The hard truths about renewable energy and subsidies 

The hard truths about renewable energy and subsidies

By Ryan M. Yonk, Ph.D., contributor, and Jordan Lofthouse

 

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In a recent Washington Post article, author Griff Witte laments how the British government has cut renewable energy subsidies. This policy change has alarmed some across the world because of climate change fears. Britain is not, however, casting away a bright future of renewables; it is facing harsh realities. British policymakers have cut subsidies because, frankly, they have realized that some renewable energy sources are not reliable, and the costs to make them more reliable are astronomical.

One of the problems with some renewables is that they don't produce consistent baseload power like fossil fuels. Wind and solar power, two of the most heavily subsidized energy sources, are also two of the most unreliable. Solar panels cannot produce electricity at night, and they are much less effective in cloudy weather. For anyone who has been to the United Kingdom, long winter nights and perpetual cloudy weather make solar power less than ideal. Like solar, wind power is intermittent, inefficient and difficult to predict, which makes it hard for electrical grid managers to match energy supply with energy demand. Making wind and solar power reliable will require grid-level interconnection infrastructure and industrial-scale battery storage, both of which are prohibitively expensive.Most renewable energy industries are heavily dependent on government subsidies, and without constant taxpayer support, many renewable energy industries cannot survive. Both American and British renewable energy companies have failed when policymakers decrease subsidies. Most wind and solar installations are not cost-effective on the open market, necessitating a never-ending cycle of subsidies. Without the crutch of guaranteed profit from the government, renewable energy industries will have to innovate so that renewables are reliable, efficient and cost-effective. As long as subsidies exist, taxpayers have to support industries that aren't economically viable on their own.
Even if the British government had the desire or ability to provide endless subsidies, renewables are not as eco-friendly as most people assume. Because wind and solar power are intermittent, they require other energy sources, usually fossil fuels, to provide backup power when wind and sunlight aren't available. Using fossil fuels as backup limits the environmental benefits of using wind and solar power. British subsidies have also caused the perverse effect of deforestation. Subsidies for the biomass industry have made it economical for energy producers to cut down millions of tons of trees in North America to burn in British power plants. The reality of renewable energy sources is less eco-friendly and, in fact, far dirtier than most people would like to think.
Among all the fear and consternation, it is important to remember that British policymakers are not outlawing renewables. Electricity providers and ordinary citizens can still voluntarily invest their own money into renewable energy sources, but many don't because of concerns over reliability and profitability. Limiting tax breaks and subsidies for all energy sources, renewable or fossil fuel, allow price signals to dictate which energy sources people want and what they are willing to pay for. Fighting climate change does not rest solely on spending billions of dollars of public money — throwing government money at a problem rarely solves it. As technology improves, renewable energy sources may become more cost-effective and reliable, but for now, British policymakers have wisely decided to end subsidies for energy sources that are not efficient, economically viable or, most importantly, reliable. Once renewable energy sources become economically viable and reliable, the industries will flourish.
Yonk is an assistant professor of research at Utah State University and the executive director of academics at Strata, a public policy think tank headquartered in Logan, Utah. Lofthouse is a policy analyst at Strata.