I think solar power is a great idea. Free electricity: how cool is that? I’d love to use it at home because my house is an ideal solar site:, with a big flat roof under a New Mexico sun that shines 300-plus days a year.
Problem is, it’s too expensive. The last time I checked, converting my house to solar power would require an investment of tens of thousands of dollars. Even with the savings on utility bills and all those tax credits, it would take as much as a decade to recover my costs. I could break even about the time they wheel me off to a nursing home.
I suspect that one reason why solar power is expensive is because solar equipment still lacks the economies of scale needed to make it affordable. The more of something you manufacture, the lower the cost of each unit. That’s why many things that used to be expensive, like flat-screen TV sets and cell phones, are now available at WalMart.
Solar energy is still overpriced despite years of government subsidies. At this point the biggest reasons to go solar are noneconomic: ecological guilt and government mandates. My utility company offered me a deal a couple of years ago to pay a voluntary surcharge for the assurance that some of my electricity would come from renewable sources. Seriously? My bills are likely to go up anyway because of government mandates that utilities use more solar and wind power. Forcing us to pay more for something because it’s good for us is not a compelling strategy.
The telecommunication industry faced a similar dilemma in the 1990s. Fiber optic cable was many times more efficient than copper cable, but the stuff was expensive. That was frustrating to telcom executives who wanted to convert more of their networks to fiber but could not justify its cost. Ameritech solved the problem by offering long-term, large-scale contracts to suppliers who could offer fiber cable at a price comparable to copper. Suppliers jumped at the deal because the long-term contracts enabled them to expand their manufacturing volume and achieve lower costs.
Government programs to encourage renewable energy may be falling short because they tend to focus on subsidizing manufacturing and creating artificial demand without reducing costs. There is a lot government can do by focusing its efforts on the areas where government is most effective.
It makes sense for the government to fund research, because research grants and subsidized national laboratories can perform more basic research and development than most private companies can afford.
Government also can create markets in its role as the biggest customer in the country for practically everything. Instead of paying companies like Solyndra to build luxurious factories in expensive locations, I’d like to see the feds announce a program to spend, say, $500 million a year for the next five years to convert government buildings to solar power and award contracts to the lowest bidders.
Companies with the winning bids could then raise private capital to build factories, with investors looking over their shoulders to ensure that the companies are managed prudently. The likely outcome is that a lot more solar panels would be manufactured and, as a result, costs would go down. Not only would the government get something for its money (for once), but solar panels would be more affordable for the rest of us.
Solar power
I think solar power is a great idea. Free electricity: how cool is that? I’d love to use it at home because my house is an ideal solar site:, with a big flat roof under a New Mexico sun that shines 300-plus days a year.
Problem is, it’s too expensive. The last time I checked, converting my house to solar power would require an investment of tens of thousands of dollars. Even with the savings on utility bills and all those tax credits, it would take as much as a decade to recover my costs. I could break even about the time they wheel me off to a nursing home.
I suspect that one reason why solar power is expensive is because solar equipment still lacks the economies of scale needed to make it affordable. The more of something you manufacture, the lower the cost of each unit. That’s why many things that used to be expensive, like flat-screen TV sets and cell phones, are now available at WalMart.
Solar energy is still overpriced despite years of government subsidies. At this point the biggest reasons to go solar are noneconomic: ecological guilt and government mandates. My utility company offered me a deal a couple of years ago to pay a voluntary surcharge for the assurance that some of my electricity would come from renewable sources. Seriously? My bills are likely to go up anyway because of government mandates that utilities use more solar and wind power. Forcing us to pay more for something because it’s good for us is not a compelling strategy.
The telecommunication industry faced a similar dilemma in the 1990s. Fiber optic cable was many times more efficient than copper cable, but the stuff was expensive. That was frustrating to telcom executives who wanted to convert more of their networks to fiber but could not justify its cost. Ameritech solved the problem by offering long-term, large-scale contracts to suppliers who could offer fiber cable at a price comparable to copper. Suppliers jumped at the deal because the long-term contracts enabled them to expand their manufacturing volume and achieve lower costs.
Government programs to encourage renewable energy may be falling short because they tend to focus on subsidizing manufacturing and creating artificial demand without reducing costs. There is a lot government can do by focusing its efforts on the areas where government is most effective.
It makes sense for the government to fund research, because research grants and subsidized national laboratories can perform more basic research and development than most private companies can afford.
Government also can create markets in its role as the biggest customer in the country for practically everything. Instead of paying companies like Solyndra to build luxurious factories in expensive locations, I’d like to see the feds announce a program to spend, say, $500 million a year for the next five years to convert government buildings to solar power and award contracts to the lowest bidders.
Companies with the winning bids could then raise private capital to build factories, with investors looking over their shoulders to ensure that the companies are managed prudently. The likely outcome is that a lot more solar panels would be manufactured and, as a result, costs would go down. Not only would the government get something for its money (for once), but solar panels would be more affordable for the rest of us.
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