Solar energy the next bubble?

November 7, 2011

Interesting report out of Pennsylvania, not a state one would normally think of as a solar powerhouse, but where a solar energy bubble has bloomed nonetheless.  Because of a state mandate for solar generated power, coupled with a state sponsored tradeable credit scheme, there has been a rush to install solar capacity in PA.  However, that rush has created a glut of solar capacity – nearly 2 times the mandated capacity is now installed.  This has led to a crash in the value of the credits, from $325 per credit at the start of the year to just $25 today.  Without the value of those credits, the installations are not cost effective, and new projects have been halted or abandoned.  One CEO of a Pennsylvania solar company admits “This is an industry that is the next dot-com boom.”

The most distressing part of this report, however, is the proposed solution:  more and extended government subsidies.  Follow the logic:  government mandates and subsidies created a bubble; the bubble deflates rapidly; therefore the government must step in with taxpayer dollars to reinflate the bubble.  It’s the same circular logic that has the national and world economies spiraling the drain.

One definition of insanity is to continue to do the same thing over and over again while expecting a different result each time.



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