Sunday, May 11, 2014

Taxing the sun: The Koch brothers find a tax they like

We hear so much from the fossil fuel lobby that the free market should determine our energy future--that government shouldn't favor one technology or fuel over another. When implemented, this view typically favors the incumbents which in this case are fossil fuels: coal, oil and natural gas. Very convenient.

But does the industry believe its own rhetoric? The Koch brothers, the much-maligned fossil fuel titans, were in the news last week after their legislative stalking horse, the innocuously named American Legislative Exchange Council (ALEC), was discovered pushing legislation in the states that would establish fees (read: taxes) for hooking solar panels to the existing grid. (Yes, I know it's not exactly a tax because the utilities who are also lobbying for it collect it. Again, very convenient.)

Now these are the same Koch brothers who say they hate taxes and anything that looks like a tax and certainly anyone who wants to raise taxes. But taxing solar panel owners is essentially what they are doing in an attempt to make increasingly competitive electricity from solar less competitive with fossil fuels.

If they or their surrogates were true to their libertarian principles, they would be fighting to repeal all energy subsidies embedded in federal and state policy including those for fossil fuels. But, of course, they aren't. With apologies to Matthew, a contributor to a very famous book, beware of false libertarians who come to you in conservative clothing but inwardly they are ravening pigs--pigs who continue to feed at the government trough while conspiring to prevent any competitors from dining with them.

When they say it's about principle, you can be almost 100 percent certain that it's really just about power--the power to impede an energy transition that is both necessary and inevitable.

What's changed the landscape so dramatically is the swiftly falling price of solar energy--so swift, that those in the fossil fuel industry who said solar would never be competitive with fossil fuels are very worried. And, many believe the downward price trend will continue.

Now there is a cost to utilities and to society to have people hook up their solar panels to the electric grid. But given the worsening outlook for climate change and given the broad uncertainties surrounding prices and supplies of fossil fuels (which are finite and MUST decline some day), it seems foolish at this point to discourage solar installations as a matter of policy.

The states that fall for this Koch-brothers-inspired-ALEC-implemented nonsense will almost surely find themselves LESS competitive in the future as they continue to rely on fossil fuels, the prices of which have been climbing for more than a decade even as solar experienced its dramatic price drop. (Even U.S. natural gas, now in the mid-$4 range per thousand cubic feet (mcf) and therefore declared cheap, remains at levels over 125 percent higher than the average price Americans paid in the 1990s, i.e., $1.92 per mcf. Liquefied natural gas (LNG) delivered to Europe is more than twice that and more than three times the American price for deliveries to Japan.)

The development of solar might not be where it is today without government research and financial incentives. But the amazing advances and astonishing price drop are vindicating those who advocated public support of solar.

Solar energy is one important response to the twin crises of climate change and fossil fuel depletion. Admittedly, it addresses only part of our energy needs: electricity and heating. We still need to find a compelling substitute for oil which remains the dominant fuel for the world's transportation system.

But it is telling that solar is fast becoming so important that those who said it could never be competitive are now having to campaign actively against it. That should tell you all you need to know about whether the solar energy revolution is real.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now, The Oil Drum,, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at


OldTech said...

I hate to say it but the utilities have a point.

The real problem is how we use electricity. We expect it to be available 7 x 24 on demand. This means that the electric utilities now have to meet that demand with alternate sources. If we would only use electricity when the sun was shining or if we had reasonable storage then solar could work.

As it now stands I now have to support neighbors who have solar (I know of none in our area) with higher rates in our coop utility. It costs us about $0.01 per KWH for this. This is true even though almost all of our electricity comes from hydro.

Lyle said...

But you do need to think a bit differently about the electric system. Undo the historic vertical integration, and you have 3 pieces, the generation, transmission, and distribution of the power. The real value to the coop of solar power is the cost of the energy on the substation busbar where it changes hands to the distribution provider.
So instead of the full retail price of energy, the netmetering rebate should be the avoided energy cost at the substation.
In addition there may be some fixed costs such as extra system protection etc needed on the distribution system, so perhaps a fixed fee. But the first part makes all customers equal and does not charge the non solar customers for the solar customers systems.

OldTech said...

Therein lies a can of worms. Yes if we could agree on a 'fair' price that would be great. Unfortunately fair is hard to define.

Your suggestion of a netmetering rebate based on the avoided energy cost at the substation plus fixed costs sounds OK to me, but I suspect that not everyone would agree.

In our case the state legislators made the decision for both netmetering and the increase in cost for everyone.

Even though almost all our power comes from hydro, it was decided that hydro was not a renewable resource so we got a tax to support 'real' renewable resources.

BTW: I have looked into solar for us but it seems like really stupid idea to go solar in western Washington state where we hardly see the sun for 8 months out of the year. Yet we have lots of real renewable resources in terms of hydro.

Moshe said...

Unless and until they charge higher prices per KWH for consumption at peak-demand times, the "net metering" setup is a subsidy to those who use air conditioning, at the expense of those who do not. Solar power is just the excuse for doing that. The grid is not a battery, and those net metering customers get paid back with electricity on winter nights, which may come from fossil fuels.

Anonymous said...

The problem is of course we first have to build the solar infrastructure before we can use it. And i don't know if the batteries (storage) part in the plan will turn out doable.
And of course no substitute for oil yet.
So: mixed to little optimism.

Anonymous said...

Solar will make AC easier to support on the grid, since the solar output only slightly leads AC demand. Some conventional types of storage should allow for a good match of solar output and AC demand.

Utilities will have to rethink system operations for the new solar resource.