If you’ve ever got to teach a kid the meaning of non sequitur, remember this assertion by one Debbie Dooley, Tea Party eccentric and advocate for solar energy:
Support solar energy, because Americans for Prosperity (AFP) says you shouldn’t, and “they refuse to take a position on the fiscal irresponsibility of illegal immigration and amnesty because their corporate benefactors support open borders and amnesty.”
The best I can figure is that Dooley’s actually Andy Kaufman, returned to prank the Tea Party: “Vote solar. Because Mexicans.”
There’s a ballot initiative campaign underway in Florida to get the state to endorse and promote solar energy all the usual ways, and it’s well-financed by interest groups with national ambitions, including friends of billionaire Tom Steyer, so different versions of the fight are popping up from Arizona to Indiana.
It’s likely to pick up more coverage, despite the inherent dullness of energy stories, because it pits Steyer against Charles and David Koch, or at least their respective networks and allies. You might say it represents the moment that the left learned to stop worrying and love dark money instead.
There are two sides to this debate.
On one side are people with some understanding of economics, or at least prices, who know that solar power is still roughly twice as expensive as electricity generated from natural gas, which is the source of 90 percent of the state’s power.
On the other side of the debate are people who’ve noticed that Florida sure is sunny. And some of them, after perhaps a few too many hours in the midday sun, have seized on a plan to convince conservatives that their belief in free markets and competition require them to support the industry’s latest bit of rent-seeking cadgery.
The Kochs require no such chicanery, as the bedrock economic facts are on their side. (I use “the Kochs” in the same expansive sense employed by progressives, as including every conservative writer or thinker ever paid by a conservative nonprofit — “Je suis Charlie Koch.”)
Gas-fired utilities are cheaper than solar, period. In sunny Dubai, a power company just set a record-low benchmark for solar costs, leading the Washington Post, among other publications, to report erroneously that “photovoltaics will soon be able to out-compete fossil fuels, even if oil prices drop to as low as $10 a barrel.”
This is untrue, because gas is cheaper still by half: $2.67 per MMBtu against $5 per MMBtu set in Dubai. Now, solar tech may well overtake gas one day, but it’s almost impossible to overstate just how cheap and abundant natural gas is right now in this country.
So the planet-savers try to disguise the cost difference through financing: hide 30 percent of the cost with a federal tax credit; hide 40 percent by letting solar generators freeload on utility infrastructure, as the solar camp wants to do in Florida.
There’s an honest way to argue for solar. You talk about externalities (although I can’t see why toxic cadmium panels get a pass there). Or sustainability. Or carbon dioxide. Or Gaia. But that message gets nowhere with conservatives, so the Steyer-aligned forces have decided to bamboozle them by speaking through trusted puppets.
Dooley and her friends are tricking conservatives, misrepresenting the numbers, and accusing AFP — which has done more for the Tea Party than anyone — of putting out “completely false information.” This has made it easy for the local press to paint AFP as the press agents of Koch Industries.
Dooley’s main argument not involving Mexicans is that “AFP frequently mentions the subsidies for solar, but fails to bring up the fact fossil fuel and nuclear have been very heavily subsidized since 1932 and still are. In addition, government created monopolies are subsidized both by the Federal government and by captive utility customers. AFP doesn’t seem to have an issue with subsidies if it is in the financial interests of their major donors.”
“Employees of Americans for Prosperity (AFP) quietly worked the crowd to drum up opposition to the amendment,” Wyllie wrote. “It was starting to figuratively stink in the room. In my experience in politics and as an investigative journalist, I’ve learned a few patterns of human behavior. Perhaps the most consistent pattern of them all is: When something smells fishy, ask yourself, ‘Who benefits?’”
Every time I hear that expression of flailing cynicism, I can’t help but think of a classic commentary The Onion once published, in which a dad berates his daughter for being so gullible as to trust the expiration date on a carton of milk, which is “just there to make Daddy pay for new milk.”
“You’re a Gordan, and a Gordan never takes an expiration date at face value,” he tells her. “A Gordan asks the important questions, like, ‘Who said?’ and ‘Who benefits?’ and ‘Why should I let an expiration date ruin a perfectly good glass of milk?’”
Dad ends up hurling. Wyllie vomits up some undigested Daily Kos guesswork in support of a theory that the real beneficiary is some guy from Chicago who makes surge suppressors. (I’m stealing this idea for a remake of Chinatown, but I’m making the shadowy mastermind a light switch tycoon.)
