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Home , Solar energy, Solar power in Germany

RELIABILITY OF RENEWABLE : SOLAR

Jordan Lofthouse, BS, Strata Policy

Randy T Simmons, PhD, Utah State University

Ryan M. Yonk, PhD, Utah State University

The Institute of Political Economy (IPE) at Utah State University seeks to promote a better understanding of the foundations of a free society by conducting research and disseminating findings through publications, classes, seminars, conferences, and lectures. By mentoring students and engaging them in research and writing projects, IPE creates diverse opportunities for students in graduate programs, internships, policy groups, and business.

Without government mandates or subsidies, solar RELIABILITY OF RENEWABLE power becomes economically unviable. ENERGY: SOLAR Renewable portfolio standards (RPS) are state-based mandates that require certain portions of a state’s to come from renewable sources INTRODUCTION by a certain date. Many RPS require that states use specific types of . For instance, New Many Americans want to limit the use of fossil Jersey has mandated that 4.1 percent of their for generation. Policymakers have electricity come from by 2028.2 Mandates responded to their constituencies by mandating and like RPS make the solar industry grow artificially fast subsidizing solar-generated electricity. These and incentivize energy companies to build more solar government policies, not market forces, distort energy facilities than they otherwise would have. markets and drive the growth of the solar power industry. Despite government assistance, solar power In addition to mandates, some states have enacted only provided 0.4 percent of U.S. electricity in 2014.1 subsidies to boost solar power usage, but these subsidies are financially burdening taxpayers for To determine whether these mandates and subsidies minimal benefits. A study from the George Washington are beneficial, the Institute of Political Economy (IPE) Institute of Public Policy analyzed the effects of solar at Utah State University examined the reliability of incentive programs in ten states. The study estimated solar power as an electricity source. If solar power is that existing solar incentive programs would save 6.1 an unreliable energy source, government policies that million metric tons of over a 20 year bolster the solar industry are misguided and should be period.3 This 20 year reduction is less than what two discontinued. IPE examined the economic, physical, power emit in a single year.4 These ten and environmental implications of solar power to states are dedicating large sums of taxpayer money to assess its overall reliability and found that solar power reduce negligible amounts of carbon emissions. is an unreliable energy source, making government policies that favor it a misallocation of taxpayer California’s solar subsidy program, called the dollars. The costs of making solar power reliable California Solar Initiative (CSI), is one of the most outweigh the limited environmental benefits. aggressive programs in the country. In examining the effects of the CSI, a University of Colorado study ECONOMIC RELIABILITY concluded that although the program had cost California taxpayers $437 million in solar rebates Solar power is not economically reliable because it alone, the CSI would only reduce emissions by “about cannot sustain itself in the . Federal and as much as is produced by a small to mid-sized natural 5 state policymakers have enacted mandates and gas power ” over the next 20 years. Because subsidies to assist the solar industry, making the is the cleanest-burning fossil , industry dependent on government assistance. California taxpayers have spent huge amounts of

1 Institute for Energy Research. (2014). Solar. Retrieved from CO2 into the calculator’s emissions data. The calculator http://instituteforenergyresearch.org/topics/encyclopedia/solar/# determined that this would be the equivalent of the emissions _ftn1 generated by 1.6 coal-fired power plants in one year. 2 U.S. Department of Energy. (2015, May 20). Renewable Portfolio United States Environmental Protection Agency. (n.d.) Standard. Dsire. Retrieved from Gas Equivalencies Calculator. Retrieved from: http://programs.dsireusa.org/system/program/detail/564 http://www.epa.gov/cleanenergy/energy- 3 Sarzynski, A. (2009, November). The impact of solar incentive /calculator.html#results programs in ten states. George Washington Institute of Public 5 Hughes, J. E. & Podolefsky, M. (2014, May 6). Getting green with Policy. p. 41. Retrieved from solar subsidies: evidence from the California solar initiative. http://gwipp.gwu.edu/files/downloads/GWIPP_Impact10.pdf Retrieved from 4 To determine this, we used the EPA’s http://spot.colorado.edu/~jonathug/Jonathan_E._Hughes/Main_f Equivalencies Calculator. We entered the 6,100,000 metric tons of iles/PV_Subsidies.pdf

