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