For at least the last thirty years the alternative energy industry has been claiming they are almost ready to be economically competitive with fossil fuel. Wind, solar, geothermal, and others keep begging for government subsidies to help them stay afloat until they can reach a size at which economies of scale kicks in, price per kilowatt hour drops, and then they can survive on their own. Now we are seeing this has been a blatant grab for taxpayer dollars and the subsidies were more about industry executives and shareholders getting rich than about reaching a green industry future. For the past few years the United States has received a veritable flood of cheap Chinese solar panels, dropping costs by 99 percent over 36 years. According to the industry itself, solar installations have increased by a factor of 60 since just 2006 and for the first nine months of 2014 solar represented 32 percent of newly installed electric generating capacity. You might think this means that solar has reached the point where it is ready to compete with fossil fuels. In fact, the industry has said so itself. A 5.5-megawatt farm with 23,176 solar panels that covers 33 acres. (Photo by Mark Wilson/Getty... [+] Images) How big an assist has solar been getting in competing economically? Quite a large assist. Solar installations, both residential and commercial, receive a 30 percent investment tax credit, meaning solar makes economic sense even when they are 29 percent more expensive than alternatives. A 30 percent subsidy can make a Mercedes cheaper than a Hyundai. Now that the solar industry’s tax credit is near expiring, the industry appears to be changing its tune. Rhone Resch, the CEO of the Solar Energy Industries Association, urged all their members to lobby for an extension of the 30 percent tax credit beyond its current December 2016 expiration date. Without an extension, Resch claims that the industry will see a loss of 100,000 jobs. Considering that the solar installation industry currently employs about 175,000 people (by their own figures), a 100,000 job decline would represent almost a 60 percent plunge. The solar industry’s top lobbyist is essentially telling us all that the solar industry would lose 60 percent of its volume if it had to compete on a level playing field (or a more level one, since state tax credits would still exist in a number of states). Give solar some credit. It has cut costs by about two percent per year for over thirty years straight. The industry now installs as much solar capacity in a month as took five years just a decade ago. These are tremendous gains in scale and in cost efficiency. So, after all those successes, why is solar still so uncompetitive that the industry would suffer catastrophic damage without government largess? Personally, I am beginning to think that thirty years of promises may have been hollow. How long are taxpayers supposed to put up with promises of “just a little bit longer” when asking how long the subsidies must continue? Many industries and some economists with a bent toward state-control of the economy favor subsidies to help industries grow to the point where the subsidies can stop. Personally, I believe that the private sector is smart enough to invest in promising new technologies and wait for the profits to emerge later (see Twitter, Amazon, or Tesla for proof). Yet, whichever viewpoint you agree with, who advocates nursing an immature industry through a thirty or forty year childhood? If solar is not grown up and able to support itself yet, why do we believe it ever will be able to do so? The time has come to use the industry’s own admissions against it in the court of public opinion. The industry is lobbying for an extension of its investment tax credit so it can continue to profit at the taxpayer’s expense. Taxpayers ought to lobby their elected representatives to allow the solar tax credit to expire. Tell Congress enough is enough. It is time for solar to face the marketplace on its own. Follow me on Twitter @DorfmanJeffrey
Forbes columnist , Jeffrey Dorfman , believes that wind , solar and geothermal have only survived in the industry because of Government subsidies that funded projects until they were large enough for economies of scale to work and the price per unit hour dropped so that young companies could thrive alone . Dorfman explains that if an extension of the 30 % credit beyond its current December 2016 expiration date is not granted , there will be huge job losses and cuts to the industry . According to Dorfman , top executives for the solar industry believe the industry would lose 60 % of its volume without energy subsidies if it had to compete in the industry on a level playing field .