Investors Business Daily has a comprehensive look at solar power generation subsidies. The whole thing is worth a long read if you’re interested in solar power or power generation in general.
The piece begins by noting that with all the upheaval in the Middle East, it should be a boom time for renewable energies like solar power. As oil prices increase (which they have been), investment in solar power usually increases. But that’s not the case right now.
That link may be weakening. Oil price spikes are reliably fickle. And the solar industry’s history in Europe, its largest market, is rife with lessons of boom and bust. Italy’s recent talk of drastic cuts to its solar subsidies — still the lifeblood of this industry — spurred a two-week sell-off in solar stocks. In addition, the potential for fast-growing capacity in China to overwhelm flagging demand further clouds the picture.
Solar power is heavily dependent on subsidies—as it says above. It’s an expensive form of power, infrastructure-wise. While its power is clean, it’s also very expensive to make the equipment that makes the power. Since clean energy is more expensive, the so-called free market generally wouldn’t make it a winner. That’s where government intervention comes in. And with the global economy still uncertain, governments around the world are hesitant to push ahead with aggressive solar power goals they set during boom years.
A way to cut down the costs of producing solar energy would make it more attractive, but since solar power is an unattractive option for business, the development of new solar technology is increasing at a slow rate.
The whole piece is worth checking out. Make sure you read it here.
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