California has noticed that solar power panels are a great deal cheaper than they used to be. Therefore, they are going to force, by law, all new houses to be built with solar power-generating technology. There is a certain amount wrong with this decision – why, to be fair about it, the heck are they doing this?
This is the inverse of something I pointed out here recently. The very fact that a government would go to the trouble of banning something, say McDonald’s, is evidence that you know people would like to have it. Otherwise, you’d not need a ban, as no one would want it anyway. The inverse of that applies to California: Why would you force everyone to do what you’ve just noted is cheap enough that it’s in their own interest to do so naturally?
But that is what California is doing. All new homes in California must have solar panels. This saves the homeowner money over the life of the panels, so we’re told, because the costs of those panels have dropped precipitously in recent years. I agree that panels have come down in price, but I strongly suspect that some other part of the economics here is screwy: Specifically, the costs of the electrical grid.
Generally, the method of paying for the electric grid is that some portion of what we draw down from it, some percentage of our utility bill, pays for all those wires around the country. As we generate more of our power from our own rooftops, we sip, instead of gargle, from that grid. That same percentage of that smaller amount of power doesn’t any longer pay for all that infrastructure of the grid. At some point, we’re going to have to switch to a flat fee payment for connection, something which will make the economics of home generation to anything less than 100 percent of all usage look very much worse.
But let’s not pick and quibble with those numbers, let’s celebrate that solar power is now so cheap in California that it really is, without any doubt, the cost-effective option. We’ve beaten climate change by making nonemittive technology cheap enough. Given that this is true, then why do we need a law to make people have it?
It is, after all, a fairly common economic observation that people do what benefits them. If solar is cheaper, then we don’t need incentives and we most certainly don’t need to force people to have it, do we? It’s cheaper already, they’ll be lining up for it.
Which leaves us with the puzzle of why they are bringing in this law to force people to have what they don’t need to be forced to have. One answer is that, as I’ve suggested, there’s something screwy with the numbers being used. The other is, I guess, just to shrug and say “It’s California” – who knows what the heck they think they’re doing over there?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
