Why Conservatives Are Bad on Energy: It’s All About the Costs

By Tom Rooney, CEO SPG Solar

Conservatives,  let’s talk about energy. And why so many conservatives are so wrong — so liberal, even — on wind and solar energy.

Let’s start with a recent editorial from the home of ‘free markets and free people,”
the Wall Street Journal. Photovoltaic solar energy, quoth the mavens, is a “speculative and immature technology that costs far more than ordinary power.”

So few words, so many misconceptions. It pains me to say that because, like many business leaders, I grew up on the Wall Street Journal and still depend on it.

But I cannot figure out why people who call themselves “conservatives” would say solar or wind power is “speculative.” Conservatives know that word is usually reserved to criticize free-market activity that is not approved by well, you know who.

Today, around the world, more than a million people work in the wind and solar business. Many more receive their power from solar.

Solar is not a cause, it is a business with real benefits for its customers.

Just ask anyone who installed their solar systems five years ago. Today, many of their systems are paid off and they are getting free energy. Better still, ask the owners of one of the oldest and most respected companies in America who recently announced plans to build one of the largest solar facilities in the
country.

That would be Dow Jones, owners of the Wall Street Journal.

Now we come to “immature.” Again, the meaning is fuzzy. But in Germany, a country 1/3 our size in area and population, they have more solar than the United States. This year, Germans will build enough solar to equal the output of three nuclear power plants.

What they call immaturity our clients call profit-making leadership.

But let’s get to the real boogie man: The one that “costs far more than ordinary power.”

I’ve been working in energy infrastructure for 25 years and I have no idea what the WSJ means by the words “ordinary power.” But, after spending some time with Milton Friedman whom I met on many occasions while studying for an MBA at the University of Chicago, I did learn about costs.

And here is what every freshman at the University of Chicago knows: There is a difference between cost and price.

Solar relies on price supports from the government. Fair enough — though its price is falling even faster than fossil fuels are rising.

But if Friedman were going to compare the costs of competing forms of energy, he also would have wanted to know the cost of “ordinary energy.” Figured on the same basis. This is something the self-proclaimed conservative opponents of solar refuse to do.

But huge companies including Wall Mart, IBM, Target and Los Gatos Tomatoes figured it out. And last year so did the National Academy of Sciences. It produced a report on the Hidden Costs of Energy that documented how coal was making people sick to the tune of $63 billion a year.

And that oil and natural gas had so many tax breaks and subsidies that were so interwoven for so long, it was hard to say exactly how many tens of billions these energy producers received courtesy of the U.S. Taxpayer.

Just a few weeks ago, the International Energy Agency said worldwide, fossil fuels receive $550 billion in subsidies a year — 12 times what alternatives such as wind and solar get.

Neither report factored in Global Warming or the cost of sending our best and bravest into harm’s way to protect our energy supply lines.

Whatever that costs, you know it starts with a T.

All this without hockey stick graphs, purloined emails or junk science.

When you compare the real costs of solar with the fully loaded real costs of coal and oil and natural gas and nuclear power, apples to apples, solar is cheaper.

That’s not conservative. Or liberal. That comes from an ideology older and more reliable than both of those put together: Arithmetic.


Tom Rooney is the CEO of SPG Solar, one of the largest solar installers in the US.

24 replies
  1. Brian Berkman
    Brian Berkman says:

    A good argument, but until those 'hidden' costs appear on a financial statement somewhere, there will always be this perception – until the raw dollars and cents of solar drops below fossil fuels.Not good – but that is they way of the world.Hopefully the 'crossover' for costs will be within the next ten years. Then it will be a nonissue.

