If you own a business—maybe a
taco stand, a dress shop, or an insurance agency—you know it takes a lot of
hard work, good market analysis, a better product or service than your
competition, and advertising. Add in a bit of luck, and you hope to grow your
business—though vacant storefronts and boarded up buildings in towns and cities
across America show that isn’t always enough. Each going-out-of-business sale
represents the death of someone’s dream.
If, however, you are a
politically favored business—say solar—your story is different. Your growth is
dependent on government generosity. And, when people, who may never buy your
product or use your service, balk at underwriting your venture and convince
their Congressmen to take away the taxpayer largesse, like a badly behaved
toddler, you threaten to take your marbles and go home—leaving former staffers
unemployed and customers without service.
Such is the story of
SolarCity—which has taken advantage of the favored status and bilked government
programs to grow into being the nation’s largest installer of rooftop solar
panels. Despite that distinction, SolarCity still loses millions of dollars.
SolarCity doesn’t manufacturer solar panels—though, thanks to $750 million in
funding from New York’s taxpayers—that will soon change.
Despite “major changes and
growing competition in an already competitive industry,” as The Associated
Press called it, Governor Andrew Cuomo is, essentially, giving SolarCity a
state-owned, rent-free factory—a decision that Michael Hicks, a professor of
economics and director for the Center for Business Research at Ball State
University, says is “an eye-popping deal, a very questionable use of state
funds, but a huge windfall for the investors of SolarCity.” In return,
SolarCity promises to “create 1,460 high-tech jobs” at the Buffalo, NY, factory
scheduled to begin operations late this year…..
What states have found, is
that the increasing implementation of solar, results in higher costs for
non-solar customers—who as the WSJ states: “tend to be lower income.”
The net-metering policies are
at the center of the debate. In short, net metering compensates solar customers
for the excess solar power they generate. The problem is that these individual
generators get paid retail for the power, rather than the wholesale rate
utilities pay for typical power supplies. As a result, customers with solar
panels can completely avoid paying the utility—even though they still use
power, transmission lines, and services from the company. States are seeing
costs shifted from solar customers to those who can least afford it. As a result,
several states, including Nevada, California, and Washington have mandated
policy changes. Generally, the changes reduce the payment to wholesale and add
a grid connection fee or demand fee…..
Despite being the largest
installer of rooftop solar in the country, SolarCity has not been
profitable—with losses of $56 million in one year and $293 million
cumulatively. As more and more states look toward revising the generous solar
subsidies as a way to rein in exploding costs and balance budgets, companies like
SolarCity become a bad investment. When Congress extended the tax credits for
solar as part of the 2015 omnibus budget deal, Solar City “saw its share price
skyrocket.” The rich get richer and the poor get soaked.
Explaining the industry’s
reaction to changing policy, Rep. Jeff Morris, the sponsor of proposed
legislation in Washington, HB 2045, said: “The reason they are going off the
rails on this is because they are afraid that it’s going to sweep across the 50
states.”
It is the state and federal
incentives, not free markets, which have created a burgeoning solar industry.
Congress foolishly extended the federal credits. But with “recent improvements
in solar costs and efficiencies,” as Lori Christian, president of Solar
Installers of Washington says: “it is time for all states to reassess the
outdated incentive structure currently in place.”
When even California is
proposing policy changes that would result in solar power being less-cost
effective for homeowners and businesses, it is time to realize this business
model has to change. And, that includes taking the silver spoon out of the
mouth of SolarCity. Although they’ll likely throw a temper tantrum, take their
marbles and go home, it will save taxpayers millions and force solar to operate
on a level playing field like other businesses have to do.
Full Text at: http://canadafreepress.com/article/77892
