Little market for green energy, even with government subsidies

Ed Fuelner:

Ever heard of the Solyndra solar-cell plant in Fremont, Calif.? Most people haven’t. That’s a shame, considering how much taxpayer money has been poured into it.

Solyndra is in serious financial trouble. Despite getting a $535 million bailout - part of the taxpayer-funded “stimulus” - the company subsequently announced it would lay off more than 17 percent of its work force. It also had to close one of its manufacturing plants about a year after it got the money. The House Energy and Commerce Committee is launching an investigation.

That’s understandable. After all, it wasn’t supposed to turn out this way for Solyndra and other solar-cell producers. President Obama and Sen. Barbara Boxer both campaigned at the plant, touting the “green jobs” that would flow from government investment in companies that produce renewable energy.

How that bit of economic magic was supposed to occur is a mystery. Solyndra’s production costs are more than six times those of other producers. Even with strong backing from Washington, the company had to cancel a $300 million initial public offering after a bad audit from PricewaterhouseCoopers. As the New York Times noted in an article on Solyndra, “the project spotlights the risks of government intervention in a dynamic market.”

No kidding. The main problem isn’t renewable energy per se; it’s the folly of having government pick winners and losers in the energy market - or any market, for that matter.

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You can think solar panels are the most wonderful thing in the world, but that doesn’t necessarily mean you should fund them. Consider this November headline from the San Jose Business Journal: “Solar Panel Glut Projected in 2011.” Supplies of the panels, the article predicts, will be nearly three times higher than demand this year.

Faced with a forecast like that, nobody with any business sense would invest in solar panels. But government would - with our money.

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I suspect those in government who have been pushing this business just assumed there would be great demand for this product. There mistake was in assuming that people would want to invest in less efficient energy at greater cost. The so called payback time on many of these units exceed their expected life. That is, it takes longer to recoup the added expenditures than the product can produce over its normal life.

The government should be researching ways to make this form of energy more efficient before they start wasting money on production.