Free Market Friday: Enough with the solar subsidies
By: Jonathan Small
Last year, the Oklahoma Legislature agreed – with overwhelming support from both political parties – that one group of electricity customers should not be forced to subsidize another group of customers. Now that principle, not to mention state law, is threatened by special interests bent on protecting their unfair advantage.
The issue is known as “net metering” and is about electricity customers who generate some of their own power. Enforcing the new law is the job of the Oklahoma Corporation Commission.
Rooftop solar panels used to be niche items for living “off the grid.” Because small-scale solar power generation remains relatively inefficient and subject to weather – not to mention sunset – most people want to stay connected to the power grid. In order to expand their market, companies that make and sell rooftop solar panels convinced politicians to do something extraordinary. They convinced politicians to force utilities to buy electricity back from these customers at retail rates.
The trouble for the rest of us is that our retail price for electricity includes all the costs – not just generation, but also installation and maintenance of the whole power grid. When another customer gets to sell power back at full price, he becomes a free rider. Net metering mandates force traditional customers to subsidize those who can afford their own solar panels or wind turbines.
Companies like Elon Musk’s SolarCity are desperate to keep the subsidies. Some even claim this mandate-and-subsidy scheme is about free markets.