blank.gif (51 bytes) Waiting for the Sun

by D. Dowd Muska

nvironmentalists often complain about the tax breaks and subsidies politicians bestow on industries which produce pollution. It’s easy to share greens’ indignation over polluter pork—after all, corporate welfare of any type is seldom justifiable. But environmentalists appear unwilling to discuss the government freebies showered upon industries which earn the Sierra Club Seal of Approval. Eco-pork is now pervasive, and no sector has benefited more from politically correct subsidies than the renewable energy industry.

The "green power" movement isn’t new, but the motivation behind the development of renewable resources (wind, geothermal, solar) has changed in recent years. In the 1970s, fear that the world’s supply of fossil fuels was rapidly dwindling ran rampant. James Schlesinger, the first energy secretary, warned, "The energy future is bleak and is likely to grow bleaker. We … must adjust our economies to a condition of chronic stringency in traditional energy supplies." The left-wing Union of Concerned Scientists agreed: "It is now abundantly clear that the world has entered a period of chronic energy shortages that will continue until mankind has learned to harness energy from renewable sources." Such paranoia prompted the first "investments" in green power.

The fossil fuels shortage never transpired, of course, but if environmentalists are anything, they’re adaptable. The campaign for renewables found safe haven in global warming’s public relations machine. The Greenhouse Effect—the scientifically shaky belief that the burning of fossil fuels causes our planet to heat up—is now a sacred tenet of the environmental left. Since the dominant media uncritically transmit this message of apocalyptic climate change, it’s little wonder that green power’s stock is rising.

And in Nevada, it’s booming. Global warming rhetoric and the bring-home-the-booty attitude of the state’s U.S. senators have made Southern Nevada the recipient of a nonprofit solar organization funded by the Department of Energy. Not to be left out, Nevada’s legislature has passed several pieces of pro-solar legislation. The Silver State is putting a lot of faith in sun power, and inconvenient questions about the technology’s significant limitations aren’t getting in the way.

Sunburned

he solar industry—such as it is—has been a public-private partnership from the start. And like most other ill-advised amalgams of government and business, it combines the worst of both worlds. Subsidies and tax breaks have given the industry protection against the discipline of the market, while the promise of massive profits from an abundant energy source has led to unfounded enthusiasm by potential solar entrepreneurs.

During the "energy crisis," writes the Competitive Enterprise Institute’s Jessice Melugin, "government bureaucrats and environmentalists looked to solar power to compete with oil and gas in electricity generation." Big money started to flow solar’s way. (In its 20-year history, the DOE has spent over $5 billion to develop solar power.) Homeowners started to purchase solar panels for their roofs, aided by a tax credit adopted by Congress in 1979.

But government’s investment in solar has not, to put it mildly, paid off. Today the technology generates a mere 0.05 percent of all U.S. electricity. Institute for Energy Research President Robert L. Bradley notes that "solar’s long-promised commercial viability has not occurred, and potential market share has been grossly exaggerated."

"Solar firms … remain unable to compete against conventional plants without government funding," agrees Melugin.

Presently, solar technology is nowhere near as cost-effective as either fossil fuel or nuclear plants—and the future is murky. "Economic, environmental and scale problems … limit solar’s potential as an electric utility power source despite improving technology," concluded Bradley. Solar farms require "over 100 times the space of conventional power plants, [are] located in pristine desert areas, [are] taxpayer and ratepayer subsidized and [produce] the most expensive electricity on earth at twice the cost of nuclear power."

If large-scale solar projects don’t work—and may never work—it’s little wonder that rooftop systems have not panned out as well. Experts estimate that as many as 30 percent of the solar panels installed by homeowners have been removed. In 1985, Congress declined to renew the solar tax credit. Last March, Gene Cattaneo, a solar contractor and manufacturer, told the Las Vegas Review-Journal that in his 20 years in the business, he’s seen 130 firms come and go in Southern Nevada.

Solar power may ultimately hold great promise, but for now it’s a textbook example of why the government shouldn’t try to pick winners and losers in the energy business. As Bradley has discovered, federal support is more of an impediment than an asset to the development of efficient energy resources. Natural gas received less than 1 percent of the $60 billion spent by the DOE on subsidies between 1978 and 1996. Yet the use of natural gas, which now burns cleaner than ever, is growing rapidly. Thus, the industry most ignored by bureaucrats has proven to the most innovative. "Given that natural gas is abundant, reliable … and relatively clean," wondered Bradley, "the question must be asked: why should the economic failure and environmental drawbacks of renewables be overlooked?"

The answer may be simple inertia. That’s the analysis of author Paul Gipe: "Whenever renewables seem stymied, environmentalists, regulators, and politicians respond that more R & D is needed. This cry arises from an outmoded belief that technological and social innovations spring from the womb of large centralized organizations. This model of innovation no longer produces results either in government or commerce."

