Why I worry about using government "insentives" for new/green technologies...

BB.BB. Super Moderators, Administrators Posts: 29,489 admin
Over my 5 decades of life, I have seen a few cycles where government "chooses" an industry, subsidizes it, then abandons it...

From the 70's, and later, solar hot water (there are still a surprising number of homes in our area with, what appear to be abandoned in place, solar hot water systems. To the manned space program(s) of today.

Here is another:

Tax Credit in Doubt, Wind Power Industry Is Withering

FAIRLESS HILLS, Pa. — Last month, Gamesa, a major maker of wind turbines, completed the first significant order of its latest innovation: a camper-size box that can capture the energy of slow winds, potentially opening new parts of the country to wind power.
Green

But by the time the last of the devices, worth more than $1.25 million, was hitched to a rail car, Gamesa had furloughed 92 of the 115 workers who made them.

...

Similar cuts are happening throughout the American wind sector, which includes hundreds of manufacturers, from multinationals that make giant windmills to smaller local manufacturers that supply specialty steel or bolts. In recent months, companies have announced almost 1,700 layoffs.

At its peak in 2008 and 2009, the industry employed about 85,000 people, according to the American Wind Energy Association, the industry’s principal trade group.

About 10,000 of those jobs have disappeared since, according to the association, as wind companies have been buffeted by weak demand for electricity, stiff competition from cheap natural gas and cheaper options from Asian competitors. Chinese manufacturers, who can often underprice goods because of generous state subsidies, have moved into the American market...

Industry executives and analysts say that the looming end of the production tax credit, which subsidizes wind power by 2.2 cents a kilowatt-hour, has made project developers skittish about investing or going forward. That reluctance has rippled through the supply chain....

-Bill
Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset

Comments

  • Volvo FarmerVolvo Farmer Solar Expert Posts: 209 ✭✭✭✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...

    Seems like the same thing that has been going on for forty years.
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  • PhotowhitPhotowhit Solar Expert Posts: 4,994 ✭✭✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...

    I think you have to look at the big picture, at least in the tax credit/incentives, I think solar created a demand and there by increased production, reducing product cost and making the industry more effiecent as a whole.

    There would be some incentives for business to create the alternative, but only as fossil fuels run out. I understand they won't all run out at once, we'll have hundreds of years of increasing demand, urging the goverment to allow dirtier production pumping of oil shale, etc. But none of that looks attractive. What ever intrest and advancment of the technology we can make now will speed us along the way to alternatives. Heck it's what i want the goverment to do...

    I think any artifical demand will produce and ebb and flow, lots of people getting in, a few figuring out the best ways and loosing/filtering out the weaker ones. Now if the goverment would just figure out a way to let their weaker employees go...

    ...then you'd have something!
    Home system 4000 watt (Evergreen) array standing, with 2 Midnite Classic Lites,  Midnite E-panel, Prosine 1800 and Exeltech 1100, 660 ah 24v ForkLift battery. Off grid for @16 of last 17 years. Assorted other systems, and to many panels in the closet to not do more...lol
  • vtmapsvtmaps Solar Expert Posts: 3,738 ✭✭✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...
    BB. wrote: »
    Over my 5 decades of life, I have seen a few cycles where government "chooses" an industry, subsidizes it, then abandons it...

    I have been waiting many decades for the government to stop subsidizing fossil fuels and nuclear. Renewables wouldn't need subsidies if they were on a level playing field. --vtMaps
    4 X 235watt Samsung, Midnite ePanel, Outback VFX3524 FM60 & mate, 4 Interstate L16, trimetric, Honda eu2000i
  • Eric LEric L Solar Expert Posts: 262 ✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...
    I have been waiting many decades for the government to stop subsidizing fossil fuels and nuclear

    Exactly. Nuclear received massive subsidies at the start and now, 50 years later and well after it's an 'established technology,' continues to be one of the biggest pigs at the subsidy trough. We can't know whether wind would be viable in a true free-market North American energy economy because we don't have one.
  • SolaRevolutionSolaRevolution Solar Expert Posts: 407 ✭✭✭✭✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...

    Incentives are a mixed bag.

    I got into the industry primarily as a grid-tie installation subcontractor. The non-battery GT systems were >$8/Watt before incentives and around $4.50/Watt after. Panels were +/- $6 / watt. I think it is safe to say that there would have been a much smaller market without the incentives. As the manufacturers ramped up production costs went down. This decreased the costs of solar for every installation includuing those not eligible for incentives.

