by Greg Krehbiel on 10 August 2011
As a general rule, that is. They might work in some cases, but it seems to me they usually cause more trouble than they solve.
Spain’s experience with solar power is a good example. Even according to NPR, they messed up. (Thanks to Pentamom for the link.) And it’s a bad day when the guys on your side are pointing out your mistakes.
In 2007, the Spanish government offered incentives for solar energy, offering to pay 40 cents for each kilowatt-hour generated by solar power. By comparison, consumers pay about 12 cents per kilowatt-hour at home.
Why would anyone think that’s a good idea?
I read a report a month or two ago about some European “green” initiative that paid subsidized rates for power generated by renewable sources. “Green energy” companies would build a token solar power station, then put a diesel generator in the basement to do the heavy lifting, and the utility and the energy company would split the subsidy.
That’s not what happened in Spain. There the government-imposed cost differential totally skewed the market. If you invite tons of unreliable, subsidized power into the system, you’re going to cause trouble.
Politicians simply aren’t clever enough to be monkeying around with these things. The crooks will always be too wiley, and the “invisible hand” of the market won’t bow to the superior moral sensibilities of the do-gooding nanny state.
Other reports about Spain’s green energy initiatives are not nearly as polite as the one from NPR. And remember that Obama touted Spain as a model for the U.S.
-- 2011-08-10 » Greg Krehbiel