Government Subsidies for Solar Power Can't Stand the Light

Still grossly expensive and unreliable.

Our federal government is such an enormous multi-pound gorilla that its actions, whether by accident or by design, alter whole industries.  In "Solar power costs going down," inTech reports:

...generating power from the sun seems to be a no brainer. But the problem always comes down to cost.  Why pay more for solar power?

First Solar, a Tempe, Ariz.-based maker of photovoltaic cells, said government subsidies from Germany are helping to make the solar industry competitive.

The German government passed laws to force utilities to pay far more for solar-generated electricity than for electricity generated in other ways.  These higher costs, which were passed on to customers, made it possible to sell more solar cells than the market would otherwise demand.

First Solar claims that the subsidy increased their production volume to 50 times what it had been.  The increased volume helped them cut manufacturing costs from $3 per installed watt to just under $1 per watt.  The installed cost of $1,000 per kilowatt is comparable to the cost of building a coal-fired plant that has higher operating costs.

So far, this sounds like a case study for a successful government subsidy.  An industry was important for political reasons, but the unregulated market was unable to make it "over the hump" of mass production.

Government subsidies artificially increased the demand; economies of scale kicked in; and voila! the world is a better place thanks to government action.  Even the most ardent industrialist would agree that, all else being equal, it's better to get energy free from the sun than by having to tear apart whole mountain ranges to extract coal.

The fly in the ointment is that all else is not equal.  Coal always burns, but the sun doesn't always shine.  A study by the International Energy Agency (IEA) documents this unfortunate fact of nature:

For solar plants the availability/capacity factors reported vary from 9% to 24%.

Solar systems have lower operating costs than conventional power plants because sunshine is free, but either backup systems or high-capacity storage systems are needed to handle the 75% - 90% of the time solar systems aren't generating electricity.  High capacity electricity storage has yet to be invented, so solar systems have to be backed up by conventional power plants which are kept staffed and ready to go at a moment's notice whenever a cloud passes by or the sun sets.

Even if electricity could be stored at reasonable cost, solar power is available 25% of the time at best.  At least four times as much solar capacity is needed as conventional capacity because normal power plants run round the clock while solar cells can't.  This increases the overall cost of solar power to at least $4,000 per available kW which is four times the capital cost of coal-fired systems.

Ignoring the cost of the battery, a solar system that was available only 10% of the time would cost ten times as much as a coal plant, and so on.  Today's greens should update the old saying, "Make hay while the sun shines."

Capital costs are the largest part of total electricity cost; fuel accounts for only about 35% of the cost of coal-fired electricity.  Even with free fuel and even after the cost reductions First Solar brags about, solar electricity costs at least four times what coal-fired electricity costs and can cost up to ten times as much, not including the cost of the backup system.

Cheaper solar cells will be welcome for applications such as powering cell towers that are a long way from power mains, of course.  Despite all the hype, however, using more solar electricity will increase electricity costs until better storage systems are available and costs come down by at least another factor of four to make up for the fact that the sun doesn't always shine.

Nevertheless, the government has chosen to subsidize solar power by forcing customers to pay many times the cost of conventional power for solar electricity.  We've explained how the Carter-era tax credits for solar heating systems brought the entire solar heating industry to its knees.  Thirty years later, government subsidies continue to force customers to pay a lot more for solar electricity than for conventional power.

As long as solar systems generate only a small fraction of the electricity any given customer uses, the extra costs won't be too bad, but as solar systems multiply, electricity costs will go up.  This may cheer the greens, but until we have efficient systems for storing massive amounts of electricity, we'll still need conventional backup systems for the entire solar load or there'll be times when we'll have to freeze in the dark.

Correction: there will be times when you and I have to freeze in the dark.  Our masters in Congress, who know better, have wisely decided to hang onto a dirty but cheap and reliable electric power plant to keep the halls of the Capitol nice and comfy.

If we want to maintain our technological way of life and the high energy availability it absolutely depends on, we must follow Congress's example and stick the environmentalists, along with their dreams of mandating solar power, where the sun doesn't shine.

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Environment.
Reader Comments
Try calculating the cost of solar energy based on the real estate used to place them. This is the real eye opener that proves that solar has no future in large scale power generation. Even assuming the solar cells are free and that they are 100% efficient, the prospect is ridiculous.
March 24, 2009 4:45 PM
From the article: "So far, this sounds like a case study for a successful government subsidy. An industry was important for political reasons, but the unregulated market was unable to make it 'over the hump' of mass production." This is a fallacy. The whole point of private investment is to make it over these humps. If a technology will be profitable in the future, there is incentive to invest in it today.
January 24, 2010 9:37 PM

Real low cost Energy
by Troy Jordan
Electricity for $0.04 per KW
I began looking for alternative energy sources several years ago while managing the utilities for a large mental hospital.
1) After running the numbers in 1983 I determining that it requires more energy (BTUs) to make a gallon of ethanol than you get out when it is burned in an automobile or anything else. Ethanol also has less energy than even regular gasoline and can reduce gas mileage up to 20% compared to gasoline. It is stupid to pour money into continuing production of ethanol from corn or any food. Until we have a process that can create more BTUs output than required BTUs input.
2) Windmills are not the answer. Check out what happened in England in December 2010 when it gets really cold there is very little wind. Their windmills produced very little electricity during the coldest weather they have had in years. Huge investment in infrastructure of little to no use, fossil fuel plants had to carry the load when demand was highest and reliability was foremost.
3) Solar panels are not the answer. They only work when the sun shines, and at present the efficiency is only 10%. Solar cells now in experimental labs are almost 20% efficient but it will be years before those units are available and costs may be prohibitive.
For 2 and 3 above:
a) They can not be placed near where the most power is needed (large Cities).
b) It is necessary to build huge additions to the current power grid.
c) Both of these options also require huge tracks of land.
I have found what I believe is the most viable source for all of this nation's future electrical energy needs.
"The Liquid Fluoride Thorium reactor."
A proof-of-concept fluoride reactor (Aircraft Reactor Experiment) was built and operated in 1954 at Oak Ridge National Laboratory. A 3 megawatt reactor was actually made small enough to be placed on a bomber and flown around Texas and New Mexico to test for shielding of the crew. They envisioned nuclear powered bombers until ballistic missiles made such plans obsolete.
The Molten-Salt Reactor Experiment (MSRE), was built and operated by Oak Ridge National Labatory from 1965 to 1969. The Atomic Energy Comission moved to shut down all research on fluoride reactors at ORNL in the mid-1970s, and the fluoride reactor team was disbanded and assigned to other projects.
a) These reactors will shut themselves down with no harm if there is a power failure.
b) They can not blow up or explode.
c) 100 Megawatt units can be manufactured in a factory and shipped on a tractor trailer truck for emergencies.
d) They can destroy spent nuclear fuel form other reactors.
e) The reactor operates at very low pressure (near atmospheric).
f) There is no need for a huge containment vessel.
g) One ton of Thorium fuel will produce a gigawatt of power for a year.
h) The US government already has over 330 tons of thorium stored in the Nevada desert.
i) Thorium is plentiful in the US and the world.
j) Fuel can be added while the unit is operation.
k) Fuel reprocessing is carried out while the reactor is in operation.
There is a wealth in information about this on the web. I have read that 2 or 3 billion dollars would be needed to rediscover technology that the tax payers have already paid for once if the regulators would cooperate.

July 20, 2011 12:30 PM
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