Wyllie’s idea is that the guy from Chicago profits off an unstable grid wracked by unplanned surges. Only that’s what happens when home solar users force power back onto the grid, so much so that Hawaiian Electric Company had to cut them off in 2013. So his conspiracy is exactly backwards.
Echoing Dooley’s ad hominems, Wyllie extends the attack to another prominent conservative think tank, the Heartland Institute, writing that it “rarely, if ever, publicly opposes any subsidy, tax break, or government support that benefits the fossil fuel or electric utility industry. Though government subsidies, guaranteed loans, tax credits, and bailouts litter the balance sheets of fossil fuel providers and electricity monopolies, Heartland fails to mention it. I could not find a single instance.”
The bailout stuff is nonsense, but what about the rest? Does the oil industry benefit from subsidies or tax credits? Let’s see — here’s a report sponsored by the Heartland Institute stating that for “nearly 100 years we have given generous government subsidies to the incredibly lucrative fossil fuels industry. The lion’s share of these subsidies comes in the form of tax breaks that cost the government tens of billions of dollars annually.”
- a domestic manufacturing tax exemption that isn’t appropriate;
- unnecessarily rapid expensing of drilling costs;
- a “percentage depletion allowance” for small oil and gas wells that often overstates costs.
And what about the Cato Institute, co-founded by the Koch brothers? What does it say about the tax breaks for oil drilling and manufacturing costs?
“There is no good economic argument for either of these tax breaks,” write Cato fellows Jerry Taylor and Peter Van Doren. “They are simply statements that ‘we won’t tax you for the cost of doing business like we would if you were in any other industry because … we like you!’”
Here’s the thing — these tax breaks are small in relative terms. Nobody would care how fast the industry wrote off its legitimate expenses except for the fact that it’s so massive, which makes a rounding error a multi-billion dollar question.
Taylor and Van Doren also point out that it’s “demagogic” to suggest “that oil companies are getting a relative free ride when it comes to their federal tax bill, which they most certainly are not…. After all, about 41% of the net income earned by the oil and gas industry is already paid out in federal taxes compared to 26.5% for the rest of the businesses in the S&P 500.”
The Energy Information Agency put the cost of those breaks at $2.2 billion for 2013, in an industry that’s had profits north of $100 billion in recent years (and tax burdens to match). So yes, there are oil tax provisions that could be streamlined, but the oil industry subsidizes the U.S. government, not the other way around.
Solar, on the other hand, wouldn’t exist without subsidies. The federal government spent $15 billion on renewable energy subsidies in 2013. Solar was up to $5.3 billion, from just $1 billion in 2010, thanks to a popular tax credit that reduces your bill by 30 cents for every dollar spent on solar panels. If the solar installer retains ownership of the panel, it gets the tax break, and gets the chance to abuse it. A researcher at the University of Colorado found that some of the largest solar companies systematically inflate their sales prices in reports the government.
That credit is set to expire in 2016, and in Florida, state officials are phasing out a rebate program this year. So the industry needs to find a way to stay in the game, a way to offload costs so that its technology appears affordable to the user. Its idea is simple: let solar users sell electricity to their neighbors, using infrastructure paid for by the utilities (and their customers).
That might sound penny ante, but grid maintenance costs a fortune. Investor-owned utilities made $103 billion in capital expenditures in 2014. A trade group expects capital spending from 2003-2016 to top $1 trillion. Those sunk costs make up 42 percent of the cost of electricity, according to the EIA; the other 58 percent is generation. But that’s not reflected in the typical utility bill, which uses a per-unit basis with the fixed costs rolled in.
Now, I don’t want to get into the weeds of the debate about how much credit solar users should get for pushing their surplus daytime generation back onto the grid — that should be a simple math problem. The point is that 42 percent is a big number, nearly big enough to close down the difference in cost between solar and gas. Everybody else is losing money on solar — the taxpayers, the utilities, the solar companies themselves, but it’s nice to think a few homeowners might recoup their costs and then some 20 years down the line.
With enough complexity, the cost of solar can be hidden on a microeconomic, household scale. But on the macro level, there’s nowhere to hide. Take Germany, which dove headfirst into renewable energy, which now makes up 30 percent of its market. That has caused electricity prices to rise 60 percent over the last five years. As Spiegel reports, “the costs have reached levels comparable only to the euro-zone bailouts. This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants — electricity with a market price of just over €3 billion.”
Florida is sunnier, though.