  2. Peter O'Connor
    Peter O'Connor says:

    Excellent article. I knew the traditional energy industry was getting massive input from tax breaks but never knew it was 12 times that of Solar. Factor in the cost of health problems and the difference sky-rockets – even before we discuss global warming.One question – may I use this article – with credits on my own eco-blog?? purely to disseminatepfiddle.wordpress.com

  3. Peter O'Connor
    Peter O'Connor says:

    Excellent article. I knew the traditional energy industry was getting massive input from tax breaks but never knew it was 12 times that of Solar. Factor in the cost of health problems and the difference sky-rockets – even before we discuss global warming.One question – may I use this article – with credits on my own eco-blog?? purely to disseminatepfiddle.wordpress.com

  4. Anonymous
    Anonymous says:

    12 times more? Is that in per unit energy or is it an absolute value? If alternative energy receives 1/12 the subsidies but produce 1/10000 (values are just examples) the power that is indeed something to keep track of and should be stated explicitly. Please, when trying to debunk one groups oversimplifications, do not add more to it.

  5. phew
    phew says:

    Completely to the point. If you wonder why 'conservatives' are doing this and 'environmentalists' are letting this pass by: the T word again. Once we, the consumers, become independent of 'ordinary power' by using solar, wind or geothermal energy, by using energy storage systems to overcome the gap between availability and demand, the government looses grip over us because they cannot Tax us for capturing solar power. And that means the end of one of the substantial and structural income streams for them, and therefore their salaries…That said, the only way of getting out of the current 'fossil fuel' stronghold is applying 'alternative' energy forms individually.Same question as Peter O'Connor asked: may we put a reference to this article on our website: http://www.xsorb.eu ?

  6. Salvatore
    Salvatore says:

    The real question, it's not about hidden subsidies; everyone working in the power industry knows that, e.g., nuclear power plants get massive subsidies/tax breaks for their decommissioning costs.It's about finding an effective and non-fictitious manner to produce electricity; just ask operators of solar power plants across the world about the actual production of their plants: an at least -20% divergence from the "business plan" values are the norm here. Indeed, actual "full load hours" (i.e., MWh/MW p.a.) of these power plants is extremely poor; this, or at least the current PV technology, is definitely not the most effective manner to produce electricityIn this case I cannot agree more with the WSJ.Salvatore Scagliarini

  7. Joseph Loveless
    Joseph Loveless says:

    I find the same to be true and speak to this fact often. I have discussed this problem with Congressmen, former Cabinet Secretaries and past (& imminent) Presidential candidates about why the Right doesn't see the economic advantages in promoting more renewables.That being said, as a Conservative (with an iPhone backed by carbon offsets) and a business owner in this energy space, the biggest firms in the nation make it clear why there is not greater adoption. First, the discussion became political and distorted. Hyperbole and science collided which created great confusion and distrust in whether the environmental problems are truly dire. You and I know better, but the general marketplace does not and just wants to be able to make payroll – not save the polar bears. Second, the hidden costs with which that solar vendors sock customers under PPAs are counter-productive and spread the justifiable cynicism of the consuming public. It is a shock to witness how many millions of dollars companies give away in lost incentives, lost rebates, and lost new revenue opportunities because they don't know any better than to challenge solar vendors about financing methods.Third, although there are tremendous strides in the German and European markets, these markets have gained leads over the U.S. under the duress of a sweltering socialistic economic model and carbon trading scheme where full costs are impossible to measure and are strangling the economy.In the current economy combined with more stringent manufacturing requirements (such as those from Canada that threaten First Solar) and institutional pressures from fossil fuel lobbyists and Owens-Corning, we will see little progress for some time. To break this deadlock, the U.S. needs a responsible energy policy at the Federal level, we must take politics out of the discussion and a genuine acceptance of real environmental dangers compelling business leaders to action must occur, and the renewable energy market must be more honest and realistic about costs and returns to customers. Until then, the U.S. will continue to limp along.Let's hope we make it long enough to salvage the planet. Good article.Joe LovelessCEO, Clear Stake

  8. Anonymous
    Anonymous says:

    I've investigated solar options for my home and business on several occasions over the past 15 years, and, quite frankly, I've been disappointed in my options. I've expected a lot more – especially recently. A lot of hype, and lot of passionate folks – like yourself. But, very little that I'm going to sink my hard earned dollars into.