Read the full report at usu.edu/ipe public money to eliminate a relatively small amount of , but ’s solar emissions. subsidies will cut carbon dioxide emissions by only one percent over the next 20 years. As Bjørn Lomborg, Federal subsidies lead to higher amounts of solar director of the Copenhagen Consensus Center, installments, but they also make the solar industry explained, “By the end of the century, Germany’s $130 more dependent on government assistance. One of the billion subsidies will have postponed most important federal subsidies is the Solar temperature increases by 23 hours.” 10 As Germany Investment Tax Credit, which allows users to claim up struggles to sustain their expensive solar industry, the to 30 percent of the expenditures of a residential or United States can learn from Germany's experience commercial on their federal income or that solar power has high costs with minimal benefits. corporate taxes. Initially passed in 2006, it is set to expire at the end of 2016. Since the tax credit was PHYSICAL RELIABILITY enacted, solar installations have increased an average of 76 percent per year.6 The Industries Solar power is not physically reliable because it is Association expects a 57 percent reduction of installed intermittent and inefficient. Solar power cannot solar capacity if Congress does not extend the consistently meet energy demands because the Investment Tax Credit before it expires at the end of does not always shine when people need electricity. 2016.7 The United States also has the 1603 Treasury Because is inconsistent, solar power plants Program, which is designed to provide capital for are unable to operate at full capacity most of the time. renewable energy projects. The 1603 Treasury Program granted $7.8 billion for solar projects as of January 5, A power plant’s indicates the actual 2015.8 The solar industry uses money from the ITC and energy output of a power plant compared to the energy the 1603 Treasury Program to sustain itself, and that it could produce if it were always operating at full without this assistance, solar power's growth would capacity. 11 Photovoltaic (PV) power plants have an likely plummet. average capacity factor of 20 percent and concentrated (or thermal) solar power plants have an average The effects of federal solar incentive programs are capacity factor of 38 percent. These capacity factors difficult to evaluate, but Germany provides a case are low compared to traditional energy sources. For study on national solar programs. German example, the average capacity factor for a coal plant is policymakers enacted aggressive solar incentives to 93 percent.12 boost the amount of solar power in the country's energy portfolio. Critics of the German incentive Even when sunlight is plentiful, solar panels are programs estimate that German taxpayers ended up inefficient at producing electricity. A solar panel's paying $23 billion for energy that had a market value conversion rate is the percentage of energy that of less than $4 billion.9 is actually converted to electricity when light hits the panel. Despite advancements in solar panel Germany enacted their solar program with the intention of making their electricity production more

6 Solar Energy Industries Association. (2014). Solar investment tax http://www.bbc.com/news/science-environment-23127175 credit (ITC). Retrieved from http://www.seia.org/policy/finance- 10 Lomborg, B. (2012, February 18). Goodnight sunshine. Slate. tax/solar-investment-tax-credit Retrieved from 7 Solar Energy Industries Association. (n.d.) Solar industry data. http://www.slate.com/articles/news_and_politics/project_syndic Retrieved from http://www.seia.org/research-resources/solar- ate/2012/02/why_germany_is_phasing_out_its_solar_power_su industry-data bsidies_.html 8 Overview and Status Update of the §1603 Program. (2015, 11 Capacity Factor. (n.d.). In U.S. Energy Information Administration January 8). Retrieved from Glossary. Retrieved from http://www.treasury.gov/initiatives/recovery/Documents/STATUS http://www.eia.gov/tools/glossary/index.cfm?id=C %20OVERVIEW.pdf 12 National Renewable Energy Laboratory. (2013, October 17). 9 McGrath, M. (2013, July 9). Can Germany its ‘energy bender’ Utility-Scale Capacity Factors. Retrieved from shift to green power? BBC News. Retrieved from http://www.nrel.gov/analysis/tech_cap_factor.html

Read the full report at usu.edu/ipe technology, conversion rates still only range from 15- grid operators may have to disconnect solar facilities 21.5 percent for the most common types of panels.13 to avoid overgeneration.

