New Jersey’s Solar Energy Success Due to State Policy?
Policy works to help the Garden State, alternatively known as the “Petro-Chemical Refinery State” (but they couldn’t fit that on the license plates), to now be taking a leading role in the U.S. for the advent of solar power–or does it? In actuality, the laws passed in that state as solar energy policy have been designed to encourage the growth of the private solar energy industry (read: tax breaks, government grants, and other financial incentives) and the construction of solar energy-driven homes, apartment complexes, and office buildings. Read more about Solar Power Commercial Market Applications
In other words, the state government is actually getting out of the way to allow what people have long wanted–the greater development of solar energy. Well, there cannot be any argument that that is good policy–for wisdom tells us that that government is best which governs least.
As a matter of fact, solar energy development in New Jersey could be much farther along and moving ahead faster than it is now, except for the matter of the political and bureaucratic in-fighting which has hampered its growth throughout the state, such as by getting seriously in the way of the state’s Board of Public Utilities being able to address solar energy development issues. Also, the state government is, naturally, finding it hard to really get out of the way altogether–part of the most recently passed solar energy development legislation mandates that solar energy installers need to pay energy union labor wages–raising the price of solar energy in the state by almost 200% over what it would otherwise be.
But those who are concerned about these problems are looking to New Jersey to use the same method that has allowed sunlight-deficient Germany to become arguably the global leader in solar power development: FITs, or “Feed-In Tariffs”. These FITs set up long-term timelines during which utility companies will have to pay a premium in addition to the going market rate for solar power. Over the course of the FIT, this premium declines until, some day in the future, it disappears entirely. Meanwhile, the motivation for the FIT is to encourage solar energy developers and suppliers to be able to maintain relatively low manufacturing costs, thus making solar energy affordable to the consumer.
The bone of contention over FITs is that the utilities, of course, aren’t thrilled about paying those premium rates, and their lobbyists insist that this heavy subsidizing by the government, which is exactly what they amount to, should not be allowed in a true free market.
And they may have a point. In spite of the glorious talk about the success of heavy government subsidizing of alternative fuel sources, which has been going on for quite some time now, alternative energy sources have not really been getting much cheaper at all, meaning that the premiums–which, remember, are supposed to fade away into nothingness over time–are still most of the profits for providers. Solar energy still costs sometimes as much as four times as much to use to produce electricity as what we can get from coal.
The policy that does seem to be working for solar energy development in New Jersey is grass-roots policy. If people demand it, the market will find the way to deliver it. Policy does work, indeed.
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