Solar Energy Policy

Cole Skinner 28 November 2011
Econ 103 Policy Application Essay
“The Oil Industry Doesn’t Own the Sun”
Word Count: 951

Solar Power – Allocation of resources & efficiency In today’s climate of growing energy needs, it is imperative to find sources of renewable or limitless energy. There is a plentiful amount of fossil fuels, including coal, natural gas, and oil. It remains to been seen however, if these resources can be depended on in the future. According to the United States Energy Information Administration, the U.S. “is the birthplace to some of the word’s greatest clean energy technology”, but produces less than half of Germany’s clean energy program. In the last couple decades China has become “the worlds largest producer of solar modules”, using the United States’ solar technology breakthroughs. In a study conducted in 2009, the United States produced less than 15% of the world’s renewable electricity. In the past, computer technology began with large consoles with slow speeds. Over time, with the help of innovation and market competition, computers have become more inexpensive with superior performance. In this example, innovation has followed deployment. Looking at renewable energy, on the other hand, the United States hasn’t sufficiently sponsored market development. With a public market for renewable energy, American’s would have the opportunity to invest in a safe and profitable program as opposed to the volatile markets we are faced with today in copious amounts. Solar power, in its most basic form, is the conversion of sunlight into electricity both actively and passively. Solar energy uses an amalgamation of photovoltaic panels, pumps, and fans to convert sunlight into useful outputs. The actual solar cell is made from a monocrystalline silicon wafer, where silicon is the world’s eighth most common chemical element. Depending on where solar panels are placed will determine the specific output. For example, it would be wise to place solar panels in a desertous region where much of the day is exposed to sunlight. On the other hand, it would be inept and a waste of valuable resources to place panels in Alaska, where during parts of the year sunlight is visible for only a few hours per day. The solar industry has a variety of players involved including: producers of silicon wafers and panels, installers, and start-up companies in search of technological developments. A couple important aspects of solar power include, finding a sufficient amount of financial investors in order to have its technology continuously grown, as well as homeowners who fiscally would want to use solar power as opposed to cheaper fossil fuels.

Solar Power – Strengths Considering solar power is still very new, it is conceivable why the industry’s prices have maintained at such high marks. That said, with competitive corporations vying to have the lowest prices, market prices are decreasing. With an increasing amount of venture capital and private equity firms providing financial means, prices will fall. When prices fall, the demand for solar panels will rise, enabling the market to progress in a positive way. Moreover, American incentive programs have also been instilled. The federal government offers energy producers and consumers tax incentives in the form of credits, allowances, exemptions, and deductions. For example, in Texas, local utilities provide monetary rebates for customers who install solar photovoltaic systems. In 2006, according to the Energy Information Agency, 12% of all government subsidies went toward solar power, only behind nuclear power. The biggest advantage that solar power has over other forms of energy conversion markets is that it does not have any negative externalities. Due to solar power’s inherent clean form of energy production, solar companies don’t have to worry about polluting our skies with toxic waste.

Solar Power – Weaknesses Although solar power has a plethora of strengths, weaknesses are still present. One aspect of this market that is a major setback is the initial cost used to harness the suns energy as well as areas in which to be installed at. At the moment, solar cells are very expensive which has kept the fixed cost of a solar power plant relatively high. Also, a certain amount of real estate is required for the system to be efficient in providing electricity. In some areas, for example New York City, land is sparse which poses a problem. Pollution can be a disadvantage to solar panels and unfortunately power companies “[don’t have the] incentive to take into account the costs of pollution that they impose on others (Krugman, Wells 436). Both pollution and cloud cover can diminish the effectiveness of photovoltaic cells. Another disadvantage of solar power is the fact that the system is unable to collect the sun’s rays during the hours of darkness. Similarly, obstructions that hinder direct sunlight will also degrade the amount and power of the electricity produced.

Solar Power – Chances of Successful Market This emerging solar power market we see progressing every day is the future of our world. With a limited supply of fossil fuels and its inherent negative externalities that arise, the solar power market is only going to grow. The American government has continued to provide the financial means for research and development in order for this market to be what our children’s children will grow up in. Instead of agonizing over whether or not a family will be able to pay his or her gas bill, the sun’s rays will be able to protect a family from harsh winters. Government programs that instill confidence in the solar market are making it easier for consumers to invest with confidence. This confidence will hastily spread throughout the world as more advanced and less expensive technology comes out. Solar power has the potential to provide millions of people with electricity without any negative externalities.

Works Cited

Brown, Eric. "An Introduction to Solar Energy." 2008. <http://www.ccs.neu.edu/home/feneric/solar.html>.
Clean Energy Ideas. "Disadvantages of Solar Energy." 2011. <http://www.clean-energy-ideas.com/articles/disadvantages_of_solar_energy.html>.
Combs, Susan. "Government Financial Subsidies." 2006. <http://www.window.state.tx.us/specialrpt/energy/subsidies/>.
Kauffman, Richard. "Clean Energy Markets: We 've Got the Innovation and Deployment Cart and Horse Backwards." October 19 2011. <http://energy.gov/articles/clean-energy-markets-weve-got-innovation-and-deployment-cart-and-horse-backwards>.
Krugman, Paul, and Robin Wells. Microeconomics. Worth Publishers, 2009.
Lorenz, Peter, Dickon Pinner, and Thomas Seitz. "The Economics of Solar Power." (2008) <http://www.forbes.com/2008/07/09/solar-power-economics-lead-cx_pldpts_0708mckinsey.html>.
U.S. Department of the Interior. "Solar Energy." 10/14/2011 2011. <http://www.blm.gov/wo/st/en/prog/energy/solar_energy.html>.

Cited: Brown, Eric. "An Introduction to Solar Energy." 2008. &lt;http://www.ccs.neu.edu/home/feneric/solar.html&gt;. Clean Energy Ideas. "Disadvantages of Solar Energy." 2011. &lt;http://www.clean-energy-ideas.com/articles/disadvantages_of_solar_energy.html&gt;. Combs, Susan. "Government Financial Subsidies." 2006. &lt;http://www.window.state.tx.us/specialrpt/energy/subsidies/&gt;. Kauffman, Richard. "Clean Energy Markets: We 've Got the Innovation and Deployment Cart and Horse Backwards." October 19 2011. &lt;http://energy.gov/articles/clean-energy-markets-weve-got-innovation-and-deployment-cart-and-horse-backwards&gt;. Krugman, Paul, and Robin Wells. Microeconomics. Worth Publishers, 2009. Lorenz, Peter, Dickon Pinner, and Thomas Seitz. "The Economics of Solar Power." (2008) &lt;http://www.forbes.com/2008/07/09/solar-power-economics-lead-cx_pldpts_0708mckinsey.html&gt;. U.S. Department of the Interior. "Solar Energy." 10/14/2011 2011. &lt;http://www.blm.gov/wo/st/en/prog/energy/solar_energy.html&gt;.