The central role played by energy in triggering economic development and endangering the environment has forced many countries worldwide to develop and implement energy subsidies aimed at ensuring a more sustainable development trajectory (“Reforming Energy Subsidies” 3). The United States (US) has used subsidies to stimulate the development and use of particular forms of energy with the view to influencing energy market outcomes and ensuring environmental sustainability (Leonard 36-37). This paper provides useful insights on how solar energy subsidies work in the US, before assessing the viability of the legislation.
Solar energy subsidies revolve around federal tax credits targeting solar developers as well as state and local incentives provided to energy companies, homeowners and other businesses interested in generating solar energy (Rotman 89). Available literature demonstrates that “federal subsidies have provided wind and solar developers with as much as $24 billion from 2008 to 2014” (Chediak and Martin par. 1). The tax credits have encouraged solar developers to undertake research initiatives aimed at developing solar-powered energy-generating equipment at a greatly subsidized cost. Although solar energy still provides less than 1% of the power produced in the US, it is evident that the tax credits have increased the nation’s solar-powered energy from 1.1 gigawatts of photovoltaic power in 2008 to about 18.3 gigawatts in 2014 (Rotman 89).
In providing tax incentives for solar developers, the federal government aimed at encouraging the production of clean and environmentally-friendly sources of power with the capacity to address the risks posed by global warming and greenhouse emissions. The government also aimed at lowering the cost of energy production to ensure that most Americans are able to benefit from the accruing cost savings (Dickinson 26-27). To date, some state legislatures continue to provide financial incentives aimed at funding research initiatives for solar energy generation.
The federal government has also been funding private businesses to allow them to provide flexible financing schemes to homeowners who would like to install solar panels in their homes. In this respect, companies such as SolarCity have received financial incentives aimed at triggering strong demand for solar products by providing consumers with innovative financing proposals to acquire expensive accessories (Cohen 690; Rotman 89). This approach has enabled solar companies and developers to penetrate the energy market despite the high costs involved in developing solar power.
Overall, the provision of federal subsidies to the generation of solar power has led to an increase in installed electricity capacity, which in turn has helped to lower power costs to domestic and industrial power consumers. However, the subsidies on solar power are not cost-effective based on the fact that solar developers add insignificant quantities of electricity to the national grid. Available literature demonstrates that “wind and solar still generate less than 5 percent of electricity in the US” (Chediak and Martin par. 2). Additionally, the viability of solar-generated energy has been put to question due to stiff competition from other energy sources, such as coal and natural gas. It is also clear that solar-generated energy still remains more costly than natural gas, coal and nuclear even after accounting for huge government subsidies, implying that the benefits of solar energy do not trickle down to American citizens (Chediak and Martin par. 4). Drawing from these facts, it is not tenable to support the legislation.
This paper has not only provided some useful insights on how solar energy subsidies work in the US, but also evaluated the viability of the legislation in light of current energy trends. From the discussion, it can be concluded that the government needs to focus its energy subsidies on economically viable energy sources. Although solar energy is environmentally friendly and sustainable, the findings of this paper question its economic sustainability and mass adoption.
Works Cited
Chediak, Mark and Christ Martin. Say Goodbye to Solar Power Subsidies 2015. Web.
Cohen, Steven. “What is stopping the Renewable Energy Transformation and what can the US Government Do?” Social Research 82.3 (2015): 689-710. MasterFILE Premier. Web.
Dickinson, Time. “The Dirty War on Solar Power.” Rolling Stone 8.1255 (2016): 26-31. MasterFILE Premier. Web.
Leonard, Jeffrey. “Get the Energy Sector off the Dole.” Washington Monthly 43.1/2 (2011): 35-41. MasterFILE Premier. Web.
Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda 2008. Web.
Rotman, David. “Paying for Solar Power.” MIT Technology Review 118.5 (2015): 88-93. MasterFILE Premier. Web.