  9. Neil
    Neil says:

    As a conservative (there are many more of us than there are liberals), I find this article and its simplistic references (incl. the War) quite offensive. Most conservatives chant "all of the above" [to quote Boone Pickens] and actually favor alternative energy sources, but not to the exclusion of any & all other domestic fuels. Please keep your politics at home. It will better serve your shareholders.

  10. Kristin Anderson
    Kristin Anderson says:

    I have been in the energy business for over 25 years and I am quite taken aback by the misinformation and half truths that are being spewed with regard to energy and climate change these days. It is no news that energy is one of the basic elements of our infrastructure. In order to remain a healthy and vibrant society and economy, we need to start having honest, fruitful discussions about energy in America, THAT DO NOT ATTEMPT TO BLAME and/or HIDE BEHIND A VEIL OF POLITICAL PARTY POLARIZATION or VILIFICATION TO SWAY PUBLIC OPINION.The article from Mr. Rooney, whose business and self interest depends on the success of the solar industry, has not seemingly offered an accurate/realistic assessment of solar or renewable energy at all.For example, according to the US DOE, Energy Information Administration, the rate of subsidies in the energy arena is as follows: http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/p… ES5. Subsidies and Support to Electricity Production:Subsidy and Support perUnit of Production(dollars/megawatthour)Coal $0.44Refined Coal $29.81 Natural Gas and Petroleum Liquids $0.25Nuclear $1.59Biomass $0.89Geothermal $0.92Hydroelectric $0.67Solar $24.34Wind $23.37Landfill Gas $1.37Municipal Solid Waste $0.13Remember these are not my numbers, these are from the US Department of Energy and clearly show that the subsidies/support are $0.44 per MWh for coal and $0.25 per MWh for natural gas, from the most recent data available, 2007. These pale in comparison to the subsidies for wind and solar at over $23.00 and $24.00 per MWh respectively; nearly 100 times the rate of coal and natural gas. The Stimulus Act provides for millions more in solar and wind subsidies, which increase the rate of subsidies even more. One may argue that there is just so much more energy produced by coal and natural gas that the numbers unreasonably appear to be high. Alright, let's provide 10 times the subsidies not 100 times. Many wind and solar proponents contend they need more subsidies because the technology is still new and developing. Please, these technologies have been around for more than 3 decades, and many more decades for wind.The fact is there are excellent applications for wind and solar in the US, geography plays a very important role in the feasibility, economically and environmentally. Let's focus on continually improving the technology with reasonable levels of subsidy, say 10 times that coal and natural gas as suggested above (if the technology is so great why isn't there a lot of VC pouring into the marketplace for wind and solar?)In addition, factor in any externalities you want. I agree with Mr. Berkman to the extent that until those "hidden" costs become quantifiable and are input to the overall cost equation, there is no importance to that information at all. See also the news regarding the independent report released today on the UN Climate Change study. Current research from unbiased scientific study is showing evidence that sun spots and volcanic activity are the two major forces that impact global climate change. None of the information which I referenced above is hidden in some obscure reports unavailable to the public; quite the contrary is true. I encourage everyone to Google, do some research and questions those that are claiming information beneficial to their own self interest, especially when it is counterintuitive to what you may otherwise believe to be true.

  11. Anonymous
    Anonymous says:

    This is just one more internally inconsistent (can we say hypocritical?)element of the "conservative ideology." They seem to be staunchly behind a thoroughly centrally planned and government owned system that produces and delivers electricity and natural gas. End users have little say over what they pay or what they get- it is all dictated by state and federal regulators. It is probably the closest thing we have to a "socialist" economic model.Given their paranoia over such matters, you would think they would be the first to advocate decentralized energy production and delivery, distributed power and far more consumer control over where their energy comes from and what it costs.Might the age old tension between the ideal of remaining pure to ideology and the ideals of campaign contributors be a factor?