Solar energy is completely ineffective at night, and it is Rooftop solar panels have also reduced the reliability much less effective during cloudy or winter of the electric grid. In Hawaii, where solar power months when there are fewer daylight hours. The peak installations have experienced rapid growth, subsidies demand for energy often occurs in the evening when for rooftop solar panels had to be cut in half when solar energy is least productive and cannot reliably residential solar installations began destabilizing the meet demand. 14 When solar power plants do not power grid.18 Additionally, officials at the California produce enough energy to meet demand, grid Independent System Operator say renewable energy operators are forced to call upon reserve power plants. producers make management of the California grid These reserve power plants are often traditional fossil more complex. Bob Foster, mayor of Long Beach and a fuel plants. member of the system operator board, said, "We are getting to the point where we will have to pay people Electric grid operators have to carefully manage not to produce power."19 systems with a large amount of solar capacity because solar power can potentially cause overgeneration. Unfortunately, the most abundant sources of solar are Baseload power sources like coal and nuclear plants located far away from densely populated areas on the provide a constant amount of electricity to the grid, but coasts where energy demand is highest. In the United during times of peak sunlight, solar power facilities can States, the availability of solar energy is most highly quickly overload the grid with too much electricity. concentrated in the Southwest.20 The United States When the amount of power produced is more than can does not currently have the necessary grid be used, grid operators have to curtail output from infrastructure to transport remotely located solar renewable sources to keep electricity supply and energy to areas of high electricity demand. To demand balanced. 15 , 16 Curtailment becomes more efficiently utilize solar energy, utility providers and necessary as higher amounts of intermittent solar electricity companies would need to build thousands of power are integrated into the grid.17 As the number of miles of new long-distance transmission lines, which solar facilities grow due to government policies, solar could cost billions. For example, in 2009 the California power plants may have to be curtailed more often so Public Utilities Commission estimated that meeting the that the electric grid remains stable and reliable. state’s 2010 and 2020 renewable energy requirements Through mandates and subsidies, policymakers are would cost $16 billion in transmission infrastructure supporting a counterintuitive energy source because alone.21 To recoup these costs, utility providers will

13 Maehlum, M.A. (2015, May 18). Which solar panel type is best? http://www.utilitydive.com/news/the-epic-fail-on-solars- Mono- vs. polycrystalline vs. thin film. Retrieved from doorstepand-how-the-grid-can-help/324411/ http://energyinformative.org/best-solar-panel-monocrystalline- 18 Carducci, A. (2013, January 11.) Hawaii Cuts Back on Solar polycrystalline-thin-film/ Power Subsidies. Retrieved from 14 Australian Solar Institute. (2012). Solar intermittency: http://news.heartland.org/newspaper-article/2013/01/11/hawaii- Australia's green energy challenge. Retrieved from cuts-back-solar-power-subsidies http://decarboni.se/sites/default/files/publications/143773/solar- 19 Halper, E. (2013, December 2.) Power struggle: Green energy intermittency-australias-clean-energy-challenge.pdf versus a grid that's not ready. Los Angeles Times. Retrieved from 15 Trabish, H. K. (2014, October 22.) The 'epic fail' on solar's http://articles.latimes.com/2013/dec/02/nation/la-na-grid- doorstep—and how the grid can help. Retrieved from renewables-20131203#axzz2mXIfGQrx http://www.utilitydive.com/news/the-epic-fail-on-solars- 20 National Renewable Energy Laboratory. (2013, September 3.) doorstepand-how-the-grid-can-help/324411/ Solar maps. Retrieved from http://www.nrel.gov/gis/solar.html 16 American Physical Society. Integrating renewable electricity on 21 California Public Utilities Commission. (June 2009). 33% the grid. p.13. Retrieved from Percent Renewables Portfolio Standard Implementation Analysis http://www.aps.org/policy/reports/popa- Preliminary Results. Retrieved from reports/upload/integratingelec.pdf http://docs.cpuc.ca.gov/PUBLISHED/GRAPHICS/102354.PDF 17 Trabish, H. K. (2014, October 22.) The 'epic fail' on solar's doorstep—and how the grid can help. Retrieved from

Read the full report at usu.edu/ipe pass these transmission infrastructure costs on to environmental costs that limit its environmental American energy consumers. benefits.

