Why Solar Subsidies and Benefits are Misdirected

As solar panel prices continue to fall, the possibility of solar as a competitive source of power has become conceivable.

But the idea of solar power competing with the current leading energy sources still seems a long way off.

That doesn’t have to be the case, says John Farrell of the Institute for Local Self-Reliance.  With a few changes in the system to guide solar in the right direction, 10 years might be all it takes.

According to Farrell, the problem lies in the fact that solar subsidies and benefits are misdirected.

Federal solar tax credit is one of the main ways the government currently subsidizes solar power.  As a fixed incentive, it doesn’t offer the flexibility needed in a dynamic field like solar.

Because the tax credit does not go directly to the power plants but to some sort of middle man—the big company funding the project, perhaps—it doesn’t benefit the local project.

But if benefits were to encourage local ownership, the possibilities would be endless.

Farrell’s claim is backed up by the National Renewable Energy Laboratory, which released a report stating that locally owned renewable sources create double the jobs and triple the benefits to the local economy.

And if projects are local rather than remote, residents are inclined to be much more supportive.

Germany, for example, a leader in solar power, uses feed-in tariffs rather than tax credits.  The tariffs offer long-term contracts to renewable projects, and the price is flexible according to the type of power and a number of other factors.

In short, it’s specific.  The price is not fixed and generalized.  And it would encourage local ownership of renewable projects, specifically solar.

Sure, the old system was beneficial at one time.  But it was for an older, coal-based system, as Farrell points out.

And now, these changes are needed before more money is wasted on the old system.

Antiquated Energy Systems Give Way to Solar originally appeared in Green Chip Stocks. Green Chip Review is a free 2x-per-week newsletter, is the first advisory to focus exclusively on investments in alternative and renewable energies.

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