The Impact of Tariffs on Solar Energy

I just saw this shared on Facebook, which leads me to an economic evaluation I'm still ruminating:

The statement that "solar employs more people than coal and oil" is Fact 1, and it checks out on sites like Forbes.com:

In the United States, more people were employed in solar power last year than in generating electricity through coal, gas and oil energy combined. According to a new report from the U.S. Department of Energy, solar power employed 43 percent of the Electric Power Generation sector's workforce in 2016, while fossil fuels combined accounted for just 22 percent. It's a welcome statistic for those seeking to refute Donald Trump's assertion that green energy projects are bad news for the American economy.

That "welcome statistic" is one of the things I'm evaluating here.
The 30% tariff is a partial truth, as we'll see below. The rest of the text is opinion, which I'm also evaluating.

Fact 2 is this table, from the US Energy Information Administration:

Solar produces 0.9% of "utility scale" power. Not quite 1% of the total power generation.

Fact 3 is this report from Yale University

For all the conflict surrounding rooftop solar, solar energy last year generated just under 1 percent of U.S. electricity, and utility-scale solar farms have three times the generating capacity of residential solar installations. That disparity is likely to grow.

So let's add another 0.3% for residential. Residential installations, however, aren't made entirely on economic factors. If they were, you wouldn't do it at all. However, there is perceived value for the customer in independence (lowering dependency on utility-sourced power) and "being green". So this can (and does) grow in defiance of economic interests. However, in some states, being "off the grid" is a non-starter, as consumers are required by law to be connected to the power grid even when they are fully capable of producing their own power. Florida, for example, requires residential solar to shut off when the grid does to protect the lives of power workers. Some solar companies simply refuse to do business in such states.

Fact 4 is this article, again from Forbes, comparing the costs of utility scale solar:
Which Is Cheaper -- Rooftop Solar Or Utility-Scale Solar?

The study found that projected utility-scale PV power costs will range from 6.6¢/kWh to 11.7¢/kWh across all scenarios, while projected power costs for a typical, customer-owned rooftop PV system will range from 12.3¢/kWh to 19.3¢/kWh.

So utility scale solar is much cheaper. Still not as cheap as coal, nuclear, and hydroelectric generation, though:

There are no obvious fuel costs, but PV solar has O&M costs of about 1.3¢/kWh, which comes to about $400 million over the life of this array. So to produce 32 billion kWhs at about $2.3 billion means a life-cycle cost of 7¢/kWh. This is getting close to the range of normal baseload providers like coal, nuclear and hydro, which have life-cycle costs of 5.1¢/kWh, 4.1¢/kWh and 2.7¢/kWh, respectively.

Fact 5 is the tariff imposed is on imported solar panels. While @Now1Solar certainly seems to see this as a bad thing, their opinion is not shared by US manufacturers that the tariff is intended to protect. From Time.com:

Trump’s solar decision comes almost nine months after Suniva Inc., a bankrupt U.S. module manufacturer with a Chinese majority owner, sought import duties on solar cells and panels. It asserted that it had suffered “ serious injury” from a flood of cheap panels produced in Asia. A month later, the U.S. unit of German manufacturer SolarWorld AG signed on as a co-petitioner, adding heft to Suniva’s cause.

Even given that I am philosophically opposed to tariffs, whether this will substantially harm the industry depends a lot on whether you're talking about the domestic industry, the Chinese importers, or the overall picture once the industry stabilizes after the tariffs take effect. That said, it appears that at the very least, the meme is misleading in that it projects the harm anticipated by @Now1Solar to the entire industry, rather than limiting it to those dependent on importers. This is despite the fact that domestic producers will clearly benefit. Thus the projection of job losses is most certainly hyperbole. To what degree, I do not yet know.

Now, keep in mind the additional fact that energy companies are not in the business of hiring people. Rather, they hire people to further their business of producing energy. That energy, in turn, allows other companies to be productive and hire people. If we could, as a nation, produce energy with no labor at all, freeing people for more productive pursuits, we would.

