in Germany, one of the world’s most important economies, reports, “The Fraunhofer ISE research institute has announced that Germany set a record high for solar use on June 9—on that day the country’s solar power output rose to 23.1 GW—50.6 percent of all electricity demand. The record occurred over a holiday, which meant less demand, but it still marks a major step forward for the world’s solar power leader.”

Key aspects of the report from our perspective:

  • Despite not having a generally sunny climate, Germany has been pushing solar energy, but not from the huge solar farms as seen in other countries. Other nations, like the United Kingdom, report the same.
  • The German government is on track to reduce greenhouse emissions from electric power generation from coal fired power plants while at the same time retiring its fleet of nuclear power plants (scheduled for closure by 2022).
  • The FRG aims for an energy mix of solar, wind and biomass; though solar has become the national leader according to most reports.


Yet challenges remain, as also notes:

The move to solar has not been without its problems, of course. The government plans to lower or remove subsidies as soon as possible, and the demand for batteries to store all that home-grown electricity is outstripping supply causing a rise in prices. Also, it’s not clear what sort of role utilities will play going forward. Currently, many homeowners are reporting surplus energy production on sunny days which they sell to electric companies, which now find themselves having to store it for use during cloudy stretches.

There’s another problem though it’s not as obvious: the German government noted recently that almost seven million households in the country are living in energy poverty (defined as having to spend more than 10 percent of income on energy bills). The national energy program, Energiewende, has resulted in some transfer of wealth. Economists note that even with subsidies, it’s generally the wealthy and sometimes the middle class who can afford to put solar panels on top of their houses.  The poor continue to live off the grid paying taxes that provide the funds for the subsidies. There’s also some evidence that the country’s energy program is pushing energy costs higher overall, resulting in more electricity being produced by cheaper fossil fuels.

Energy poverty is also a problem in the US.  As states like Ohio abruptly suspend widely popular solar power policies, working poor, middle class families, and businesses see expenses rise. Manufacturers like Honda and Whirlpool joined consumers in opposing Ohio Governor Kasich’s executive order to freeze its program. Additional side-effects weigh on taxpayers.  As more coal is used public health suffers resulting in rising health care costs, and water treatment costs increase too which is also true of  fracking for natural gas. These costs are passed along disproportionately to small businesses hurting them as well as working families.

Do arguments about coal helping with persistent joblessness add up.? No. The industry began to automate via strip mining in the early 1970s. Coal mining accounts for only 0.06% of overall U.S. employment.  As Paul Krugman observed: “Shutting down the whole industry would eliminate fewer jobs than America lost in an average week during the Great Recession of 2007-9.”

Source: The New York Times; earlier numbers are from Historical Statistics of the United States, Millennial Edition; the later ones from the FRED database
Source: The New York Times; earlier numbers are from Historical Statistics of the United States, Millennial Edition; the later ones from the FRED database

And, we must account for the immense harm to our neighbors and their families, home values, and agriculture that results from living  in one of our nation’s sacrifice zones as a recent documentary by the Birmingham, Alabama non-profit GASP makes clear.

We need policy formulations and economic modeling that continue to induce clean tech entrepreneurship. Some examples of the after mentioned are smarter net-metering policies, less regressive tax structures, and  targeted tax breaks for large public/private works that deploy clean technology. Sports stadiums already provide an array of natural experiments, and the results show how taxpayers save huge sums as bond issues typically cover some if not all the costs of building them. Both the Miami Marlins and The Philadelphia Eagles are noteworthy examples among many.

Since 2001, the cost of generating electricity using  has fallen by more than 70 per cent. Many experts report that by 2025 solar will be the cheapest way of harnessing renewable energy. It’s also at or reaching cost parity with coal meaning it can provide electricity that is cheaper than fossil fuels in many regions and situations.

A common bit of conventionality is that with the economy hurting, we can’t afford to build clean energy infrastructure. But, to the contrary, the cost of public borrowing and employment in the US is at multi-decadal lows: now is the time to invest and lock in low rates. This is something we have observed here at this blog many times over the last five years, and we are not alone observing such.

Solar technologies making its power more efficient and versatile exist now. As also reports:

Dr Neil Robertson, of the University of Edinburgh’s School of Chemistry, said: “The plummeting cost means that large-scale  is coming to Scotland whether we realise it or not. The key priority is to recognise this, so that we can start planning to maximise the social, environmental and business benefits it will bring us.”

So, now is not the time to cut finances for solar programs. Viability of solar power increases more robustly each day. Increased deployment will sharply reduce global warming greenhouse gas build-up.  It will also lessen the tax burden on working families, reward bondholders with lower credit risk,  help investors both deploy capital for 21st century infrastructure and avoid large losses from carbon bubbles and stranded asset balance sheet hits.