Solar Growing But Still Heavily Lagging Hydrocarbons

American taxpayers spent an average of $39 billion a year over the past 5 years financing grants, subsidizing tax credits and guaranteeing loans, bailing out failed solar energy boondoggles and otherwise underwriting every idea under the sun to make solar energy cheaper and more popular. But it has a long way to go reports Elizabeth Harrington. (1)

Despite billions spent in investments over decades, solar energy will only make up 0.6 percent of total electricity generation in the United States in 2015. Government support for the solar industry is vast, with at least 345 different federal initiatives that spread across 20 agencies. The Pentagon has the highest number of solar programs with 63 followed by the Interior Department which oversees 37 programs. The Energy Department only manages 34 solar programs. (1) In the United States, the solar industry has been aided by tax incentives and stimulus funding. The investment tax credit for solar is currently 30 percent, but drops to a permanent 10 percent credit for commercial investments at the end of 2016 and will expire for residential investments. Along the way, overcapacity has caused the price of solar modules to decline by 65 to 70 percent since 2009 causing many US firms to enter bankruptcy, close their US operations, or reassess their business models. (2) What about jobs? The US solar manufacturing industry employed about 32,000 workers in 2014—just a tiny portion of the more than 12 million domestic manufacturing jobs in the United States. (2)

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The solar manufacturing industry has entered a phase of global consolidation. The number of module manufacturing facilities in the United States dropped by 13 in 2 years—from 51 in 2011 to 38 in 2013. Module production in China is relatively flat because of declining demand in some countries and weakened prices. The number of PV module manufacturers in China has dropped by over 200 in 2 years—from 300 in 2011 to less than 100 in 2013. China expects to reduce the number to 10 by the end of 2017 with those 10 manufacturers supplying 70 to 80 percent of domestic demand. (2) Comparing solar with coal: In 2013, domestic solar energy capacity nearly doubled and now stands at more than 12 gigawatts. But coal use continues to dwarf this number. In 2013, solar provided about 42,000 barrels of oil per equivalent day to the US economy. For comparison, last year, domestic coal use grew by about 380,000 barrels of oil equivalent per day. Thus, just the increase in coal use—in a country that is supposed to be going beyond coal—was equal to nine times the contribution of every solar installation in the US combined. (3) Comparing solar with oil: In one year the increase in US oil production has been roughly equal to twice the contribution from every solar energy installation on the planet. (4) In spite of all this, there's no question that solar is on a tear. Since 2011, the amount of energy produced by the solar sector has more than doubled. But amidst the solar frenzy, we must remember the critical issue of scale. Indeed, despite solar's rapid growth, its output is still being dwarfed by the ongoing growth in hydrocarbons. The hard reality is that for all its rapid growth, solar isn't even keeping pace wit the growth appetite for hydrocarbons. Robert Bryce concludes, “By all means, let's appreciate the growth in solar. And if it makes you happy and/or you can get a subsidy—put some solar panels on your roof. But don't count hydrocarbons out yet. They're going to stick around for many decades to come.” (4) References

1. Elizabeth Harrington, “Report: solar energy subsidies cost $39 billion per yer,” freebeacon.com/issues, February 12, 2015
2. Institute for Energy Research, “CRS reports on solar manufacturing: US closes numerous facilities,” Canada Free Press, February 5, 2015
3. Robert Bryce, “Coal use is soaring—that's good news,” robertbryce.com, December 22, 2014
4. Robert Bryce, “Solar booming but not as fast as hydrocarbons,” The Sydney Morning Herald, September 3, 2014