NCPA - National Center for Policy Analysis

Big Solar's Subsidy Bubble

September 2, 2015

At the National Clean Energy Summit in Las Vegas last week, President Obama celebrated the solar industry's remarkable job creation as evidence that government "investments" work.  The solar industry employs twice as many worker than the coal industry and the number of jobs in solar has grown ten-times faster than the rest of the U.S. economy.

However, this is just as much an indictment of the Obama Administration as it is a notable success. Many experts are concerned that the solar bubble will burst if government subsidies run dry.

  • A 30% federal investment tax credit and lower prices on photovoltaic panels have created a rush to build solar energy installations.
  • The number of solar installations -- solar panel units installed on the roofs of homes and businesses to harvest sunlight for power -- increased 30% last year.
  • Solar-leasing companies incentivize customers by offering zero-down installation and low introductory monthly service fees that increase over the length of the 20-year lease agreement.
  • Solar-leasing companies pocket the service fees and tax credits while customers are promised lower energy bills.
  • States want to reform their current net-metering policies that require utility companies to purchase, at retail price, excess energy harvested by a customer's solar panel installation.

Members of Congress, including four Democrats from solar-rich states, have voiced concern that solar installation companies are engaging in deceptive marketing in order to attract new customers. But even as their client rolls increase, changes to the net-metering rate in many states are threatening the business model of solar installation firms.

The solar industry's top lobbyist has threatened massive job cuts if any State attempts to reform their policy. Unsurprisingly, the utility commission recently bowed to the political pressure and temporarily extended current net-metering rates.

Source: "Review and Outlook, "Big Solar's Subsidy Bubble," Wall Street Journal, August 30, 2015.

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