Straight Talk from Al Jacobs

THE ECONOMICS OF SOLAR ENERGY

 

It appears another solar firm is being accused of defrauding its customers through deceptive sales practices.  This time it’s Vivant Solar, headquartered in Lehi, Utah, and operating in 21 states. The charges, filed by New Mexico Attorney General Hector Balderas, contend the company’s door-to-door sales tactics and agreements constitute unfair and unconscionable business practices. Prosecutors allege, among other things, that the staff systematically overstates possible cost savings to consumers.

 

Despite claims to the contrary, the concept of solar energy as a time-proven and clean source of power is valid. In particular, recent improvements in the manufacture of photovoltaic panels are making solar home installations ever more competitive. The reality, nonetheless, is that the industry is not yet economically competitive. It’s for this reason there are unscrupulous contractors and companies driven to compete through the practice of exaggerated claims and outright deception.

 

If there’s a fundamental problem, it’s that government has the ability to pass financial benefits on to selected parties, but cannot make an inherently uneconomical process profitable by decree. One clear example of this is, despite the granting of both federal and state tax credits, the electrically operated motor vehicle cannot compete in price with one propelled by an internal combustion engine. Without a doubt this explains why Tesla, Inc., the firm operated by a superb marketer, Elon Musk, who managed to manipulate the per share price to over $320, has never been able to generate one dime of actual profit for his shareholders.

 

It goes without saying there are fortunes to be made when government money flows. In the energy conservation business, which has gained the favor of the nation’s political hierarchy, the keys to its continuity are clearly tax credits, cleverly contrived initial public offerings and government grants. Whether or not faulty economics will eventually be its downfall – as will be the reason California’s high speed rail program, championed by outgoing Governor Jerry Brown, will be scuttled – is uncertain. If, somehow technological improvements make solar energy truly competitive, it may become viable. If not, it must go the way of the pterodactyl.

 

A final word: In the government subsidies business, being on the inside looking out , rather than on the outside looking in, is a distinct advantage … to which former Vice President Al Gore can attest.

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com