In Focus: The Post-Subsidy Solar World

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Let’s start out with a fact: the free market for energy is a myth.

Every country uses subsidies in some way to encourage production and dictate consumption of different forms of energy. According to the International Monetary Fund, global post-tax subsidies for fossil fuels (which includes the external costs of pollution) amounted to $1.9 trillion in 2011. And IMF said that figure is an “underestimate.” The IEA also estimates that global consumption subsidies for fossil fuels reached $523 billion in 2011.

Here in the U.S., the government practically gives away taxpayer-owned coal to mining companies. It provides billions of dollars to the oil and gas industry in the form of preferential tax treatment. And the fracking boom, which is often held up as a shining example of the free market, was spurred by strong R&D funding, government cost-sharing programs and tax credits that helped an unproven technology reach wildly-successful commercial scale.

And now, of course, we have billions of dollars in specialized tax subsidies, rebates, certificate trading programs and utility programs like net metering to encourage the production of renewable energy.

The conversation around how to handle subsidies — which has become more heated as renewables scale — is where facts and opinions start bleeding together. The heated opinions about the issue were on full display at GTM’s Solar Summit this week during a panel discussion called “The transition to a post-subsidy reality.”

The debate around subsides within the U.S. solar industry is manifesting itself in different ways.

On the federal level, the looming 20 percent reduction of the investment tax credit in 2016 is raising questions about whether the industry can pull together an extension, compromise on a longer-term phase-out or simply live on without the credit. While the trade groups in Washington are thinking about the issue, businesses around the country are more focused on the local fights that have a more immediate impact.

On the state level, there’s a growing political campaign among conservative groups to repeal or water renewable energy targets through the legislature. While those efforts have failed thus far, many utilities are already far ahead of their procurement targets — effectively creating the same outcome. Colorado’s “solar cliff” is proof of that.

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