Given all this; as rational beings, what conclusions are we to make regarding the economic efficiency of solar power (employing 43 percent of the sector's workforce to generate around 1.2% of the total power)? And is that really a "welcome statistic" for solar proponents?

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UPDATE 1: here's a bit more on the implied "unfairness" of the imposed tariffs: From PV magazine, The case for U.S. solar manufacturing.

The article describes the illegal "dumping" of subsidized Chinese panels into the US market to drive American manufacturers out of business. And regarding the predictions in the meme at the top of this page,

Opponents also contend that relief from imports could cause layoffs in the installation business.  The same corner of the industry predicted similar job-loss fallout from the first two cases – losses that never materialized as the U.S. market kept right on growing.

And Tesla doesn't seem to be bothered at all: Tesla commits to Gigafactory 2 expansion despite Trump’s 30% solar tariff.

Together with Panasonic, Tesla has begun production of solar cells in-house at Gigafactory 2 in Buffalo. By manufacturing solar modules and photovoltaic cells at its New York-based facility, Tesla would largely be unaffected by the 30 percent tariff imposed by the US government.

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UPDATE 2: If you've done the math and extended the amount of effort to expand solar from its current 1.2% capacity to replace the 83.9% of the power production currently provided by natural gas, coal and nuclear, you should quickly come to the conclusion that solar... sucks. It simply does.

Photovoltaic solar energy horribly inefficient. It seems to me the most effective way of using solar energy to produce massive amounts of electricity involves harnessing the Water Cycle. Let the solar energy evaporate water into the atmosphere, where it then precipitates on high ground. This runoff is then collected behind dams, where it turns gravity-fed turbines to generate electricity. 100% of the water that passes through the turbines is returned to the rivers and oceans to be re-evaporated as part of the Water Cycle. The major inefficiency of this system is that some of the water soaks into the ground or used by living things, and some evaporates from the reservoir prior to use for power generation. And YES. This IS solar power. It is infinitely sustainable and infinitely renewable. It's what powers the planet.

Again, this is THE most efficient use of solar energy. And it still provides only 6.5% of our total power. And we can't dam every river. (Well, we could, but we won't, and if we did it still wouldn't match our power consumption needs). So how do we make up the difference? Well, this talk by Michael Shellenberger should put solar in context compared to nuclear energy.


Keep in mind that Schellenberger's talk focuses on obsolete reactors. Modern reactors are much safer.

My conclusion: I'm completely unimpressed by the complaints of the solar lobby. Economically, solar energy is a luxury item, bought because you want it and can afford it. As it stands, 43% of our energy effort is expended providing limited amounts of solar energy to basically a few economically privileged homes. Good for them: it's a free market. But I'm not holding that up as a "welcome statistic" by any measure. It is, to use an electrically-charged word, "deplorable". Environmentally, solar makes no sense at all.

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Sources:

1. https://www.forbes.com/sites/niallmccarthy/2017/01/25/u-s-solar-energy-employs-more-people-than-oil-coal-and-gas-combined-infographic/#6a74fc022800
2. https://www.forbes.com/sites/jamesconca/2015/07/30/which-is-cheaper-rooftop-solar-or-utility-scale-solar/#6010a23b1e5d
3. https://e360.yale.edu/features/utilities-grapple-with-rooftop-solar-and-the-new-energy-landscape
4. https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
5. http://time.com/5113472/donald-trump-solar-panel-tariff/
6. https://pv-magazine-usa.com/2017/08/31/the-case-for-u-s-solar-manufacturing/
7. https://www.teslarati.com/tesla-expanding-gigafactory-2-despite-trump-30-percent-tariff/

For the Benefit of Bernie

Everyone's favorite member of Doc Emmett Brown's Hair Club for Men is back:

And he he's been tweeting:

"What sense is that?" That's a fair question.

