By Nicolas Loris
President Obama is channeling his inner Jimmy Carter again.
In 1979, President Carter had solar panels installed on the roof of the White House, and they were taken down in the Reagan Administration during roof repairs. Today, the White House announced that that Obama Administration will use taxpayer dollars to build solar panels and a solar hot water heater on the roof of the White House in the spring of 2011.
It’s an easy decision to make when you’re not the one paying for it. The government’s Energy Information Agency projects that electricity from solar cells will cost nearly five times as much as electricity from natural-gas-fired power plants—in 2016. So not only will taxpayers have to foot the bill for the project, but they’ll also be paying for pricier electricity. Keep in mind that exorbitant costs do not take into account the unreliable nature of solar (the sun doesn’t shine all the time) or for the additional transmission costs to build lines from where solar panels are to where the electricity is needed. The government should let American taxpayers know how this investment pans out.
The fact that President Carter installed solar panels on the White House is important to note for one particular reason. It was 1979. The solar industry is not an up-and-coming industry that needs taxpayer dollars; it is a highly subsidized industry that relies on taxpayer support to compete in the marketplace. Solar receives subsidies of over $23 per megawatt hour—compared with the $0.44 for conventional coal and $0.25 for natural gas—but provides a very small fraction of America’s electricity.
Secretary of Energy Steven Chu said of the announcement: “This project reflects President Obama’s strong commitment to U.S. leadership in solar energy and the jobs it will create here at home. Deploying solar energy technologies across the country will help America lead the global economy for years to come.” But how? How does forcing Americans to pay more for electricity—the lifeblood of our economy—result in economic growth or jobs creation? The truth is that it merely fills the solar industry’s pockets with taxpayers’ money.
The sad part is that federal subsidies for solar power actually harm the long-term health of the renewable energy industry. It causes resources to flow away from the most promising renewable technologies and toward those preferred by bureaucrats and politicians. This system essentially awards mediocrity at the expense of innovation, competition, and economic sustainability. Any system that punishes the precise elements on which success depends is bound for failure.
This failed approach to renewable energy is unfolding in other countries every day.
Spain and Germany are leading the race in the clean energy; as President Obama says, “they’re making real investments in renewable energy.” But what’s at the finish line? If Spain and Germany provide any indication, it’s a slumping economy, and both countries are cutting back the subsidies. In May, E&E reported:
Only two years ago, Spanish solar energy companies feasting on generous government subsidies expanded at a feverish pace, investing €18 billion (then worth roughly $28 billion) to blanket rooftops and fields with photovoltaic panels. They briefly turned the country into the top solar market in the world.
Then came a monumental case of sunburn. The market crashed under a wave of subsidy cuts, fears of possible forced tariff paybacks and allegations of fraud involving energy produced at night being sold as solar power to collect super-premium prices.
Spain’s subsidies for solar were four to six times higher than those for wind. Prices charged for solar power were 12 times higher than those for fossil fuel electricity. Germany and Spain received about 75 percent of the world’s photovoltaic panel installations that year.
Spain is not the only European country cutting solar subsidies. On July 1, Germany will cut the price paid for electricity from roof-mounted solar panels by 16 percent and that from larger solar power stations by 15 percent. France cut its solar subsidies in January by 29 percent after the installed capacity more than doubled from 105 megawatts in 2008 to 250 megawatts last year. Italy, considered by analysts the first market where solar is likely to become competitive without subsidies, is considering a gradual decrease in tariffs between 2011 and 2013.
If individuals, families, or businesses want to install solar panels on their roofs in belief that they’ll save money, they should be permitted to do it. But they shouldn’t do it with the taxpayers’ help. If it’s an investment that will save consumers money in the long run, they won’t need a handout. If the Obamas really wanted to provide leadership, they should pay for those solar panels with their own money. While such a gesture may not be required, it would demonstrate a high level of personal commitment to the President’s policies and confidence that it’s an economically sound investment.
Absent that, installing solar panels on the White House roof seems like political stunt. It is using taxpayer dollars to advance a political agenda.
Such decisions are less about stimulating the economy and more about reshaping it to what Washington deems politically acceptable.