Are Solar Subsidies Unfair?

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The latest pushback against solar power has centered on the benefits that accrue to owners of solar panels, with the intent of making them appear to be “free riders”, unfairly extracting gains to themselves at the expense of their neighbors. Utilities have taken particular issue with Net Metering, and doing everything they can to quash it by pointing their fingers at the owners of solar arrays, accusing them of “leaching” from the system.

Let’s be clear: they are not.

As much as the utilities would like you to believe (and who else would be fomenting these arguments), the current array of benefits and incentives are not the result of the all-powerful lobby of “ordinary citizens”. Nor are they the result of the lobbying efforts of the likes of Goliath’s like SunEdison (a corporation worth $2.6 billion dollars) and SunPower (a $3.8 billion dollar corporation) outspending the little David’s of the utility sector, such as National Grid (a $50 billion corporation), NextEra ($45 billion), Dominion Resources ($40 billion), or even Eversource ($15.6 billion).

Yes, money does talk, but if it were only money making the argument for solar incentives, then they never would have seen the light of day.

Instead, our elected representatives have made a push for renewables a priority at both the Federal level, and at the State-level in several states. Our representatives (or, put another way, “we”) have decided to place an emphasis on utilization of renewable resources and clean energy generation, for a variety of reasons that include short-term goals (pollution reduction, improvement in air quality) and longer-term goals (energy independence, attempting to counter climate change). To do this, many forms of clean and/or renewable power are incentivized, including wind (both), nuclear (carbon-free), and ethanol (renewable).

The incentives don’t end at the solar systems owner’s doorstep either. Though the State of Massachusetts has provided for $1.5 billion of incentives to solar owners, the resulting PV installations have provided $2.1 billion in benefits to everyone within the state, with power companies and their customers the chief beneficiaries. A recent study found that solar allowed power companies to reduce their transmission costs by nearly $1 billion dollars, reduced their need for capital outlays by over $770 million, and provided another $390 million in other lower and avoided costs. If there should be any outrage, it should be that the utilities haven’t passed those savings on to their customers.

What sets solar apart from other clean and/or renewable energy sources is that solar is the only form of power generation that can be installed and maintained by individuals and companies, rather than by big utilities. And even though utilities are making a bigger and bigger case against solar subsidies, they fail to mention that the incentives flowing to the owners of PV systems are equally accessible to the utilities complaining about them.

A traditional power station costs a utility in the range of hundreds of millions to billions of dollars to construct, and might take 10-15 years to pay for itself. Utilities in Massachusetts could, today, build their own PV arrays and see them be paid for within 2-3 years. They would receive the same 30% Federal Tax Credit that everyone else sees. They would be able to depreciate their solar equipment over the same 5-year term that every other business does.

The fact is, people have been clamoring for cheaper, cleaner energy, something which utilities have been reluctant to provide. Because of their foot dragging, they’ve created the opportunity not only for the SunEdison’s and Beaumont Solar’s of the world, but for everyone else who wants to participate in providing the country with a cleaner future.

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Lucas Krupinski
Consultant
Lucas likes to write. Besides contributing to Commercial Solar Guy, he maintains a blog at Current Take.

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