For the benefit of Bernie:

col·lat·er·al kəˈladərəl,kəˈlatrəl/ noun  1. something pledged as security for repayment of a loan, to be forfeited in the event of a default. synonyms: security, surety, guarantee, guaranty, insurance, indemnity, indemnification; backing "she put up her house as collateral for the loan"  2. something that you don't have with a student loan.

risk  noun  1. a possibility of harm or damage against which something is insured. the possibility of financial loss. "project finance is essentially an exercise in risk management"  2. a primary component of student loans.

And that's how it makes sense.

--==//oOo\==--

When I first posted that, I was chided for belittling the candidate. And (I was told) Bernie understands the economics of it perfectly well. The problem with the responses of Bernie's supporters is that they appear to be projecting. They assume he understands the economics and they fill in the copious blanks to explain what he really means. This is apparently defined as what they think he means, such as that he's approaching this from the perspective of the people and not the banks. But communication is the candidate's job, and I remain unconvinced that these eloquent expressions of 'real' meaning are contained in Bernie's message.

Perhaps the medium is the problem. After all, you're not going to say much that's profound on Twitter.

Then again... naaaah.... it's still his job to demonstrate his competence. And since I'm an equal-opportunity critic, I find that my guilt remains disengaged. As this is the worst selection of Presidential candidates ever presented, disregarding party entirely, I see no reason to hold back on Bernie's account.

Sanders' tweet borders on pandering in that it ignores the fact that the bankers' perspective is reasonable. "Where's the sense...?" he asks. The sense is obvious, not merely from a profit-making perspective, but from the perspective of keeping the lending institutions solvent so that loans can continue to be made. This is every bit as much in the interest of the public as the banks.


The Real Problem

One thing that would make the loans less risky, and therefore cheaper, is if fewer people defaulted. But often people take on loans to pay for an education that is either not completed (sometimes due to the fact that they're uninterested or unsuited for academics) or because the returns on that investment are non-existent. This last is in direct opposition to what they were promised by people who sell education for a living.

More higher education does not solve either of these problems, and neither does "free" education (in reality, spreading the costs to others). You're still paying for formal education of people who either do not really want it, or will not benefit from it. Taking them out of the system entirely, however, would reduce the economic strain on the system.


A Better Society

One commenter noted that the existing system is not good social policy. "In effect," he says, "you’re purposefully holding the population back from bettering society and themselves." And let's ignore for a moment the hubris required to set one's self up as the arbiter of what makes another human being "better".

If we were to stay on-topic -- Bernie's tweet about interest rates -- and we took "the existing system" to mean the banking system charging more interest for more risk, then this isn't true in the slightest. Increased risk means loss, and in order to be sustainable, this loss must be covered by redistribution among those who did not forfeit. This is exactly what higher interest rates do. You don't get to magically dispel the costs by pretending they don't exist or by hiding them in the bookkeeping. There is no "holding back" involved in making those real costs visible.

If instead we took "the existing system" to mean the concept of you paying for that which is valuable to you, then I don't think that's true, either. Even when we look at it through Socialist eyes and proclaim that "Society" will pay for that which is valuable to the collective, we find that "more higher education" is a terribly unsatisfactory goal. Yet it is the simplistic goal of those socialists who overwhelmingly populate academia.

It is the common trope of those who sell education for a living that you must have their product to be successful, regardless of how you define success. We should approach this claim with the same skepticism with which we approach the claims of anyone who sells anything. While Learning is a wondrous and powerful thing, Education salesmen reflexively conflate "learning" with "college". This is a dangerous fallacy. While there may always be a benefit to the former (and I see no need to argue against it), there is not always a benefit to the latter. There are many paths to learning that don't involve buying their specific product.

