Further Evidence Alternatives Just Not There

Difference in Free Market, and Government Prop.

Hey folks,

This was interesting in the New York Times, non-the-less. According to the NYT - Solar Industry Learns Lessons in Spanish Sun By ELISABETH ROSENTHAL

PUERTOLLANO, Spain — Two years ago, this gritty mining city hosted a brief 21st-century gold rush. Long famous for coal, Puertollano discovered another energy source it had overlooked: the relentless, scorching sun.

Armed with generous incentives from the Spanish government to jump-start a national solar energy industry, the city set out to replace its failing coal economy by attracting solar companies, with a campaign slogan: “The Sun Moves Us.”

Soon, Puertollano, home to the Museum of the Mining Industry, had two enormous solar power plants, factories making solar panels and silicon wafers, and clean energy research institutes. Half the solar power installed globally in 2008 was installed in Spain.

Farmers sold land for solar plants. Boutiques opened. And people from all over the world, seeing business opportunities, moved to the city, which had suffered from 20 percent unemployment and a population exodus.

Great! What a glorious story. You see, you see? Get away from Big, Bad, Oil, and other DIRTY Energy and prosper. Save the Planet. Follow their Lead!!!! But Wait?

But as low-quality, poorly designed solar plants sprang up on Spain’s plateaus, Spanish officials came to realize that they would have to subsidize many of them indefinitely, and that the industry they had created might never produce efficient green energy on its own.

The industry the GOVERNMENT Created. THAT'S the problem. Yes, of course, ALL these people flocked to Spain to jump on this band wagon. Why not? The Government was going to pay them no matter if it worked or not. FREE MONEY. Couple that with them having the then bragging rights of being "Green," who wouldn't want to go there.

Let's see. Spain has more than abundant and consistent Sunshine. Then Government will pay you no matter what. Bragging rights. Status. ETC. However, then reality set in. Even in this "IDEAL" situation, it FAILED!

In September the government abruptly changed course, cutting payments and capping solar construction. Puertollano’s brief boom turned bust. Factories and stores shut, thousands of workers lost jobs, foreign companies and banks abandoned contracts that had already been negotiated.

“We lost the opportunity to be at the vanguard of renewables — we were not only generating electricity, but also a strong economy,” said Joaquín Carlos Hermoso Murillo, Puertollano’s mayor since 2004. “Why are they limiting solar power, when the sun is unlimited?”

Puertollano’s wrenching fall points to the delicate policy calculations needed to stimulate nascent solar industries and create green jobs, and might serve as a cautionary tale for the United States, where a similar exercise is now under way.

For now, electricity generation from the sun’s rays needs to be subsidized because it requires the purchase of new equipment and investment in evolving technologies. But costs are rapidly dropping. And regulators are still learning how to structure stimulus payments so that they yield a stable green industry that supports itself, rather than just costly energy and an economic flash in the pan like Spain’s.

“The industry as a whole learned a lot from what happened in Spain,” said Cassidy DeLine, who analyzes the European solar market for Emerging Energy Research, a firm based in Cambridge, Mass. She noted that other countries had since set subsidies lower and issued stricter standards for solar plants.

Yet, despite the pain that Spain’s incentives ended up causing, in many ways they fulfilled their promise, Ms. DeLine said.

“Even though incentives can create bubbles and bursts, without them this industry won’t take off,” she said. “The U.S. is really behind Europe on this, and if we wait until solar is cost-competitive on its own, we may miss the boat and an opportunity to shape the market.”

So even though it's a FAILED experiment. The US needs to jump aboard. {Sigh} Look. Here is the reality.

What may work OK in Florida, will not work in Seattle. What may work in Chicago {Wind} will not work in NY. ETC. That is just reality. Let's say our Government, like with Ethanol, start paying people free money for nothing, people will come and take it. YOU will pay for it through more taxes, and NOTHING will be solved.

Lets look at the free market. I'm sitting around one day and discover ABC. I think to myself, I can create ABC, and make it do XYZ. My Neighbor sees my ABC, and says "I want one." I comes up with a cost, say $19.95, go to a Manufacturer, who finds they can create ABC for $4.00, sell it for $29.95. They make money, I make money. People start seeing ABC, they HAVE to have it. ABC becomes the next big thing. Stores open up for the sole purpose of ABC and helping you to XYZ. Now it becomes this multi BILLION Dollar industry. I'm a Billionaire. The Manufacturer is making Billions. The little Stores popping up and creating jobs, and making Money. EVEN the GOVERNMENT is happy, they are making A LOT of money through Taxation.

Now, lets look at government subsidized market. I'm still siting around and discover ABC. I go to the Government, and the GOVERNMENT pays a Manufacturer money to produce ABC if it works or not. The Government then goes out and PAYS people to open Stores. Through tax breaks and incentives, they are holding these store up. Then the Government starts offering YOU an incentive to BUY ABC. Some do, others want nothing to do with it. Then more and more people come looking for the handout. When the Government goes away, taking it's free money with them, people with their hand out will go away also. A failed venture will take YEARS to fail, being propped up, as opposed to not even beginning in the first place.

I say, if Solar is so great. Let it develop on it's own. If Wind is so great. Let IT develop on it's own. Let these do whatever they do in the Free Market. Meanwhile Drill here, Drill now, and reduce energy costs to reasonable levels. Increase energy supply. Do not worry. The Free Market WILL make the switch to Alternatives as soon as they are VIABLE. As soon as the are perfected, or at least profitable and sustainable on their own.
Peter

Sources:
NYT - Solar Industry Learns Lessons in Spanish Sun