    I did many off-grid projects (few or no incentives) but most of my income was from doing GT installations at +/- $1.20 /Watt. This cost to was able to decrease as innovations made installing more efficient. The hard part for my business was the "sun set" dates for tiers of the rebate programs. There was always a push to get projects finished before June 30 and before Dec 31st. This was a rough schedule with school-age kids at home. Then there were the political battles which often left the incentive programs in limbo. There were times when I would need several employees to meet the deadlines and then suddenly there would be almost zero work for months at a time. This was a major part of the reason I changed my business focus into off-grid. It's a lot more client and service oriented and not so much of a get-in, get-out, get the check, but it is steady (and far more interesting).

    I enjoy working with my niche clientel. It is very rare that my systems are directly effected by incentives now but there is no doubt that the off-grid industry has benefitted from the mainly GT based incentive programs. Also, a friend who works for the California Air Resources Board has said that the impact solar has on reducing emmisions from off-grid generators is not insignificant.8)

    -Alex
  • WindsunWindsun Solar Expert Posts: 1,164 ✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...
    vtmaps wrote: »
    I have been waiting many decades for the government to stop subsidizing fossil fuels and nuclear. Renewables wouldn't need subsidies if they were on a level playing field. --vtMaps
    The fossile fuel subsidies are not near as much as is it popular to believe. And a lot depends on what you consider to be a "subsidy". While it is easy to make such a statement, few people when challenged can actually come up with many concrete examples in the USA. Some interesting info here http://news.nationalgeographic.com/news/energy/2012/06/pictures/120618-large-fossil-fuel-subsidies/
  • BB.BB. Super Moderators, Administrators Posts: 29,489 admin
    Re: Why I worry about using government "insentives" for new/green technologies...

    From another thread that discussed subsies and other stuff:
    BB. wrote: »
    How much do we subsidize the Nuclear vs Wind energy providers?

    http://www.wind-watch.org/news/2009/...lete-disaster/
    The U.S. Energy Information Administration reported in 2008, on a dollar per MWh basis, the U.S. government subsidizes wind at $23.34 — compared to reliable energy sources: natural gas at 25¢; coal at 44¢; hydro at 67¢; and nuclear at $1.59, leading to what some U.S. commentators call “a huge corporate welfare feeding frenzy.” The Wall Street Journal advises that “wind generation is the prime example of what can go wrong when the government decides to pick winners.”

    Depending on their power plans--I would not be surprised (PG&E E-1 flat rate residential PDF) if they are paying $0.40 per kWH for any usage over ~1,000 kWH per month (may be higher--baseline kWH numbers vary by area of state and gas vs all electric homes).

    One person suggested this did not cover the government costs for 10-100,000 year of nuclear waste storage.

    And:
    Windsun wrote: »
    But if you think subsidies are out of line in the US, you should see some of the European ones (before it started falling apart due to the economics):
    Initially, solar power producers could sell their energy at a feed-in tariff rate set at €440 (US$ 565) per MWh, although after the onset of the financial crisis in 2008 this was lowered for any new projects to €259 (US$ 329) per MWh. Payments are again guaranteed for the lifetime of the systems, with slight reductions to the tariffs being made after a longer period than wind, 25 years. According to the IEA, feed-in tariffs are adjusted every quarter for new systems.
    http://www.globalsubsidies.org/subsidy-watch/analysis/fiscal-deficit-forces-spain-slash-renewable-energy-subsidies

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
  • CariboocootCariboocoot Banned Posts: 17,615 ✭✭
    Re: Why I worry about using government "insentives" for new/green technologies...

    Subsidies are not the same as not realize the true cost. As Windsun pointed out there is little actual subsidizing of fossil fuel/nuclear. But that does not mean the price you pay when you buy it is the complete price, as it does not always include the expense of waste disposal or environment clean-up. This sort of thing is nearly impossible to quantify monetarily, but they keep trying.

    In B.C. we have a "carbon tax". It is supposed to help the environment by decreasing energy use. It is also "revenue neutral", meaning the taxes they collect from the end user for energy are shifted against other taxes so your over-all tax bill doesn't change. Neither of these factor actually function as claimed in real life. Energy use continues to increase here (people can't afford to ditch their lower MPG car in favour of a higher MPG car due to the capital outlay) and the additional cost of having to collect and administer the new tax has made everything more expensive. When the tax was first implemented at 2 cents per litre gasoline was already $1.44 per. The tax has gone up to 6 cents per litre now, and gasoline is down to $1.34 (same area). So that will affect energy use? Not much of an incentive. On the other hand a truly punitive tax would cause an instant recession.

    Like the reflective roof discussion in another thread, government policy may have good intentions but the lack of understanding of these complex issues by the people who make the laws leaves them implementing legislation that is politically popular rather than actually useful for solving the problem. Why, they can't even agree on if there is a problem and if so, what the problem is.
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