Cut Solar Subsidies? Update with Vinod Khosla

In a previous post I asked if we need subsidies to advance our solar market, or if like New Zealand we might find subsidies become a hindrance more then a help. Along the way, I quoted Vinod Khosla's stance that solar power has the ability to compete against fossil fuels without subsidies. This idea, and the quote, raised a few eyebrows in the room, and so in search of the truth I turned to the man himself.The subtle reality of solar power is that it is a diverse ecosystem of technologies and products, with more species born every day. However, the field can be divided into two major groups: photovoltaic technologies, and solar thermal. Vinod made the distinction between the two in our correspondence:

"I invest in technologies that achieve unsubsidized market competitiveness with five to seven years after introduction to the marketplace. I don't think photovoltaic has reached that point yet but I do think that solar thermal electricity will meet this criteria."

To bring this into perspective, solar power of all varieties has been heavily subsidized throughout its technological history just to begin to turn a profit. The idea that solar thermal energy may become one of the cheapest and most reliable sources of energy is an incredible turning point for the technology. It appears, for solar thermal at least, there is a bright unsubsidized future.

Vinod has also stated publicly that he is supporting the California Proposition 87, saying that, "Clean tech R&D; has been declining in this country for 30 years. We absolutely need to have more R&D; in this area," And while I couldn't agree more, we should ask what we are funding, and how we go about developing these technologies. Vinod has thoughts in this direction as well. He has clearly stated that reducing the cost of Solar Photo Voltaic (SPV) is not the right direction to focus our research.

"(SPV) Solar systems would still cost $2 kiloWatt/hour if the cell cost went to zero. What we need are higher efficiency cells. We should be saying we will accept higher costs to get 30 percent efficient cells," he said.

Indeed, there are diminishing returns for making SPV solar cheaper, especially at the expense of efficiency. Ideally, we could have competitive and highly efficient SPV solar power, but while more exotic SPV might one day make this a reality, the pragmatic truth is that we nearly have the technology today to make solar thermal energy generation work.

In addition, the U.S. is comfortable with centralized power, and we have the systems in place to take advantage of the combination of scale and high efficiency solar power. Other nations might also find centralized solar thermal power an attractive alternative to the politically and environmentally expensive oil and coal. The choice between centralized or distributed solar power is one that will ultimately be decided by local trends, policies, geography, and available technology.

But back to the original question, do we need subsidies for solar power? Solar subsidies are a short term patch on a much larger problem: our heavily subsidized energy production today. At times it seems that creating another subsidy to compete with existing subsidies is like throwing gasoline on a fire.

However, in California, Proposition 87 begins to address this issue, by creating a more even playing field between alternative energy and oil. Essentially, proposition 87 taxes California oil producers and takes this money to create short term subsidies for the development and implementation of an alternative energy infrastructure. The proposition also allocates a significant portion of the tax into research and grants for alternative fuels. This is one of the more rational proposals I have seen regarding alternative energy, as it takes a global perspective. It could create an environment where alternative energy has a more equal footing with fossil fuels, while still creating a competitive marketplace for all fuels. As we begin to think about reducing our subsidies on oil, and increasing subsidies on alternative energy, we should look to other markets that have wisely dismantled the artificial support of markets, creating a realistic and vigorous economy. Vinod Khosla's statements give me hope that if we were to identify all associated costs, and truly level the playing field by cutting all subsidies, solar thermal energy would be able to stand neck in neck with any other energy production method in the world (at least in some places).

There is no doubt that further research and development into all alternative energy forms will benefit society. But, we should also recognize that without changing our approach to the increasingly absurd energy market, we may loose more then we gain. In the end, the jungle that is solar technology will develop and advance at a furious pace both with and without subsidies. But Vinod Khosla's pragmatic approach just might be the key to turning the ignition on a new way of generating energy, without the need for subsidies.:: Vinod Khosla :: Proposition 87 :: EETimes