Welfare is a loaded word. No one wants to admit that they receive welfare—it’s always someone else.
But that’s a fib.
Let me define welfare as a voluntary exchange where 1) you are receiving more than you give up, and 2) one of the parties to the exchange is the government.
That covers unemployment benefits (receiving money for little work), as well as corporate welfare (like getting paid for acres planted).
It also covers most residential solar power.*
There are two ways in which residential solar power is a form of welfare: installation subsidies and net metering.
Well-meaning—but ill-conceived—federal, state and local tax incentives for rooftop solar give back between 30% and 40% of the installation costs to the owner as a tax credit.
… Hidden rate subsidies, the most significant of which is called net metering, which is available in 44 states. Net metering allows solar-system owners to offset on a one-for-one basis the energy they receive from the electric grid with the solar power they generate on their roof.
While this might sound logical, it isn’t. An average California resident with solar, for example, generally pays about 17 cents per kilowatt-hour for electric service when the home’s solar panels aren’t operating. When they are operating, however, net metering requires the utility to pay that solar customer the same 17 cents per kilowatt-hour. But the solar customer still needs the grid to back up his intermittent solar panels, and the utility could have purchased that same solar power from a utility-scale solar power plant for about five cents per kilowatt-hour.
This 12-cents-per-kwh cost difference amounts to a wealth transfer from average electric customers to customers with rooftop solar systems (who also often have higher incomes).
Think about that. If the utility makes power that it sells for 5 cents, but is required to buy from this other vendor for 17 cents, where’d the difference come from? Now you have to read between the lines: it means they’d be selling their power for a lower price, say 4 cents, if they didn’t have to come up with the cash to pay top dollar for net metered solar power.
But this raises another important point. I don’t see many residential solar arrays in poor neighborhoods. So, the poor are paying more for their power, so the utility can pay extra for the power coming out of rich folks rooftop solar arrays.
It’s worse than that. Think about the arithmetic: if your rooftop solar array is big enough, your net metering might zero out the cost of regular power that the utility wires into your home.
And none of this says that you can’t just like solar better as a matter of personal preference. If you do, then think about this:
Yet the federal subsidies for solar amount to about $5 billion a year, with more than half of that amount going to rooftop and other, more expensive, non-utility solar plants. If the federal government spent the $5 billion instead subsidizing only utility-scale solar plants, I estimate that it could increase the amount of solar power installed in this country every year by about 65%. And without net metering and all of the other nonsensical state and local subsidies for rooftop solar, we could save this country billions of dollars every year.
Sounds like, once again, richer whiter people have hijacked another welfare system for themselves, and dressed it up on the high moral ground.
* Commercial solar power is looking better economically, but it’s still a form of corporate welfare: utility-scale solar plants still produce electricity that’s more than twice as expensive as coal-fired plants.
Read the whole thing, entitled “The Hole In the Rooftop Solar-Power Craze”.