Why American PV Makers Do Not Want Cheap Solar

  • Published on September 2nd, 2009

If it were possible to make perfect public policy, we would not be in the middle of our nation’s 111th Congress. Alas, there is no “set it and forget it” formula for governing. Add in complex scientific questions, global-scale economics and technological innovation, and you have the energy and environmental policy challenge: how do we succesfully incentive and subsidize renewable fuels (or penalize emissions and fossil fuels)? Feed-in tariffs pose problems. Cap-and-trade has proven thorny. Green power options still need a lot of fine-tuning.

One universal difficulty is the continuing cost gap between renewable and fossil fuels. Creating an incentive program that works within the prevailing market – even a heavily regulated one – without interfering with normal market operation is very difficult when the price points are so far apart. Internalizing some of the costs of burning fossil fuels would help close that gap, and that is what cap-and-trade is all about: promote and subsidize clean energy and put downward pressure (both economically and through command and control) on dirtier fuels.

Still, this past Sunday’s NYT Week in Review graphic, entitled “Dimming Prospects” gave a small insight into another complication: green energy industry in-fighting. Besieged by start-ups, spin-offs, and even F500 outfits awash in planet-first, mission-based green messaging, it can sometimes be too easy to forget that the green energy industry is just that: an industry. Within the confines of the business, companies are jockeying for position, market share, and – increasingly – for federal dollars. Who lays claim to those federal dollars is becoming an important factor in determining who may emerge as the green power industry’s winners, losers, and leaders.

The NYT graphic reports that photovoltaic unit pricing has been halved in the last year, largely due to increased low-cost Chinese production. As a consequence, regulators are getting more of the cost parity their policies need, consumers pay less for PV, we get more solar power on the grid, we emit fewer GHGs per kilowatt hour used, and we rely less on dirty, foreign fossil fuel. Great news, right?

Not if you are a domestic PV manufacturer. NYT goes on to write that “Western manufacturers question whether low-cost Chinese solar cells should qualify for [economic stimulus] subsidies.” Suddenly, “green business” is a little low on green and high on business. Companies that have built their public profiles on the new energy future and fighting climate change by taking on Big Oil and the utilities are now sharpening their elbows in the lobbying fight to make sure that their bottom line does not fall victim to grid enhancements that are built out by someone else.

There are legitimate economic concerns with much of the energy-environment policy that has been put in place or is proposed, and those arguments have chipped away at public support for comprehensive climate change legislation. Further, we know that GOP opponents of energy and environment reform are willing to demagogue the issue, and this kind of self-interest in the face of the purported common good gives some credence to even the most outlandish claims.

From now on, remember that when Newt Gingrich and other very public opponents of the “energy tax” say that climate change legislation is really about someone’s hope of capturing revenue…he may just be right.

Photo courtesy of the Solar Energy Industries Association

More: Solar Energy Facts

About the Author

An award-winning energy and environmental law scholar, Joe combines professional experience in utility sector government, community and regulatory affairs with a background in security clearance-required military intelligence and offers unique insight and complex analysis of energy infrastructure, technology and policy in national security, international trade and climate change and carbon-restrained economics contexts. Joe was awarded the Suffolk University Jurisprudence Award for Outstanding Scholarship in Environmental Law for his work analyzing the pathways and obstacles to adoption of renewable energy in state, federal and international energy policy. ”Home Rule on the Ropes,” his paper on renewable energy zoning in Massachusetts is on SSRN’s Top Ten lists for the Journal on Urban Economics & Public Policy and the Journal of Public Policy. And, he was awarded Suffolk Law's 2009-2010 McCormack Scholarhship in recognition of excellence in research and writing, including his paper - "Coming up ACES?" - on the NAFTA and WTO implications of the national renewable portfolio standard limitation proposed in the Waxman-Markey energy bill. A research assistant on Westlaw’s definitive energy regulation reference, ”The Law of Independent Power,” Joe is also a former state legislative aide and US Army linguist who tested at professional profiency in Russian and Spanish. His writing on law, politics and policy is also featured on the blog at www.RedGreenandBlue.org and he runs a series on land use and zoning for energy infrastructure - entitled "Powering Past NIMBY" - for Renewable Energy World Magazine. Joe lives in Boston with his wife and two young children. In his spare time, Joe is the founder and curator of the corporate social responsibility network on LinkedIn, and is an avid runner who recently posted a personal best in in the Walt Disney World Half-Marathon in Orlando.


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