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Solar Is Not Viable Without Political Connections and OPM (Other People’s Money)

Posted: October 31, 2013 at 1:45 pm   /   by

What fuels American society? Is it gas? Oil? Coal? Solar power?


It’s OPM. Other people’s money. America runs on the stuff.

A congressman needs to bring some tasty bacon to his home state in order to buy the votes of this constituency or that? Plenty of OPM from people in other states to pay for that.

A surfer in Hawaii decides that collecting food stamps and chillin’ on the sand beats working? No problem. Some working stiff in Oklahoma can cough up a bit more to pay Surfer-dude’s way.

Need to give special perks or tax breaks to a powerful union, connected corporation, or special interest in order to garner their support at election time. Hey, plenty of OPM to go around.

You may not realize it, but right now, while you wonder how to pay for the things you need, you are covered in a million tiny leeches. Each one only extracts a little bit. Together, the extract a lot. But because the costs are so broadly distributed, the politicians and the special interests to whom they give your money hope you won’t notice.

SolarCity, and many other solar companies like them, certainly hope you won’t notice. Especially given the fact that they cannot survive without OPM . . . and lots of it.

Welcome to SolarCity, the latest booming green company that has never recorded a profit. The startup’s stock price has soared by 600% since its IPO last December—it closed on Monday at $57 a share—and spiked after the company announced a couple of weeks ago that it expects business to grow by 70% to 90% next year. Yet the company, based in San Mateo, Calif., and specializing in deploying rooftop panels, ended the first six months this year $61 million in the red.

Ordinarily, that sort of number might disconcert investors. But SolarCity’s business model is powered by government subsidies, which also fueled the 500% stock run-up and turn to profit this year of the electric-car maker Tesla.

The company is losing money. People who install solar panels on their roofs may never make back their initial investment. But who needs results when you have OPM to fuel your meteoric rise?

How would you like to have everything you could possibly want, along with financial security for you, your children, and your grandchildren (at least)? This guy has that . . . on your dime:

In addition to being the chairman of SolarCity and CEO of Tesla, Mr. Musk is the largest shareholder in both companies. The increase in their stock prices has raised his net worth by more than $5 billion over the past year.

Resentment of the super-rich is a cottage industry in every western country, and America is no exception. But most multi-millionaires and billionaires at least had to provide a good or service that makes people’s lives better in order to make their money.

People don’t unload their cash for nothing. They spend it on things they want. Real estate, iPhones, those yummy biscuits at Red Lobster . . . if it’s good—if it makes people’s lives better—people will spend their hard-earned money on it. Yes, this makes some dudes at the top fabulously wealthy, but at least they provided something that people want.

Musk doesn’t have to provide squat. All he has to do is go to his friends in the Obama administration and in Congress and tell them that what he provides, or will one day maybe provide, is gonna be really, really cool, and they give him all the OPM he needs. Plus, they change the laws to benefit him, and legislators in state capitals across the country follow right along greasing the skids on their own legislative gravy train.

No one is dragging you to Red Lobster. If you like their food, you go. If you don’t, opting out is as simple as not pulling your car into the danged parking lot. But with Musk, and Solar City, and Al Gore’s Generation Investment Management LLP, you don’t get a choice. They have you fixed to a chair like Dustin Hoffman in Marathon Man, and they are going to get what they want out of you whether you like it or not.

The company’s base is a 30% federal tax credit that accrues to investors who provide upfront financing for the rooftop panels that SolarCity installs for customers at no charge.

When someone is granted a federal tax credit, that means that someone else has to pay for bombs, butter, and bureaucrats at the Department of Whatever. That someone is you.

Guess how else you’re paying?

SolarCity and its competitors also implicitly benefit from energy policies like renewable mandates, fracking moratoriums and greenhouse-gas regulations that drive up electricity prices and enable the company to charge its customers more for solar power. Indeed, in its latest SEC filing, SolarCity warns investors that “a reduction in the price of natural gas as a result of new drilling techniques or a relaxation of associated regulatory standards” could harm its business.

So they work the political system, and you pay higher costs. Then they fleece you again with the subsidies at the local, state, and national level. Feeling like a sucker yet?

Even those who install panels aren’t getting the true benefits. They are just a conduit to provide more money for solar companies and connected firms.

Customers, however, must sign a contract agreeing to cede “any and all tax credits, incentives, renewable energy credits, green tags, carbon offset credits, utility rebates or any other non-power attributes of the system” to SolarCity. The tax credits are passed on to its investors, which include the venture-capital firms Draper Fisher Jurvetson, DBL Investors and Al Gore’s Generation Investment Management LLP.

They’re also going to make you pay through de facto price fixing:

SolarCity also benefits from “net metering” policies that 43 states, including California, have adopted. Utilities pay solar-panel customers the retail power rate for the solar power they generate but don’t use and then export to the grid. Retail rates can be two to three times as high as the wholesale price of electricity because transmission and delivery costs, along with taxes and other surcharges that fund state renewable programs, are baked in.

So in California, solar ratepayers on average are credited about 16 cents per kilowatt hour on their electric bills for the excess energy they generate—even though utilities could buy that power at less than half the cost from other types of power generators.

Big solar gets their friends in government to force solar panel users to sell their excess power to the utilities, and to force the utilities to buy it. They use net metering to fix the price at which this forced transaction takes place. Guess who pays for that? You do. Increased costs for the utility means increased costs to you.

Solar customers still use the APS power grid for electricity at night, or when their solar panels are not making enough electricity for all of their appliances to run at once. But because their monthly bills are so low, they pay little of the cost of running the grid, building new transmission lines and paying for other improvements. That cost increasingly is pushed onto non-solar customers who can’t afford solar, can’t pay for the down payment for a leased system, or live in homes too rundown for rooftop panels.

Guess who can afford to install solar panels? Higher-income people. Guess who’s paying for it? Lower-income people.

Also other higher-income people. And people in your state. And people halfway across the country.

Solar is just one example of the OPM machine. Everyone one of us is hooked up to that machine. We are its food.

We’re in the Matrix.


Christopher Cook

Christopher Cook

Managing Editor at Western Free Press
Christopher Cook is a writer, editor, and political commentator. He is the president of Castleraine, Inc., a consulting firm providing a diverse array of services to corporate, public policy, and not-for-profit clients.

Ardently devoted to the cause of human freedom, he has worked at the confluence of politics, activism, and public policy for more than a decade. He co-wrote a ten-part series of video shorts on economics, and has film credits as a researcher on 11 political documentaries, including Citizens United's notorious film on Hillary Clinton that became the subject of a landmark Supreme Court decision. He is the founder of several activist endeavors, including (now a part of Western Free Press) and He is currently the managing editor of and principal contributor to
Christopher Cook

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Solar Is Not Viable Without Political Connections and OPM (Other People's Money)