MAJOR MYTH: Solar Panel Systems Are Only a Good Investment Because of Rebates and Incentives

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Lately, there’s been a lot of noise in the marketplace about whether or not solar panel systems would make financial sense without the government tax incentives and rebates that are available today. Even the Wall Street Journal seems to have jumped on the band wagon. 

Rebates and Incentives: Just an Additional Bonus to Cheap Solar

First of all, the existence of rebates and incentives on their own shouldn’t be a reason to reject the entire idea of solar power and other clean energy systems. The government has a long-standing history of using tax breaks to drive consumer behavior. There are tax breaks for participating in retirement savings programs such as 401 (k)s, 403 (b)s, and IRAs; there are tax breaks for making charitable donations; there are tax breaks for home owners. The tax breaks themselves don’t mean that these programs wouldn’t make sense on their own. Rebates for solar power systems are only offered for a limited period of time—current tax breaks are set to expire in 2016. This hardly constitutes a long-term crutch for the industry, especially when you consider that some of the tax breaks for mortgages and retirement savings have been in place for decades and are not likely to be removed.

What we think is an even bigger flaw with this argument, however, is the lack of apples to apples comparison. If someone—especially the venerated Wall Street Journal—is going to make the determination that solar energy doesn’t measure up economically against the alternatives, we would appreciate it if they would present a full picture of all the facts. Yes, the government has chosen to provide economic incentives to increase the use of solar power and other clean energy systems. What’s interesting though, is that for every $1 in subsidies the government gives to solar power industry, it’s giving $10 to the fossil fuel industry. By some estimates, the petroleum industry currently receives $20 billion (that’s right, billion) in tax breaks from the U.S. government. And by the way, these numbers don’t include the hundreds of billions of dollars in military expenses we are outlaying to protect our foreign supplies of fossil fuels.

Keep in mind, too, that solar panel system technology is continuing to develop and mature rapidly. Manufacturing and overhead costs for making solar panels and other clean energy systems are declining. As this happens, prices will come down and the market for solar panel systems becomes even more vibrant and it will not need tax breaks and incentives.

Ultimately, each person needs to determine whether or not solar energy systems makes financial sense for them. We just want to make sure that everyone has all the facts before they make up their minds. The New York Times has asked its readers what they think. We’d like to know, what are your thoughts?

2 comments

  1. The rebates as they pertain to things like Solar Energy are good for everyone concerned. It helps the consumer save money on the front end, and makes it possible for more homeowners to be able to actually install solar. Additionally, it helps the solar companies, and enables them to employ more people in the industry, therefore helping to reduce the unemployment rate, and as more and more systems are installed, the manufacturers are able to reduce their prices because of the volume they are selling, which in turn makes if more affordable for people in the future.

  2. WSJ complains that solar and wind would not be profitable without subsidies.WSJ is hardly a peer reviewed journal.See New York Academy of Science article estimating the yearly US cost for the external costs of just coal to be 1/3 to 1/2 trillion dollars per year.And there is the myth of US oil and gas independence.Evenif we ever produced the amount of oil and gas we consumed,we would still pay the global price for those commodities -unless we weren’t consuming those commodities.

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