Tax stuff I think is interesting. It is either copied from my primary blog on forbes.com http://www.forbes.com/sites/peterjreilly/ or stuff that I did not put there because being on forbes is a good gig and they have, you know, standards. Also some guest posts.
Friday, August 22, 2014
Should Solar Stand on its Own in the 21st Century ?
Originally Published on forbes.com on November 1st,2011
Solar has taken a hit lately in the media, and the opinion of some newspaper columnists is that solar technology deserves a stern dressing down. The negative stories written about Solyndrahave put a smear on the entire solar industry. Solar, before the Solyndra debacle, enjoyed extremely positive press for its reliable and clean energy generation delivered amazingly by the sun every day. Solar enjoyed a rebirth at exactly the right time as a strong growth industry that provides good quality jobs and careers across the country. But then Solyndra collapsed and the solar goodwill suddenly was in flames. The columnists could have chosen to reveal that Solyndra, through no fault of its own, competed in a market that was about to be flooded by Chinese solar manufacturers, and we all know what that means – equipment becomes a commodity and commodity product pricing forces a rapid price decline.
In the solar module market equipment is priced by the watt. In 2009, when the Chinese made modules began flooding the market, Solyndra priced at over six dollars per watt for its modules. That’s expensive. They competed against modules being sold as low as almost two dollars per watt at that time. Solyndra’s challenge was to take their highly innovative and excellent technology and reduce its very expensive manufacturing costs to a price per watt that competed against the Chinese. It couldn’t be done. Their target price was to be under two dollars per watt before 2012. Even at this price per watt, Solyndra was still not competitive because the pricing of competing technologies continued to fall. Unfortunately, it appears there was mismanagement within Solyndra, but mismanagement does not over ride the market conditions in which they were forced to work.
This brings me to the columnists’ outrage of the $535 milliongovernment loan guarantee Solyndra received two years ago. Columnists and commentators have suggested that solar should not be propped up and that it should stand on its own merits. Well, how about all the other industries and Fortune 500 companies that receive government hand outs? In the early 1900s oil subsidies found their way into specialgovernment assistance and have never left. There are so many government subsidies extended to the oil industry you need to be a forensic accountant to be able to pull them out and understand them. A short list would be: tax incentives, tax credits, special deductions, exemptions, grants, loans, special below market royalties, R&D, and foreign competition protections. In one year alone, oil and gas will receive over $3.5 billion in subsidies and special treatment.
The agriculture industry benefits from government subsidies that are older still, dating back to the 1800s. This sector, for decades, receives as much as a whopping $30 billion every year not to mention $5 billion dollars per year in cash. Timber, another government subsidies old timer, is also in the billions of dollars per year. Even our biggest department store received $1 billion in special government favors. Coal, oil, gas, nuclear and ethanol receive over $12 billion a year in special government assistance. I would have expected that by the 21st century these industries wouldn’t need to be propped up by special government help. By comparison, what solar gets is a pittance. Run your finger down the Fortune 500 list and see for yourself who either always gets special government favors or who has at some time received government help. It’s a long list of hand outs received.
We, Americans, are very quick to dismiss what other countries achieve especially when it comes to science. This ivory tower position today shows we have our heads firmly stuck in the sand. While Europe, China, and Japan are competing against each other in the big race to transform their energy sectors, the USA may not even qualify for the event. Europe is on track to produce 20% of its energy from renewable sources and be carbon free by 2050 under its 20-20-20 plan – reduce 20% of its greenhouse emissions, reduce energy consumption by 20% and increase renewable energy by 20%. The USA, by comparison, is all about drill, baby drill, and dig, baby, dig. The USA’s backward attitude will guarantee that we will lose technological and production leadership to Europe, China, and Japan. China is easily the world’s leader in investing in renewable energy. Last year China invested $54 billion in private sector investments alone in renewable energy. Germany invested $41 billion in private sector renewable energy investments. The USA’s backward thinking has held us back and it will be one more race for which we fail to qualify. Solar was once the technological and manufacturing domain of the USA.
Without question solar technology has proved itself. Solar reliably produces power and the systems are engineered to last for decades. The power produced is clean and the systems require very little in operation and maintenance in comparison to most other forms of energy generation. The USA has an excellent solar resource that should be exploited to the maximum. Solar contributes to job growth, energy independence, and environmental sustainability. Solar has earned its place in the mix of renewable energy generation. The political hostility against the development of solar must stop. Solar has earned a national commitment to its growth. Today is the time for the USA to ramp up for the energy race and be the leader we should be.