Solar Power Investments Don’t Pay Off

Solar Power Investments Don’t Pay Off

Ivanpah is a 640,000 megawatt-hour solar farm in California that received $1.5 billion in taxpayer-funded federal loans. The project benefited from a loan-guarantee program where taxpayers bear the risks and the solar industry gets favorable rates to protect their profits.

The Ivanpah plant has failed to provide the energy, and thus the environmental benefits, it promised consumers. Unfortunately, this foundering is barely news. Despite decades of strong financial and popular support, government investments in solar power have yet to pay off.

Investments of the magnitude solar receives require huge returns to justify, but those returns have yet to appear. Research by the Institute for Energy Research shows solar power is subsidized in excess of 345 times more than generation from either coal or oil and natural gas. In fiscal year 2013 alone, the federal government spent $5.3 billion subsidizing solar energy, as reported by the Energy Information Administration. This funding, and the millions before it, has resulted in only 0.6 percent of total U.S. electricity coming from solar energy technologies in 2015.

Subsidizing the solar industry has resulted in a continual retreat of the goalposts without any of the promised benefits ever coming to fruition. The argument in favor of government funding for new technologies is that temporary public assistance helps protect investors and helps jumpstart the industry. But those receiving the support always forget about the temporary part of that argument. Each time a deadline looms and a program is about to expire, wind and solar trade agencies push for an extension for just a few more years.

Solar Power Investments – 1983 study

Solar and wind were predicted to be competitive by 1990 if they were assisted by tax credits and federal funds for research and development, according to a 1983 study. With the help of current tax credits and subsidies, utility-scale solar photovoltaic facilities will become competitive by the end of this decade. according to a 2013 study. The 1983 study was not close to accurately predicting the renewable energy future and there is little chance the 2013 study will do any better as solar power remains one of the most expensive forms of generating electricity, according to estimates compiled by the Transparent Cost Database, an open source project of Open Energy Information.

When subsidies are removed, investments in solar power plummet because the technology is not economical. One major subsidy, the Investment Tax Credit, was set to expire in 2016 until lawmakers in Washington extended the life of the credit six more years, until 2022. Before the extension some solar developers determined they would probably not meet the deadline and withdrew from their projects.

BrightSource Energy, the company that also runs the controversial Ivanpah solar plant, canceled a utility-scale solar farm planned for California because of uncertainty about qualifying for the Investment Tax Credit. Now, however, with the tax credit ensured for a few more years, an increase in solar developments is expected.

The market for solar is clearly driven by the tax credits and protectionism procured through the political process, not by serving the energy needs of average people.

The direct beneficiaries of subsidizing solar power are not new innovators. The funding actually concentrates in the hands of large and established companies. Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, shows that most of the funds for the Section 1705 Loan Guarantee Program, which passes the obligation for repayment of a loan on to the government if the borrower defaults, went to large, established companies rather than to startups. Of the program’s approximately $30 billion, 64 percent was captured by just four companies.

Solar power manufacturers and investors benefit from massive government programs, but ultimately it is you and I who foot the bill through higher taxes. Our money ends up going straight to the bottom line of solar energy companies. For too long we have fruitlessly subsidized large solar industry favorites, and the time has come for solar energy producers to either prove their worth on their own, or exit the market.


Solar Power Investments solar power installation
Solar Power Investments

Solar Power Investments

  • David McKay

    Typical fossil fool (sorry fuel) promoted article. I take a very balanced view of the old & new energy sectors. I don’t believe Ivanpah was a particularly smart plant, as it has no storage. Storage is what makes Solar Thermal valuable. Wow, they obviously did a lot of creative accounting to to create the 345 times more subsidies for solar than fossil fuels?? So, what fossil fuels received 16m in subsidies for the same period?
    I am sure the owners of Ivanpah are a whole lot happier than those of Peabody or Arch or Alpha who have seen them lose all value in their investments.

  • R. Kooi

    It would be nice if there was an ounce of objectivity….This article is actually written by the PR department….
    funding :

    “….IER is a nonprofit 501(c)(3) organization and is funded entirely by tax
    deductible contributions from individuals, foundations and corporations.[1][10] IER has received funding from the Brown Foundation
    (started by founders of a construction and energy company),

    the Searle Freedom Trust and the Claude R. Lambe Charitable Foundation.[11]

    They have also previously received funding from ExxonMobil[12] and from the

    American Petroleum Institute.[13] IER says that it has not sought for or accepted financial support from the government…”

    if you would like some objective information on this subject:


    a Conservative & Pro Business site, which is not in any way MARRIED to the Petroleum industry.

    Not surprisingly the author FAILES to accurately represent the hundreds of billions of dollars of corporate welfare/subsidies dumped into the eternal waiting arms of Oil Billionaires.
    They earned $1/3 Trillion last year…
    despite that
    they returned to the Congress ((into which they dump hundreds of millions in political contributions and billions into hundreds of lobbyists)) and collected $600+ Billion in subsidies…..which they have been collecting since 1918.
    Next year the guesstimates are they will collect over $1 Trillion in subsidies…..a large chunk of which will be spent on FRONT ORGANIZATIONS like the one which paid for this article…to keep all of the federal welfare dollars flowing into their Pockets & Banks…..
    by the way,
    Did you hear the story about how the oil industry is the most heavily TAXED industry at rates of 45% and hundreds of billions of taxes……
    FACT is
    The smaller companies rarely pay more that 3% (that’s three per cent) in taxes….the larger industries NEVER PAY MORE THAN 17% (never more than seventeen per cent).

  • Robert Howd

    Solar power installations are growing exponentially in the U.S., with 1 million total installations now operating. The future is bright! http://blog.ucsusa.org/mike-jacobs/one-million-solar-energy-systems-now-turned-on-in-us