Dick and Rose

ndaunted, the solar industry insists it isn’t a throwback to Carter-era na´vetÚ. Its promotional literature claims a bright future is just around the corner. The Solar Energy Industries Association (SEIA) speaks of "rapidly growing markets" for their members. That may be true—overseas. The U.S. solar industry exports 60 percent of its products.

As for the home front, the SEIA boasts that 10,000 American homes are fully powered by solar energy. Impressive? There are 63.5 million homes in the U.S., meaning only 0.016 percent are self-sufficient due to solar. America’s homeowners seem perfectly content with the less-expensive power provided by Fossil Fuels, Inc.

Despite this, the SEIA touts its product as the next big thing. "Solar technologies are likely to follow similar market penetration commercialization paths to that of other high technology products such as the fax machine, the cellular telephone and the personal computer," claims one fact sheet. Of course, it didn’t take Steve Jobs and Bill Gates two decades and $5 billion in government funding to bring about the Information Age, but that’s being picky.

Industry representatives aren’t the only ones shading the truth about solar. Someone had to appropriate all those subsidies, after all, and solar technology has plenty of friends in government—many from the Silver State. Southern Nevada is arguably ground zero for solar boosterism, and leading the way is the Corporation for Solar Technology and Renewable Resources (CSTRR). Formed in 1995, the organization says it "represents the culmination of one and a half years of work undertaken at the request of Senators Richard Bryan and Harry Reid of Nevada to assess the commercial energy potential of the Nevada Test Site." Reid may have been an initiator, but Bryan is the organization’s chairman, and clearly CSTRR is his baby.

Predictably, Bryan found a Democratic Party loyalist—and lifetime government employee—to administer CSTRR’s $3 million DOE grant. Rose McKinney-James, a former Public Service Commissioner and director of Nevada’s Department of Business and Industry under Bob Miller, was named president and chief executive officer, and paid an annual salary of about $100,000. (McKinney-James is currently the Democrats’ candidate for lieutenant governor. She says she intends to keep her job at CSTRR if victorious in November.)

CSTRR’s honchos share McKinney-James’ inexperience with the pressures of market forces—the organization’s officers are straight from the state’s establishment left. Nevada AFL-CIO boss Claude "Blackie" Evans sits on the board of directors, as does Senate Minority Leader Dina Titus, former state DOE chief Nick Aguilina and Miller appointee Diana Weigmann.

So what does CSTRR actually do? Here’s the group’s self-professed mission: "To facilitate the commercialization of solar and renewable energy technologies by integrating public supports and using them to elicit the best private initiatives to deliver commercially competitive energy from the most advanced solar and renewable technologies."

In other words, CSTRR is solar pork.

In an inspired bit of Clintonian lingo, CSTRR says it works "to bring community leaders, solar developers and the public together" to advance solarism. But it’s clear that CSTRR’s real beneficiaries—aside from McKinney-James and her staff—are the companies which will prosper from the organization’s attempts to "attract international, federal and local markets for Southern Nevada’s solar energy," and "assist in securing bond financing for solar developers."

CSTRR’s value as an exemplar of green pork is beyond doubt, but the organization also offers a glimpse at the inability of Nevada’s political elite to recognize that the state’s relationship with the federal government is a Faustian bargain. Plenty of Nevada-bound checks emanate from Washington, but the feds want the Silver State’s residents to accept the nation’s high-level radioactive waste, too. The standard applied by Nevada’s politicians is fairly clear: embrace the federal funding which helps your career, denounce the federal dictates which threaten your career.

From a political perspective, cheerleading solar power in Southern Nevada is a no-brainer. If the solar industry ever does start to make waves—either by government support or on its own—it will probably do so in a desert locale. Since other states have deserts, too, what Nevada politician wants to risk being blamed for "losing solar"? If the industry’s day in the sun never comes, at least CSTRR gives Bryan et al something to squawk about to environmentally obsessed constituents. (With President Clinton’s Million Solar Roofs Initiative and Al Gore’s calls to bring back the solar tax credit for homeowners, sun power may once again be a fashionable cause.)

We Want You

ot all solar initiatives originate along the Potomac. States are chipping in as well, and here again Nevada is playing a significant role. During the last legislative session, Silver State lawmakers approved a number of solar-friendly laws. Written into 1997’s landmark electrical deregulation package was a mandate that Nevada utilities generate 0.2 percent of their power from renewable resources by 2001 and 1 percent by 2008. (Modest requirements to be sure, but solar lobbyists are pleased with the precedent, and will push for a higher percentage in future sessions.) Legislators also approved two measures sponsored by CSTRR board member Titus: a property tax exemption for solar facilities and a "net metering" law which allows homeowners with solar systems to swap the excess power they sometimes generate for grid power they draw in times of need.