One of the most obvious ways to address the (CSP) plants typically require incongruities between power supply and demand 4–16.5 acres of per megawatt of electricity associated with solar is to develop ways to store generated and PV plants require between 3.5 and 10 energy on a large scale. Aside from hydroelectric acres of land per megawatt of electricity generated. facilities, grid-level is virtually Because of the large amount of land needed, CSP and nonexistent. The California Public Utilities Commission PV plants can and have harmed or displaced has recently mandated that three of California’s threatened species. 25 , 26 Furthermore, the investor-owned utilities add 1.3 gigawatts of energy concentrated heat and large cooling towers of CSP storage to their grids by 2020.22 In an effort to reach systems can singe and sometimes kill birds as they fly this goal, an electric supply company called Southern through the solar plants.27 California Edison has invested $50 million to develop 8 megawatts of power storage within lithium-ion Solar plants are most often constructed in hot locations batteries.23 Southern California Edison, however, has where is scarce. PV plants require very little warned that California’s new energy storage mandate water to clean and maintain, but CSP plants, like "could cost up to $3 billion with uncertain net benefits nuclear and plants, require large amounts of for customers."24 water to cool their steam turbines.28,29 To decrease water usage requirements, CSP solar developers in ENVIRONMENTAL RELIABILITY Idaho, Arizona, California, and Nevada are switching to a less water-intensive cooling system called dry- While solar power is environmentally reliable in the cooling that reduces the stress on local water sense that it does not emit greenhouse gases or other supplies.30 By using dry-cooling systems, CSP plants pollutants directly, solar power has hidden can decrease their total water consumption by about 90 percent.31 Dry cooling systems, however, are more costly, reduce energy conversion efficiency,32 and are

22 St. John, J. (2013, October 27.) California passes huge grid 28 Keith, G., Jackson, S., Napoleon, A., Comings, T., Ramey, J. A. energy storage mandate. Retrieved from http://Magill, (2012, September 19). The hidden costs of electricity. 62. Prepared www.greentechmedia.com/articles/read/california-passes-huge- for The Civil Society Institute. Retrieved from: grid-energy-storage-mandate http://www.civilsocietyinstitute.org/media/pdfs/091912%20Hidd 23 Macgill, Bobby. (2015, January 15). California Takes Lead in en%20Costs%20of%20Electricity%20report%20FINAL2.pdf Developing Energy Storage. Discovery News. Retrieved from 29 Carter, N. T., Campbell, R. J. (2009, June 8). Water issues of http://news.discovery.com/earth/california-takes-lead-in- concentrating solar power (CSP) electricity in the U.S. southwest. developing-energy-storage-150115.htm Prepared for Congressional Research Service. Retrieved from 24 Halper, E. (2013, December 2.) Power struggle: Green energy http://www.circleofblue.org/waternews/wp- versus a grid that's not ready. Los Angeles Times. Retrieved from content/uploads/2010/08/Solar-Water-Use-Issues-in- http://articles.latimes.com/2013/dec/02/nation/la-na-grid- Southwest.pdf renewables-20131203#axzz2mXIfGQrx 30 Union of Concerned Scientists. (2011, November). Freshwater 25 Union of Concerned Scientists. (2013, March 5). Environmental use by US power plants. 2. Retrieved from impacts of solar power. Retrieved from http://www.ucsusa.org/sites/default/files/attach/2014/08/ew3- http://www.ucsusa.org/clean_energy/our-energy- freshwater-use-by-us-power-plants-exec-sum.pdf choices/renewable-energy/environmental-impacts-solar- 31 Union of Concerned Scientists. (2013, March 5). Environmental power.html#.VLBdD2TF-mm impacts of solar power. Retrieved from 26 Wells, K. (2012, October 10). Where Tortoises and Solar Power http://www.ucsusa.org/clean_energy/our-energy- Don't Mix. Retrieved from choices/renewable-energy/environmental-impacts-solar- http://www.bloomberg.com/bw/articles/2012-10-04/where- power.html#.VLBdD2TF-mm tortoises-and-solar-power-dont-mix 32 International Renewable Energy Agency. (2013, January). 27 Kraemer, S. (2014, September 3). For the Birds: How Concentrating solar power. 12. Retrieved from Speculation Trumped Fact at Ivanpah. Retrieved from http://www.irena.org/DocumentDownloads/Publications/IRENA- http://www.renewableenergyworld.com/rea/news/article/2014/0 ETSAP%20Tech%20Brief%20E10%20Concentrating%20Solar%2 9/for-the-birds-how-speculation-trumped-fact-at-ivanpah 0Power.pdf

