California Goes Solar

CALIFORNIA’S $3.3 billion solar initiative, championed by Arnold Schwarzenegger, the governor, is impressive. State rebates, combined with federal tax credits, can cover up to half the cost of a residential solar system. California builders must now offer solar as an option on all new construction. Another perk: installing solar on existing buildings will not trigger a rise in California’s already heinous property taxes. Mr Schwarzenegger’s goal of a million solar roofs by 2017—in a state with 36m people, and growing—looks ambitious. It also looks relatively feasible.

The title of this post links to the story above in The Economist.

I am usually not a fan of government intervention and I'm not much worried about global warming, but I am a fan of solar power. I've been watching this industry for a long time and the efficiency of solar collectors is rising fast. See this story from last December about a solar panel that achieved a 40% efficiency in converting sunlight to electricity. Average panels today are in the range of 12-18%. That panel was developed using funds provided by the DOE.

Living in South Florida, I have wanted to install solar panels, but I've been waiting for the efficiency to rise enough to make the cost worthwhile. I don't like government intervention in the market, but I have hope that they'll get this one right. In this case, I think I can overlook the malinvestment caused by the government subsidy. The idea of getting energy from a source that isn't found under the Middle Eastern version of the Hatfields and McCoys is enough to convince me that any market distortion is worth the cost.