In recent years it has become fashionable to incorporate green energy solutions like solar wiring and electric vehicle charging stations in homes and buildings. California leads the way in the attempt to transition away from fossil fuels to renewable energy alternatives— with limited success — but the unintended financial consequences of these sanctimonious initiatives fall invariably on the shoulders of the consumer.
Earlier this month, the Golden State made solar and battery storage mandatory for all new commercial buildings. It is incumbent on states that value unfettered competitive markets (and reasonable electricity rates) to resist policies that put big brother’s thumb on the scale of consumer decision-making.
The mandate will add nearly $14,000 to $16,000 in the upfront cost of a new building. On top of installation expenses, the rule will also require buildings to be equipped with batteries large enough to crowd out space that would otherwise be used for other commercial rent-paying tenants. Higher costs for expensive equipment directly increase the cost of building and takes up more space so that increased rent falls on fewer payers. With California already under fire for its regressive energy policies that disproportionally harm minority communities, the state should be wary of imposing further costs on its residents, even for commercial buildings.
The unanimous vote by the unelected California Energy Commission (CEC) to include solar power on new and renovated commercial structures is an excessive big-government approach—mandating what should otherwise be a choice. We are better off letting the market regain its equilibrium and strike the proper balance of resources. Either that, or let the government contrive a market structure based on erratic energy reserve margins.
Solar power is great for those who freely make the decision to use it. The inconvenient truth, however, is that California is leveraging government intervention and crony corporatism to impose hefty green energy costs on construction that will find its way onto the bills of rent-paying tenants and final-consumers downstream.
Whether it’s a corporate income tax credit for photovoltaic (PV) solar systems, property tax exclusions for new solar installations, or local solar rebate programs, the cost-effective nature of the new mandate touted by the CEC is neutralized when one remembers that it is being financed by the taxpayers themselves. Building owners are commanded to install PV systems so that they can later receive the accompanying green energy tax break. Consumers are not asking for obligatory renewable energy. Tax incentives are needed in order for politicians to buy the political will to enact those policies because renewable energy feasibility depends on government support. And crony corporatism ensures that these costs are well hidden.
States like Georgia, on the other hand, have no renewable mandates and have nonetheless seen solar power skyrocket. The growth of solar power in Georgia is a testament to how powerful competitive markets and lenient state policies eclipse frenzied federal fears of climate change as a more fiscally responsible way to galvanize investment in renewable energy. There may be a way to make renewable energy economically appealing, just not by government edicts.
Even so, it is important to note that decades of multibillion-dollar subsidies for renewable energy haven’t moved the needle. Wind and solar still only provide 4% of our energy nationwide, and since fossil fuels and nuclear remain our only fully reliable and affordable sources of energy, it’s unlikely even the most strident mandates will force a renewable transition.
The memory of relentless wildfires and blackouts still lingers in the minds of Californians and makes this proposal seem especially brazen. Unreliable renewable energy like solar produces too much energy when you don’t need it and not enough when you do. Solar requires non-renewable generators to step in when roofs are at the mercy of the clouds. And despite California’s confidence in new technologies to support their desired policies, battery storage remains prohibitively expensive and scarce. Thus, the economic value of solar declines as it becomes a larger share of the electricity supply.
Californians are being handed a set of rather incongruous policies. Electricity from solar is getting cheaper to produce— its cost has fallen by 90% in the past decade—and yet, it is still prohibitively expensive to transport and store. That’s why the state has some of the highest electricity rates in the country and is quietly adding natural gas plants to compensate for the renewable energy generators when they fail to provide supplemental energy during blackouts—when consumers need it most.
If private individuals and companies want to install solar panels on their roofs, that should be their prerogative—not a government edict. Winter Storm Uri was a warning for Texas not to mistakenly prioritize renewable energy in the way that California does, and this new mandate provides a cautionary tale for the rest of the nation.
This commentary originally appeared in The Cannon Online on September 1, 2021.