Clean, renewable energy will
power America’s future. Or so we’ve been told. If such is the case, personal
investing in the production of clean, renewable energy should be a sound
wealth-enhancing strategy. Can we clean up on solar?
The recent bankruptcy of
Massachusetts-based Evergreen Solar
and the closing of its Midland, Mich., plant raise a cautionary flag. Subsequently
a California company, Solyndra LLC,
shut down with bankruptcy intentions and a reported job loss of 1,100. SunPower
Corp., another California company, tallied a net loss of nearly $150 million
for its latest quarter.
Let’s look instead at Energy Conversion Devices of Auburn
Hills, a respected half-century-old pioneer in solar-based electricity
generation. It is famed for its numerous breakthroughs in the field.
ECD’s stock price has
fluctuated widely over the years, but recent history is more revealing as
momentum has built for clean, renewable energy. The price was below $9 a share
in early 2004 after being buffeted down from plus-$30 highs by the recession of
a decade ago. Good time to buy? In early 2006 the price was above $50. But a
slump followed and brought it down to about $23 in early 2008.
Perhaps a new rush was due by
then. States were mandating renewable portfolio standards, forcing electricity
providers to generate specified percentages of their total output from
renewable energy sources. The Michigan
RPS, enacted three years ago, is 10 percent by 2015.
ECD did well in 2008. By late
summer its stock price was above $75 — more than a tripling in value in little
more than half a year. Sky’s the limit, ride the wave up on renewable hope and
Not so fast. The 70s were still
pertinent in the ECD price through much of this past August — 70 cents. More tumbling has occurred since,
down to 62 cents on Sept. 6. For ECD, the radiant solar future has yielded a
present that makes it a penny stock.
Part of ECD’s problem appears
to be unique; a slippage in competitiveness. The research firm Morningstar Inc.
notes that ECD “has gone from an industry cost leader to inefficient laggard.”
The larger problem is the solar
industry’s “global oversupply,” as a Solyndra press release put it. Several
European nations have caused demand to slump by reducing solar subsidies because
they realized such subsidies are unaffordable.
The core issue is that
renewable energy is an unnatural, forced and politicized market. Politics is
fickle and unpredictable. The government subsidies that may make an industry
possible can vanish.
The subsidies are in place
because renewable energy is so inefficient. Our ancestors grasped that
shortcoming and abandoned renewables like wind and biomass at the first
opportunity. The economic planning lobby has resurrected these outmoded forms
in a highly questionable strategy. The capstone is the law authorizing the
Michigan RPS, Public Act 295 of 2008. It is titled, with an exquisite touch of
irony, “The Clean, Renewable and Efficient Energy Act.” The law promotes
wind-based energy, which is a parody of efficiency. A wind turbine spends most of its
working life as vibrant as a corpse.
The question arises why P.A.
295 provided for an RPS of 10 percent. Why not 8 percent, or 6 percent or 4.34
percent? The act presupposes that economic planners are wise enough to know
what kind of energy future we must have. If so, the planners should have
sufficient knowledge to guide us in the minutest detail to that future. The 10
percent figure suggests they simply landed on a convenient, round number. The
conclusion to be drawn is that the economic planners are without sufficient
knowledge to be economic planners.
The RPS, rooted in subsidized
inefficiencies, is a sideshow that
detracts from Michigan’s main mission of working to efficiently move back into
prosperity. The smart thing for
Michigan legislators to do is reduce the RPS to zero.
is an adjunct scholar with the Mackinac Center for Public Policy, a research
and educational institute headquartered in Midland, Mich. Permission to reprint
in whole or in part is hereby granted, provided that the author and the Center
are properly cited.