But the truth is, if "Society" were to truly operate in its best interests rather than according to the dictates of those who have placed themselves in positions of influence, we would find that less education would be more valuable to the collective. The academicians get it wrong in a big way, and that's why we see stories like this: Why a BA is Now a Ticket to A Job in a Coffee Shop. More and more, college degrees are "required" by lazy HR managers for jobs that actually require no college-level skills. Lower level workers are thereby frozen out of jobs that they are skilled enough to do. These are the people who have placed no stress on the system, have cost society nothing, and who would immediately be productive were they allowed to be. But they are forced out of jobs and onto welfare roles by those who made the self-fulfilling prophecy. College grads who were promised success if they only pursued a diploma are disgruntled to find that this now earns them minimum wage. The Socialists peddling education as a panacea have done little but inflate the cost of higher education while devaluing the diploma and costing society untold billions of dollars in wasted effort and lost opportunity costs.

For decades now, we have let the socialist elite dictate that what makes a person "better" in their eyes should be universally applied to all. Their mistake has raised the cost of education to unsustainable levels. Now these socialists hope to improve the mess they created by decreeing that it should continue at the cost of all. Would it not be better for the collective itself to act to set both the cost and the value of an education rather than depend on the flawed premises of those who peddle the product? There is a mechanism for this, and it's called the Free Market. When it is subverted, as it has been; ruin is the result, as we have experienced.


A Mo' Better Society

Arguably, a better society arises when people are not shamed into pursuing goals which are not their own and when the rest of us bother to appreciate people for more than their social status as measured in years of formal education. Personally, I would find this trend, which began when I was very small, to smack of snobbery were it not now so prevalent due to the result of decades of indoctrination. It is this institutionalized snobbery that prevents us from examining the premise more closely.

Success is personal, and covers a broad spectrum. We don't even have to go to high-profile examples of mega-successful high-school grads and college dropouts like Bill Gates & Paul Allen (Microsoft), Steve Jobs (Apple), Larry Ellison (Oracle), Oprah Winfrey (Oprah), Michael Dell (Dell Computers), Mark Zuckerberg (Facebook), Jack Taylor (Enterprise Rent-a-Car), Dustin Moskovitz (Facebook), Peter Thiel (PayPal), Matt Mullenweg (WordPress), Arash Ferdowsi (DropBox), Ty Warner (Beanie Babies), Aaron Levie (Box), Elizabeth Holmes (Theranos), Stacey Ferreira (MySocialCloud.com), David Karp (Tumblr), Pete Cashmore (Mashable), Daniel Ek (Spotify), Danielle Morrill (Twilio), Jeffrey Kalmikoff (Threadless), Sahil Lavingia (Pinterest), Zach Sims (Codecademy), Ben Milne (Dwolla), David Neeleman (JetBlue Airways), Susan Lyne (AOL), Evan Williams (Blogger), Gabe Newell (Microsoft, Valve), John Mackey (Whole Foods), or Sophia Amoruso (Nasty Gal).

Consider instead the small business entrepreneur who lives just a quarter of a mile from me. He owns car washes, a convenience store, office complexes, strip malls, storage units, a recycling business... all on a high school education. And, he started with nothing but personal drive and a desire to try anything that might make a legitimate profit without regard to whether it was "beneath" him. Or the electrician, apprenticed to his dad, who earns more than a university professor. Or my plumber, who I'm very happy to report makes more than my doctor, since my plumber makes house calls. Or the guy who a couple of decades ago used to fill my furnace's kerosene tank on short notice on cold winter days, who now lives in a three-story mansion. He started out pumping gas. These are not random examples; they're friends and relatives who will recognize themselves here. These folks got the education that they needed to succeed. But "education" doesn't necessarily mean college or university, and it doesn't mean debt. They focused on their interests and put them to work.

The point here is not that you are going to have a wonderful life if you don't go to college; but that you can... just as you can be miserable and broke with a college degree, serving up candied coffee at Starbucks.

When we push people into the system when they are uninterested or unsuited, we run the very real risk of turning successes into failures. Paying for those failures does not prevent them. The comfortably well-off folks above could easily have been dejected college drop-outs if they had bought into the proposition that this expense defined their chances of success.

And the mega-rich who did drop out...? They did so because they were bright enough to reject the proposition outright.