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The Energy Industry’s Crocodile Tears


Governments subsidize energy. That is a way of life in the United States that is not going to change, because powerful interests make sure those subsidizes become naturalized and we don’t think of them as welfare. That’s probably a good thing. It’s in the government’s interest to make sure its citizens have access to affordable energy. The question is which types of energy should we subsidize. Now that the tiny subsidies for solar are just barely beginning to cut into the profit margins of the long subsidized home energy industry that relies upon hydroelectric, gas, and oil, they are crying huge crocodile tears after their future profit margins.

Alarmed by what they say has become an existential threat to their business, utility companies are moving to roll back government incentives aimed at promoting solar energy and other renewable sources of power. At stake, the companies say, is nothing less than the future of the American electricity industry.

According to the Energy Information Administration, rooftop solar electricity — the economics of which often depend on government incentives and mandates — accounts for less than a quarter of 1 percent of the nation’s power generation.

And yet, to hear executives tell it, such power sources could ultimately threaten traditional utilities’ ability to maintain the nation’s grid.

“We did not get in front of this disruption,” Clark Gellings, a fellow at the Electric Power Research Institute, a nonprofit arm of the industry, said during a panel discussion at the annual utility convention last month. “It may be too late.”

I am sympathetic to the idea that one form of energy shouldn’t necessarily have to pay for the upkeep of a system that other energy users aren’t paying for. That’s an easy fix–a slight tax on credit for system maintenance. Otherwise, I see no reason at all why the government should take an interest in the profit margins of energy corporations. Again, the government needs to ensure affordable energy. But it also needs to ensure clean and sustainable energy. Home solar is a great way to do that. Like any energy system, it’s almost impossible for an everyday homeowner to install on their own. Government subsidies are necessary. The government already massively subsidizes one type of home energy system. There’s no reason at all that it should pull back from doing so with solar.

Moreover, both of these are good things:

“If the costs to maintain the grid are not being borne by some customers, then other customers have to bear a bigger and bigger portion,” said Steve Malnight, a vice president at Pacific Gas and Electric. “As those costs get shifted, that leads to higher and higher rates for customers who don’t take advantage of solar.”

Utility executives call this a “death spiral.” As utilities put a heavier burden on fewer customers, it increases the appeal for them to turn their roofs over to solar panels.

A handful of utilities have taken a different approach and are instead getting into the business of developing rooftop systems themselves. Dominion, for example, is running a pilot program in Virginia in which it leases roof space from commercial customers and installs its own panels to study the benefits of a decentralized generation.

Last month, Clean Power Finance, a San Francisco-based start-up that provides financial services and software to the rooftop solar industry, announced that it had backing from Duke Energy and other utilities, including Edison International. And in May, NextEra Energy Resources bought Smart Energy Capital, a commercial solar developer.

The government should be subsidizing solar and if there’s more reason to move to clean, renewable energy, then yay! Second, like with wind energy, I think it’s crazy that established energy companies don’t get involved and monopolize that as well. The opposition of oil to wind and home energy to solar makes no sense. If you want to stay ahead of the curve and continue to profit, adjust and dominate the new energy. You have the capital to do it. So I’m glad to see a few big energy companies do this. But most will resist because solar is hippie energy and hippies suck.

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