The renewable mandate wasn’t a problem for Sierra Pacific in Northern Nevada—it already generated 9 percent of its electricity from geothermal plants. Nevada Power wasn’t so fortunate. The nation’s fastest-growing electric utility had some catching up to do, since its generation facilities used only coal and natural gas. Charles Lenzie, Nevada Power’s CEO, expressed his concern with the renewable requirement last fall, noting it "doesn’t sound like a lot, but when you start at zero it is." (At the federal level, a number of far stricter mandates are possible, including Arkansas Sen. Dale Bumpers’ plan to force utilities to generate a whopping 14 percent of their power from renewables.)

Lucky for Lenzie, he and McKinney-James are buddies. Nevada Power put a laudatory color photograph of McKinney-James basking in the sun—with her hand on a sundial—in its last annual report, and Lenzie is a contributor to her campaign. CSTTR’s boss, in turn, is helping Lenzie’s corporation promote Green Power, a "green pricing" program similar to those offered by other utilities. Green pricing allows ratepayers to voluntarily raise their electric bills to fund renewable energy—in Nevada Power’s case, two photovoltaic solar arrays. (Despite objections by ubiquitous Citizen Alert lobbyist Rick Nielsen to Nevada Power’s use of donations to advertise Green Power, state regulators approved the program in March.)

Green Power calls itself "an affordable way for customers to participate in the development and advancement of the renewable efforts in Southern Nevada." How there’s an "affordable" way to raise your utility bill is a mystery, but a Nevada Power survey found 85 percent of their ratepayers wanted a renewable energy program, and 25 percent would pay more for cleaner electricity.

But Nevada Power—and the solar flacks at CSTRR— are now discovering a harsh truth about consumers’ willingness to make a financial commitment to environmental crusades. Despite CSTRR’s public education efforts and bill inserts that informed every customer about Green Power, the program has recruited only 400 participants, or less than 0.08 percent of the utility’s total accounts. (Nevada Power’s shareholders will pick up the tab if the utility does not collect enough contributions to cover the cost of the solar arrays.)

For several years solar supporters have hoped that the deregulation of electricity monopolies will give their cause a shot in the arm. "Utilities will offer renewable energy because they realize that it’s the common-sense solution to producing a service customers want to buy," wrote Scott Weiner in a 1996 issue of Solar Industry Journal.

However, it is obvious that customers don’t want to buy renewable energy. Dismal public participation is the norm for green pricing programs—from coast to coast, utilities which have offered their customers a chance to pitch in for solar and other renewables have been disappointed with volunteer rates. Niagara Mohawk Power Company, Detroit Edison and Portland General Electric Company all launched green pricing programs which fell far short of expectations. These companies—and Nevada Power—might have heeded the warning of Synergic Resources Corporation’s Lance Hoch: "Market research that relies on self-reports of future behavior is always difficult. When it involves an issue such as helping the environment, the potential is vastly increased for politically correct responses that are meant to please the interviewer and maintain the self-image of the respondent."

Getting Off the Dole

o the other shoe seems to have dropped for solar power. With the industry unable to support itself and ratepayers unwilling to hike their own utility bills to help out, continuing government support remains its best hope for survival.

And more insulation from the market is exactly the wrong prescription for solar. Theoretically, harnessing the sun could produce immense quantities of clean electricity. But given the success of clean-air laws, the growing use of natural gas that’s friendlier to the environment and the serious credibility problems of the global warming hypothesis, it is difficult to justify continuing public assistance for solar and other renewable resources.

That doesn’t mean mankind should turn its back on solar forever. The Institute for Energy Research’s Bradley best expressed the position of green power skeptics: "If central station power from wind, solar, or other renewables becomes economic on its own merits, there will be no complaint from free-market quarters."

Craig Shirley of Citizens for State Power concurs: "If renewable energy sources can be developed and utilized in an efficient and competitive manner, let them compete and prosper in the open market."

Yet until the right technologies are in place to make sun power competitive with more traditional resources, the solar industry will continue to be a Potemkin village, propped up by a minuscule niche market and a giant eco-pork check. Nevada—and the nation—is long overdue for an honest discussion of solar’s less-than-stellar past, as well as the numerous obstacles that stand in the way of the technology’s future. Such a conversation might cause taxpayers to wonder how much longer they should foot the bill for greens’ solar dreams. u

D. Dowd Muska is a contributing editor of  Nevada Journal.

News to Use
Cato Institute Policy Analysis No. 280
Renewable Energy: Not Cheap, Not 'Green'

http://www.cato.org/pubs/pas/pa-280.html

CEI Update: A Time and Place for Solar
http://www.cei.org/update/1998/0698-jm.html

Citizens for State Power: (800)536-5920

D.Dowd Muska: ddm@npri.org
   

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