Alternative Energy Subsidies Accelerate Move To Grid Parity

Subsidies are financial incentives, usually paid by governments to encourage the production of something. There are many reasons that a particular product might be beneficial to the community, but not economically feasible to individuals and businesses. Many products are subsidized to support local businesses, reduce the amount of imported goods, provide employment and encourage environmentally friendly practices. Governments have subsidized the energy industries, including oil, coal, nuclear and other technologies, for years. In recent years the trend is to encourage renewable energy sources (such as solar, wind, biomass) at the expense of fossil fuels such as coal and oil. Alternative energy subsidies include Feed-in Tariffs and financial incentives to photovoltaics.

Each country’s goals may be different, so naturally they use subsidies differently to move toward their objectives. Often governments may wish to encourage the use of a fuel source which is available locally, and reduce the national dependence on imported fuels. Promoting the export activities of local producers may also be an important factor for many countries.

Subsidies are often used to bring about economic benefit for the people the government is trying to look out for. Examples of this might be reducing prices of a product to help the poor or increasing employment in a specific area. Sometimes international treaties come into play. For example, countries might impose tariffs or subsidies to reduce the consumption of some forms of energy and increase the consumption of others to comply with an agreement like the Kyoto Protocol.

Those who oppose subsidies will often use arguments that they distort the free operation of the marketplace, they do not necessarily benefit the people (e. G. The poor in underdeveloped countries) they were supposed to help, and, in the case of energy subsidies, they encourage increased consumption and waste.

Policies for promoting the production and use of renewable forms of energy are common to many nations. In addition to the fact that protecting the environment is good for each country individually, international agreements often drive the need for such national policies.

Many fuels that we use now because they’re less expensive than their cleaner counterparts release carbon dioxide into the air. The carbon dioxide contributes to a natural effect in the earth’s atmosphere, called the green house effect, causing the earth to warm. A main aim of policy in many countries, is to reduce the use of fossil fuels, and to encourage sustainable and renewable energy, using alternative, carbon-neutral sources, such as biomass fuels, solar power, wind power, tidal power, hydro-electricity and (more controversially) nuclear power. You can see the effect of subsidies on the prices of solar panels for sale in the U.S.

Subsidies encourage the production and/or use of these technologies. Feed-in tariffs and tax incentives for photovoltaics make it financially attractive for consumers to buy and use environmentally friendly solar panels. The goal of these subsidies and incentives is to help reach grid parity, which is the point at which the cost of renewable power is equal to the cost of traditional forms of energy.

When a government pays the producer of renewable energy for each unit of power the produce, that’s called a feed-in tariff. National electricity grids are conventionally considered as a network of suppliers (power stations) connected to a network of consumers (homes and businesses), but it is in fact technically possible for any consumer to feed power back in to the grid.

When solar panels are purchased and used by a private individual or business, they may generate more electricity than the home or business need, especially at certain times of the day or year. If the government institutes a feed-in tariff, the owner of the power source can feed excess electricity back into the grid. The utility company must purchase that power at a specified rate. This encourages owners of homes and businesses to invest in solar panels and produce renewable energy, thus reducing their negative impact on the environment.

Find out what incentives are available for solar power in your area and then research solar panel prices. Solar Power Subsidies by Coleen Regis.