Solar Moving Forward Despite Low Subsidies

Despite relatively low subsidies, especially in comparison to the subsidies awarded to other energy sources, solar has been making it’s way as a valuable source of energy .

Incentives Graph

Graph Used From Baker Report and Think Progress .

The federal government provides incentives for every major energy production market and they exist to bridge the “chasm” between early adopters (about 16%) of a certain market and the majority adopters (about 84%). Crossing the chasm doesn’t necessarily mean all companies in the industry succeed, but that the industry itself succeeds. To get from initial adoption to full scale implementation, federal incentives support new energy resources on average for 30 years, including market control for oil, pipeline availability for natural gas, and dams for hydropower. Incentives provide economies of scale in a long term scenario that offer stability during the adoption process with gradual reductions in incentives as the industry matures.

Solar is at the chasm where continued government incentives are critical in assisting the jump between adoption phases. As it is, incentives for solar have been small compared to fossil fuels, according to a report by the Baker Center, “federal investment in solar technologies has been modest in a long-term histroical context relative to other energy technologies”. But, the incentives solar has received have really aided the industry. The growth of solar over the past two years has come with the federal investment tax credit and state renewable energy standards set in place. In addition to the decreasing PV prices, there’s been a 77% growth in the last 5 years.

This growth is spurring innovation, which in itself stimulates growth. Growth means more opportunity for jobs–the Baker Report estimating between 200,000 and 430,000 direct, indirect, and induced jobs coming from the solar industry by 2020. There are already 100,000 Americans working in the solar industry. To top it off, solar provides more jobs per megawatt hour than any other energy industry.

Solar has huge potential in the U.S. Rooftop solar alone could provide 20% of America’s energy needs, which would help decrease impacts of price and supply vulnerabilities from fossil fuel supplies. Solar could be an important addition to the American energy portfolio, but continuing incentives will be a crucial factor in perpetuating this.

Incentives are used to move an industry up the adoption curve. Solar has come this far despite relatively low subsidies; imagine what it could accomplish if the federal government channeled incentives usually given to the fossil fuel industry into solar.