Sun blows against reality

I am a proponent of most alternative energies on the grounds of replacing limited fossil fuel sources and alternative energy's lower environmental impact. My global opinion on the subject can be read here. One issue that restricts alternative energy's growth is cost. These technologies are not cheap to implement. In an effort to offset the high cost, government subsidies are often given to wind and solar companies. This may seem fine, but when the political winds change, these mostly startup operations run into serious cash flow issues from the simple fact that they can not turn a profit on their high investments into equipment and talent.

This CNNMoney.com article warns of the expiring subsidies the US federal government has been giving to both wind and solar companies.

After years of rapid growth and darling status among many in Washington, the future of the American renewable energy industry is uncertain. That's because the government cash it has come to rely on may dry up on Dec. 31.

Before the Great Recession, renewable energy developments were helped by a tax credit, worth generally 30% of the cost of the project. When the recession hit, the stimulus package replaced those tax credits with direct cash grants of similar value.

Cash is considered more beneficial than credit to the industry.

So far, the government has handed out about $5.4 billion, according to the Energy Department.

Congress could vote to extend the grants, but that's highly unlikely.

$5.4 billion is a lot of money to be spending on technologies that may be abandoned from lack of interest. Those companies most likely will not survive without the stimulus money. Money thrown down a hole. What saddens me further is this is a repeat of the solar boom/bust that occurred in the 1970's. This is a demonstration of why socialism does not work on a large scale, the government's central planning is not efficient and is often driven by politics, not market reality. Do we ever learn?

What to do? The stark reality is these alternative energy technologies are not yet ready for prime time in the capitalist market place. Reality trumps a naive, orthodox environmental ideology. This should not be an excuse to fully abandon them though. As a supporter of these alternative energies, I believe we need to spend more money (government and private) on research and development (R&D) of these technologies. Develop them to the point where they can compete with the more traditional fossil fuel and companies will be able to turn a profit. The secondary benefit would be a revitalization of US R&D and industry.

This lesson should not be forgotten when the true energy crisis strikes, the exhaustion of crude oil.