Research & Commentary: Direct Solar and Renewable Sales
The solar power industry is pushing states for special carve-outs that would grant them (and in some cases, the renewable power industry as a whole) a new and exclusive monopoly right to produce power at small-scale facilities and bypass utilities to sell the power directly to consumers.
While utilities enjoy government-created, -protected, and -regulated monopolies on electricity sales that violate free-market principles and increase electricity costs, creating a special carve-out solely to benefit the heavily subsidized solar/renewable power industry further distorts free markets and will lead to still further increases in electricity costs, preferential subsidies, and taxpayer burdens. Such carve-outs will induce the solar/renewable power industries to double down on their support for the existing utility monopoly structure that is necessary for them to sell their expensive product.
The renewable power industry depends on subsidies and laws requiring consumer to buy their product to remain in business. For example, the solar power industry benefits form an exclusive 30-percent taxpayer subsidy on solar power equipment purchased and put into operation. The U.S. Energy Information Administration reports that solar power by itself receives more preferential subsidies than all conventional energy sources combined. Wind power by itself similarly receives more preferential subsidies than all conventional energy sources combined. On dollars per unit of energy produced, renewable power receives 25 times more subsidies than conventional energy. Additionally, the renewable energy industry has successfully lobbied 30 states to impose renewable power mandates that force consumers to purchase their expensive product.
Even with such massive preferential subsidies, renewable power is significantly more expensive than conventional power and inflicts tremendous economic harm on consumers and the larger economy. A 2014 report by the left-of-center Brookings Institution found wind power is twice as expensive as conventional power and solar power is triple the cost of conventional power. The U.S. Energy Information Administration reports wind power will remain twice as expensive as conventional power – and solar power will remain approximately four times as expensive as conventional power – for many years to come.
The renewable energy industry is one of the most fervent supporters for the existing utility monopoly system. This is because utilities in competition with each other for residential and business customers would not be able to afford prohibitively expensive renewable power. By contrast, utilities that are protected from competition can afford to incrementally add expensive renewable power to the mix while simultaneously increasing the utilities’ own profits through their guaranteed rate of return on such expensive purchases and investments.
A truly free-market and consumer-friendly option to expand competition in electricity markets would allow all utilities and small-scale power providers the right to compete for customers. This would be especially desirable if tied to legislation that would eliminate all preferential subsidies, or at least level the playing field regarding preferential subsidies. A second-best alternative would keep the renewable power-supported utility monopolies in place while allowing all energy sources – rather than merely the solar/renewable energy industries – the right to sell electricity to consumers at small-scale facilities while also eliminating all preferential subsidies.
Efforts to give the solar/renewable power industries special monopoly rights to small-scale electricity sales will merely expand the reach of existing taxpayer subsidies, increase tax burdens when more subsidized equipment is put into place, expand the market share of the most expensive forms of electricity generation, and permanently freeze out conventional power sources from the opportunity to compete in small-scale power generation.
The following documents offer additional information on the detrimental impacts of giving the solar/renewable power industries special monopoly rights on small-scale electricity sales:
Ten Principles of Energy Policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.
Solar Power Lobbyists Seek to Subvert Florida Tea Party
Heartland Institute senior fellow for energy policy explains why giving the solar power industry new monopoly rights to sell electricity from small-scale power facilities will increase electricity prices, increase taxes, and impose new obstacles on consumer choice and free-market energy principles.
Some Conservatives Playing Too Close to the Sun?
The American Spectator reports that the usual left-wing suspects are funding the solar power industry’s efforts to gain a special monopoly on small-scale electricity sales in Florida.
Blowing Sunshine Up Their Skirts
The American Spectator reports members of the Tampa 912 grassroots conservative group solidified their opposition to a solar power monopoly on small-scale electricity generation after hearing The Heartland Institute’s James Taylor debate Floridians for Solar Choice’s Tory Perfetti at a Tampa 912 meeting.
Solar Buffs Seek Favors in Power Plan
The Tampa Tribune reported on the Florida direct solar sales monopoly and declared James Taylor the victor in his debate with Tory Perfetti.
Americans for Prosperity: Proposed Solar Policies Are Not Free Market
Americans for Prosperity published a short statement noting and explaining why it opposes special solar power favoritism in the form of monopoly carve-outs for small-scale electricity sales.
Why the Best Path to a Low-Carbon Future Is Not Wind or Solar Power
Charles Frank, a nonresident senior fellow at the Brookings Institution finds natural gas combined cycle is the cheapest low-CO2 energy alternative, even cheaper per kilowatt hour than power from coal or gas simple cycle plants. The most expensive alternatives are solar and wind. Frank says gas combined cycle, nuclear, and hydroelectric are the most cost-effective options for transitioning to a low-CO2 future.
Direct Federal and Financial Interventions and Subsidies in Energy in Fiscal Year 2013
“The U.S. Energy Information Administration finds in this study solar power and other renewable power sources receive disproportionately large federal subsidies compared to conventional energy sources.
2016 Levelized Cost of New Generation Resources from the Annual Energy Outlook 2010
The U.S. Energy Information Administration reports solar power and other renewable power sources will remain substantially more expensive than conventional power sources for many years to come.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News website at http://news.heartland.org/energy-and-environment, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
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