I went to visit The Naturalist and The Quilter today. They took advantage of a green energy policy by the Ontario government that was aimed at increasing solar power creation in the province. I got to watch them show off their immense solar array that was about 10 meters tall and perhaps 15 meters wide. The engineering aspect of the project was really neat but the economics of supporting it looked mighty suspicious indeed. Energy around here is sold for approximately 8 cents per kwh and Ontario Hydro is committed to buying solar energy from producers like the folks I visited at a much higher rate; initially the price was 80 cents per kwh and now it is down to 64. Essentially what the government did is force everyone using electricity to subsidize these solar installations by paying 10 times the going rate for electricity. People who installed these very expensive machines were looking at paying back their investment in full in 8 years and then making pure profit from that point forward. While this unquestionably reduces emissions and gives good investment opportunities to local people with capital and real estate I really have a lot of doubts as to whether this policy was remotely sensible.
First off, why was it set up so that anyone buying into the program would make such immense profit at the expense of the regular ratepayers? Clearly if you want anyone to opt in you need to make it possible to recoup the initial investment but the rate was simply set way too high to start. Secondly I question the strategy of having huge numbers of individuals set up solar panels in their backyards when it is abundantly obvious that a large number of panels built in an ideal location would generate much lower setup costs. It has the 'local' feel to it but is certainly inefficient. Thirdly I wonder why anyone thought it was the best possible use of capital to generate electricity at such a low return on investment. If the utility was buying at 30 cents there would be practically nobody who would view setting up their own solar panel as a good investment and yet they would still be generating electricity at 5 times the normal cost!
So here is the big dilemma: Since we have finite dollars to spend and want to achieve the maximum emissions and CO2 reduction how should those dollars be spent? In some kind of imaginary fairyland we simply produce all of our power from solar and wind and reduce electricity sourced emissions to zero but the cost of doing so would be a stupendous capital investment and then quintupling the cost of electricity; hardly a palatable solution. In the real world where capital is limited the clear choice is to produce the maximum emissions reductions possible per dollar invested and solar and wind power are laughable in that regard. There are ways to close old, dirty, inefficient coal plants and replace their output effectively but local solar isn't that way at this point. If we want to have cleaner air and lower emissions we need to invest in nuclear power and high efficiency fossil fuel plants burning coal if necessary, gas where possible. These options are drastically better from a ROI perspective and that is the perspective that matters in the long run. Right now the government is supporting options that look good from a PR standpoint and bad from the standpoint of actually making the world a better place.