The article this weekend on the front page of The New York Times, “A Gold Rush of Subsidies in the Search for Clean Energy,” clearly underscores why the U.S. should phase-out all permanent and long-term subsidies for energy. When slow moving utilities start chasing solar and wind you know that we are ready to create a level playing field for all.
The article pointed out that subsidies were intended to “help renewable-energy plants that were jumbo-sized or used innovative technology,” which are “both potential obstacles to getting private financing.” But subsidizing jumbo-sized solar is deeply flawed. This shows the limitations of the government’s knowledge and ability to choose winners – in this case Fortune 500 companies.
My knowledge comes from having founded and successfully launched the largest solar services company, SunEdison.
Solar photovoltaic technology, at its core, is about distributed energy generation; each module is less than 400 Watts. It is not about building massive arrays to feed the GRID. It is about getting off the GRID. Proven, effective solar PV installations are anti-jumbo.
That is why companies like WalMart, Kohl’s, Staples and others put solar energy on their rooftops. The energy is at the same price, or lower cost, than retail electricity from the current GRID and gives these companies energy independence: an American ideal.
With the government focus on jumbo-sized plants, we are prone to making jumbo-sized mistakes.
Big energy companies are stepping up and proposing jumbo solar projects that make no economic sense. Rooftops projects can be built in 90 days as opposed to three years. This saves working capital, planning costs, permits, environmental studies, and more importantly can be developed by hundreds of firms – not just the 1 percent. Southern California Edison’s latest RFP showed that these smaller projects today are cheaper than new high-efficiency natural gas plants – even with today’s low gas prices.
Understand that a large energy company is like a carpenter with one tool: a hammer. Every problem looks like a nail. They are jumbo-sizing a technology that is most efficiently deployed in small projects that are stand-alone. In the end, the people who are getting nailed are the ratepayers.
If the government wants to incentivize a move to American energy independence it should focus on three criteria:
- 1) Helping solar achieve GRID parity within three years
- 2) Make solar fully scalable for residential to industrial size
- 3) Show how solar can improve security by becoming GRID independent
Instead of starting with 20th century assumptions of “bigger is better” we need to move to “small is beautiful”. In short, as the new SMART car commercials assert, thinking “big” is thinking dumb.
Lets hope America uses it God-given sunlight to help deploy cost effective renewables within our borders and continue to significantly increase our exports – it is already the fastest growing industry in the USA. Now that is THINK SMART.
Jigar Shah is the CEO of the Carbon War Room, a nonprofit that harnesses the power of entrepreneurs to implement market-driven solutions to climate change and create a post-carbon economy. By bringing project finance and growth capital together with infrastructure entrepreneurs, corporations, governments and nongovernmental organizations (NGOs), he identifies and eliminates market barriers, driving environmental improvements alongside economic growth.
Shah founded SunEdison in 2003 with a new business model, the solar power services agreement business (SPSA). The SPSA uses mature technologies and required no new legislative action. The SPSA model launched solar services into a multibillion dollar industry. SunEdison now has more solar energy systems and megawatts under management than any other company.