Whoda thunk it - yet another Govt induced Bubble? - Granite Grok

Whoda thunk it – yet another Govt induced Bubble?

Solar PanelUh-huh, another day, another problem from the Feds (w/contributions from the States, too).  This is what happens when the Smart People decide they know better for everyone than each of those hundreds of million everyones making their own decisions for themselves.  Get that – those in govt believe that they not only have the Smarts but the Right to outweigh the millions of choices made by individuals whom each is making those choices out of their OWN self-interest.  This is the thing that Statists can’t grasp or accept – that people are better at this individually and in the aggregate bottom up than they are. So here we go again (reformatted, emphasis mine):

Federal subsidies have created a massive “green bubble” in the solar industry that is in danger of bursting when they expire next year, leaving taxpayers on the hook for billions of dollars, according to a report by theTaxpayers Protection Alliance(TPA). Homeowners and businesses that install a solar energy system are currently entitled to a 30 percent Solar Investment Tax Credit (ITC), which was initially passed by Congress in 2006 and extended for another eight years in 2008.

However, the ITC will drop to 10 percent for commercial and zero for residential properties on Dec. 31, 2016.  And even members of the heavily-subsidized solar industry, which provides less than one percent of the nation’s electricity, are worried that it cannot stand on its own without government handouts.

“The reality is that we will lose 100,000 jobs if we lose the ITC — and these are conservative numbers. Ninety percent of solar companies will go out of business,” Rhone Resch, executive director of the Solar Energy Industries Association (SEIA), told participants at PV American 2015 in March.

SEIA spokesman Ken Johnson said that lobbying Congress to extend the ITC beyond 2016 is the group’s “top priority.”

And this is why I keep saying that any marketplace that depends on Crony Capitalism for its lifeblood is no market at all.  How many times have we seen this happen already?  How many times will Govt, thinking it can and SHOULD define what we citizens should do or act, will spectacularly get it wrong – and then go around and scratch their heads thinking “umm, how did THAT happen?”

We’re still seeing the results of the bad decision to have the Feds have loose money for housing – and then cramming that down lenders throats and onward to people who should have never taken the mortgage (or as I saw, multiple mortgages never thinking about the phrase “what cannot continue, won’t”). The Community Reinvestment Act, Fannie Mae, Freddie Mac – and all of those in and outside of Govt that won big as the little people lost.  We’ve seen the big bets using tax monies in the Solar area by Govt bureaucrats who thought they knew better than real private sector Venture Capitalists and lost our shirts on the deals (like Solyndra – whose Dem bundler founders made theirs and then skeddaddled out before the crash came in).

According to the TPA report, entitled From Washington to Wall Street: How Government Policies are Skewing Solar Investments, solar companies are currently “bundling and securitizing” third-party solar leases, similar to the activity that triggered the housing market collapse.  “Since most homeowners do not have enough tax liability to utilize the Investment Tax Credit and some state incentives, the leasing company can take advantage of subsidies the average homeowner cannot,” the report explained.  “Solar leasing companies then take hundreds or thousands of leases and PPAs [in which the homeowner pays the company for the solar power produced] and bundle them together to offer them to investors (banks, insurance corporations and corporate investors) as asset backed securities, using the homeowner’s lease or PPA payment to service the debt.”

But the report pointed out that after 23 years, production of wind power “dropped off significantly” when a similar $12 billion annual federal wind production tax credit was set to expire, warning that “solar could well suffer a similar fate.”

And the “Windies” are also all about nosing up to the Govt trough like the piggies they are – they also know that their industry would collapse if governments pull out.

“Much like the government-created housing bubble and subsequent financial crisis, handouts at the federal and state level are creating a solar bubble that taxpayers are propping up, and it will the taxpayers and investors who take the hit when the industry comes crashing down,” the TPA report predicted.

According to a March report to Congress by the U.S. Energy Information Administration (EIA), “the total value of direct federal financial interventions and subsidies [to the energy sector] decreased 23% between FYs 2010 and 2013, declining from $38 billion to $29.3 billion” even as domestic energy production “rose 10% from 73.7 quadrillion Btu in FY 2010 to 81.1 quadrillion Btu in FY 2013.”  However, during that same time period there was a $4.2 billion increase in solar subsidies, “from $1.1 billion in FY 2010 to $5.3 billion in FY 2013…reflecting a large increase in the installation of solar facilities utilizing the ARRA [American Recovery and Reinvestment Act of 2009] Section 1603 grant payments or the 30% Investment Tax Credit.”

TPA calculates that the total amount of federal subsidies, including loans, grants and tax incentives, amounts to about $39 billion annually in addition to generous state and local subsidies. Yet despite these massive government subsidies, firms such as SolarCity, the nation’s largest solar energy provider, and other solar installation and leasing companies are operating at a loss,” the report points out.

That’s a staggering sum – but hey, that seems to be the way America is going.  That’s right – if the government is supplying the gold money, you can be sure it is also supplying the rules and regulations.  And you can also be sure, it will be the taxpayers that will get it in the shorts, once again as the Cronies yell and scream “we need it more!!”.  ‘Course not, they won’t use those words but that’s EXACTLY what they mean.

And to poke it again, it’s no like these bubbles happen once in a hundred years – waiting in the wings is the meltdown of the student debt that was nationalized when Obamacare ws passed.

We’re concerned that taxpayers and consumers are going to be caught in this web. Because homeowners will be caught.” TPA president David Williams told CNSNews.com.  “Because if a company goes bankrupt, who services those panels, who services the house to make sure that the panels are working correctly, what happens to the lease or to the loan, however they purchased these panels? Taxpayers.

Yes – happened to me back in the 80s.  Sorry for sounding like a broken record (yeah, another 80s thing) but I learned from my history – just wish those Smart People had as well. And then there is this – a second shot in the shorts:

He added that many homeowners who installed expensive solar systems because they wanted to “get off the grid” and reap a financial bonanza by selling electricity back to their local utility have been disappointed with their real-world results.  “They’re not receiving as much money as they thought because the peak usage time is in the evening and at night when the sun’s not out, and they’re generating most of their electricity during the day when they’re not using it. They don’t have the battery capacity to sell much of it back to the grid right now, so we’re not seeing the big windfall coming to homeowners selling their power back to the grid.”

Other homeowners who signed long-term leases for a rooftop solar array, which can cost between $15,000 and $50,000, are finding that the added monthly cost makes it harder to sell their homes, Williams added.

Oops.

 …“Would the solar industry be viable without government subsidies?” CNSNews.com asked him.

“That’s the $39 billion question. We need to see that,” Williams replied. “I hope it is. I hope that we can get to a point where solar power isn’t subsidized and it survives, because we really need an all-of-the-above approach when it comes to energy. But we can’t prop up an industry just because we think it’s cool and we like it.”

…“We can’t have a situation where industry has a blank cheque, and that cheque is paid for by people’s bills,” Rudd said.

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