A Free Market for Solar Energy: It’s Coming

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Free markets require competition.  Ready or not, solar is bringing competition to the energy industry.

No one would argue that it is time to start dismantling the national energy grid and replace it with battery storage and solar panels on top of every building. As much as every customer of a monopoly energy provider (and that’s all but 180,000 off-grid families) loves the idea of “cutting  the cord” and producing their own energy, for the majority of Americans, that will never happen. However, for those who want more than one choice when it comes to buying electricity, the future’s looking brighter.

“Free Market” has always been a tricky term. In the strictest libertarian sense, a free market is one in which there is no government intervention, and businesses are free to compete for customers and set prices based on supply and demand. Obviously, nothing like that currently exists, and never really has. Commerce and government have always relied on one another, and nowhere has that been more historically apparent than in the growth of the energy industry. Federal, state and local governments all had a hand in establishing service territories for generation and transmission companies, and those government sanctioned monopolies have been held sacred for a century.  However, not since the advent of electrification has there been a better chance for something akin to a free market in energy been possible.

Why? Not because, as some would have us believe, Democrat politicians have “picked favorites” in the renewable energy system and “showered” them with government subsidies. Massive subsidies have always been a reality in the energy sector, and the amounts “showering” the solar industry have been relatively modest when looked at in context with, say, the nuclear industry. And this is to say nothing of the unpaid fossil fuel externalities… environmental clean-up, healthcare costs, etc. No, solar is bringing the energy industry kicking and screaming into the “Free Market” in spite of all of the government subsidies sloshing around in the overflowing pail of taxpayer and ratepayer cash that the industry bathes itself in.
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The simple answer is, solar is the most elegant, technologically advanced energy generation system on the planet today. It is the lateen sail to coal’s paddle. It is the carbon-fiber racing bike to coal’s penny-farthing.  It takes the energy straight from the sun, rather than from dead sunlight stored underground. The efficiency and scalability are unmatched. The externalities are non-existent by comparison. Fossil fuel companies are in the buggy-whip business, it’s that simple. And, despite their best efforts to strangle the solar baby in it’s crib, fossil fuel lobbyists are losing their battles, state by state.

What happens now?

To say that there is a lot of uncertainty about the future of federal energy policy after the 2016 election is a major understatement. But to think of U.S. Government energy policy as synonymous with progress in the energy sector is not only defeatist, it is misinformed. To begin with, the majority of action in the renewable energy game takes place on the state level. Federal policies, like the Production Tax Credit (PTC) are drafted solely to benefit large-scale, utility industry projects. The ITC (Investment Tax Credit) which benefits rooftop and indie solar projects, is being phased out, and many solar companies think that the market will be more robust without the ITC.

Meanwhile, state governments are looking at a range of policies, some good, some downright awful. Luckily, advocates for a free market for solar are making themselves heard. In Florida, a deceptively written, utility-backed ballot initiative designed to trick voters into punishing solar users was defeated.

Finally, storage is on the horizon. As I predicted in my January article “Solar Trends to Watch in 2016: The Good, The Bad and The Ugly” …”Residential battery storage will not be ready for prime time in 2016. After the Tesla PowerWall hype, it’s going to take a few more years to become reality. Expect a lot of smoke this year- and hopefully we’ll see fire in 2017.” I stand by that prediction, and I expect to see the first wave of early adopters taking the leap and doing their energy business behind the meter next year. Once that happens, look for solar cooperative and collective structures to take off. Unleash the power of the Free Market, indeed.

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