  12. Mercy Vetsel
    Mercy Vetsel says:

    Kristin Anderson:Thank you for so deftly puncturing this absurd argument put forth by dishonest shills like Rooney that since coal companies are (wrongly) paid a tiny, tiny subsidy that solar companies are justified in receiving huge subsidy 55 times greater.For alternative energy to be taken seriously, proponents need to stop relying the type of clearly bogus arguments that gave us the ethanol debacle.One interesting point in the study you cite is that for coal and nuclear power, most of the subsidy comes in the form of R&D which is bit problematic in assigning as a per MWH cost.So if anything, the numbers overstate the subsidies of coal and nuclear relative to the subsidies for wind and solar. -Mercy

  13. Anonymous
    Anonymous says:

    If you do some research and analyze what this "article" really is, you might come to the conclusion that it is a commercial or part of the market strategy of a wise business man. If you look at SPG closely you will see that they use predominantly Chinese manufactured modules, these modules are fairly cheap. Here is a link to a Post artice on what is happening on the ground in China: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/08/AR2008030802595.html Another unbiased source of information is the Silicon Valley Toxics Coalition site. Silicon Tetrachloride is but one of the many byproducts of solar cell production.

  14. Troy Helming
    Troy Helming says:

    Well said, Tom. Republicans have lost their way: they were at one time respectable stewards of the environment: Nixon (a Republican) formed the EPA, Roosevelt (a Republican) set aside more land for national parks & preserves – by far – than any other President, etc.

  15. Anonymous
    Anonymous says:

    Hi. just saw your site, and found it interesting. If you need more info or inspiration, I have a reveiew-site testing the top online DIY instructions in how to build your own solar panel. A lot of us TALK about renewable enregy and saving the planet, but sadly only a few DO something. But a least talking is a step on the way. Thanks http://www.1greenpower.com

  16. Chris Winter
    Chris Winter says:

    So, Anonymous 7, you want to talk about toxics?Let's starts with the statement from Tom Rooney's article: "…last year so did the National Academy of Sciences. It produced a report on the Hidden Costs of Energy that documented how coal was making people sick to the tune of $63 billion a year."You probably know the particulars. Mercury, a neurotoxin which now pervades the nation. Sulfur compounds and fly ash, which can worsen asthma. Heavy metals, leaching from coal slurry into groundwater.Certainly toxic chemicals are used in, and result from, the manufacture of semiconductors, including solar cells. And yes, the dumping of pails of SiCl4 by Chinese firms is reprehensible and creates a serious problem. But, as the Washington Post article notes, Western companies recycle this waste product. Wikipedia notes that the compound reacts with water to form HCl and SiO2 (quartz.) The HCl — hydrogen chloride — when dissolved in water becomes hydrochloric acid, a product with many industrial uses.Thus, it's apparent that these Chinese companies need incentives to put in the recycling equipment. In my opinion, comparing their waste with the poisons routinely released into the environment by coal plants is ludicrous.

  17. Chris Winter
    Chris Winter says:

    Kristin Anderson posts EIA data showing subsidies for various forms of energy production in dollars per MW-hr.This strikes me as similar to setting goals for greenhouse-gas reduction in terms of intensity: for example, tons of GHG per dollar of GDP. I think it's beside the point. Mature fossil fuel industries are getting many times the absolute amount of subsidies that wind and solar receive. If we want to expand clean energy, this is counterproductive.

  18. Brian Herndon
    Brian Herndon says:

    Kristin Anderson writes "Many wind and solar proponents contend they need more subsidies because the technology is still new and developing. Please, these technologies have been around for more than 3 decades, and many more decades for wind." Using this reasoning, why do fossil fuel industries who notoriously have no problem making a huge profit and have been around for more like 7 or 8 decades need subsidies at all?

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