Read the full report at usu.edu/ipe less effective in locations with temperatures demand. The financial investments of public money consistently above 100 degrees Fahrenheit.33 As water needed to make solar power a reliable energy source scarcity becomes more of a concern in some locations, outweigh its limited environmental benefits, so CSP systems may unduly strain water supplies for an government policies that favor the solar industry are a inefficient and costly energy source. misallocation of taxpayer dollars.

While solar power’s water needs are an environmental The solar industry is heavily dependent on government concern, solar power is more environmentally friendly assistance for its success. and in other regards. Solar power produces much lower the United States indicate that solar incentive emissions than other traditional energy sources. programs are extremely costly and the resulting Recent studies by the National Renewable Energy environmental benefits are minimal. These costs are Laboratory have estimated that the mean greenhouse generally passed on to taxpayers and electricity gas (GHG) lifecycle emission rate for CSP plants is 44 consumers. Although solar power does not directly times less than that of coal plants, and 19 times less produce emissions, it has hidden environmental costs than coal for PV plants.34 that make it less eco-friendly than people assume. Solar power relies on traditional energy sources like Carbon emissions do not tell the whole story, however, fossil fuels to provide backup power when sunlight is as harmful chemicals such as silicon tetrachloride and not available, diminishing the positive impact of solar. hydrochloric acid are used in the manufacturing and Solar power also impacts land and , uses large production of PV solar panels.35 When PV panels are amounts water in arid regions, and can be harmful to not recycled or properly disposed of, PV parts may the environment in the manufacturing process. Grid- contaminate the environment. Almost half of the level energy storage can overcome many of the world's PV panels are manufactured in China where problems with intermittency and inefficiency, but factories have been found to dump silicon tetrachloride storage is currently economically unviable. For these waste on fields near their PV facilities, poisoning the reasons it should be markets, not mandates or and causing health problems for nearby subsidies, that determine whether solar power will residents.36 According to a 2012 Worldwatch Report, become a reliable energy source within the next few China exported 95 percent of its solar modules to other decades. countries37 which proclaim solar to be environmentally friendly. These countries, however, fail to recognize that they are essentially supporting dangerous waste disposal practices in China.

CONCLUSION

Solar power is an unreliable energy source because it is intermittent, inefficient, and cannot meet electricity

33 Union of Concerned Scientists. (n.d.) Environmental impacts of 35 Galland, A. (2012). Clean & green: Best practices in solar power. Retrieved from . 21. Retrieved from http://www.ucsusa.org/clean_energy/our-energy- http://www.clca.columbia.edu/Clean&Green-Photovoltaics.pdf choices/renewable-energy/environmental-impacts-solar- 36 Mulvaney, D. (2014, August 26). Solar energy isn’t always as power.html#.VcJ2XBNVhBc green as you think. Retrieved from 34 Keith, G. Jackson, S. Napoleon, A. Comings, T. Ramey, J, A. http://spectrum.ieee.org/green-tech/solar/solar-energy-isnt- September 19, 2012. The Hidden Costs of Electricity. Prepared for always-as-green-as-you-think The Civil Society Institute. p. 6. Retrieved from 37 Worldwatch Institute. (November 2012). India’s National Solar http://www.civilsocietyinstitute.org/media/pdfs/091912%20Hidd Mission: A Market Analysis of Phase 1. Retrieved from en%20Costs%20of%20Electricity%20report%20FINAL2.pdf http://www.worldwatch.org/system/files/WW%20Research%20 These numbers were obtained by dividing the mean greenhouse Note%20India%20Solar%20Market%20Analysis%20Phase%201 gas emissions from CSP plants and PV plants against that of coal _FINAL_0.pdf plants.

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