Government efforts to boost affordability and expectations of unsustainably high investment returns generated a boom market that’s destined to crash.
I’m talking, of course, about the market for rooftop solar, which has grown exponentially in recent years.
Most people are aware of the government subsidies that offset 30 percent or more of commercial and residential rooftop solar — more than $10,000 for a typical solar home in California. Less known is that those up-front savings, as big as they are, still aren’t enough to generate the double-digit investment returns that solar promoters promise. In fact, for residential solar panels to pay for themselves over their 20-25 year lifespan, households and businesses must receive a second, hidden subsidy for their solar electricity generation that is far too high to be justified by economic fundamentals, and that cannot be sustained in the long run. In California, some residential solar electricity fetches a price nearly four times its energy value.
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