By Amy Oliver and Michael Sandoval
If lawmakers really cared about consumers, they would ditch expensive renewable energy mandates that require a subsidized market for resources that are not practical on a large scale. It’s a classic case of putting the cart before the horse; policy came before practical application.
The Department of Energy (DOE) reports that 24 states and the district of Columbia have renewable energy mandates ranging from Maine’s high of 40 percent to Pennsylvania’s low of 8 percent. Also known as a “Renewable Portfolio Standard” (RPS), these policies require that energy providers ignore practicality and price in order to obtain a minimum amount of electricity by a specific date from sources that environmental zealots consider “renewable,” such as solar and wind.
Five other states, North Dakota, South Dakota, Utah, Virginia, and Vermont, placate special interest groups while remaining more realistic with “non-binding goals” rather than an RPS.
Does it matter if the resources don’t exist to fulfill the RPS? No. Government will subsidize the manufacturing of those resources. Does it matter if those resources are little more than science projects? No. Government still will subsidize them.
The U.S. doesn’t have a corner on the market of misguided energy policy. Europe is also a major contributor to the myth of enlightened energy policies.
These mandates are rooted in a clean, green fantasy, and a market must be invented to fulfill it. If that isn’t ridiculous enough, government then cannibalizes the market it created by subsidizing companies where the market is already saturated.
Colorado, with its 30 percent RPS, is a perfect case study of an energy absurdity. In particular, its highly subsidized solar panel industry likely is contributing to a global decline in the market that threatens the very fantasy it is trying to fulfill.
General economics of the solar industry
To say the taxpayer-supported solar panel industry is struggling is an understatement. The Economist explains that subsidized manufacturing and purchasing distorted the market. Prices declined but subsidies didn’t. As a result, global “demand for solar panels doubled last year driven by soaring growth in Germany and Italy.”