I watched a piece on CNN the other day that really tied the room together, in terms of the battle over America’s energy future. Recently in this space, I’ve ranted about “rentseekers”—established industries backed by favorable regulations that stifle innovation and thrive by maintaining the status quo. This story rides a thru-line from social innovators, like Uber and Airbnb, to the heart of the solar energy revolution, and it exposes a dilemma at the core of our economy: The free market doesn’t really exist.
Uber is a mobile app that lets users hail taxis or private cars from their phones. Airbnb is a web-based application that allows people to rent out their homes or apartments on a nightly basis. It’s easy to see why the yellow cab industry in some cities is fighting back against the former, and it’s not surprising that the traditional hotel industry is up in arms about the latter. It’s called profit. And if you’ve been making it for long enough, you can afford to have friends in high places passing laws that protect your desire to eliminate competition.
The same rule applies to the energy industry, where investor-owned utilities have owned the playing field for the better part of a century. Now that people are slowly awakening to the very real threat of climate change, a gap has opened in the market, and innovators have stepped in to fill it. Once viewed as a luxury for the rich, rooftop solar is steadily expanding to low- and moderate-income communities. And policies like net energy metering, which give rooftop solar customers full retail credit for the excess energy they give back to the grid, have made this more than an alternative to fossil fuels.
Distributed solar energy has the potential to save our energy future. But instead of embracing this shift in our technology and culture, the utility industry has attempted to kneecap the nascent solar industry at every turn. Two prominent weapons in the news these days are Feed-in-Tariffs (FITs) and Value of Solar Tariffs (VOSTs), alternatives to net energy metering that may sound reasonable at first, but actually have hidden, negative tax implications for consumers.
A memo released last week by The Alliance for Solar Choice— authored by top national law firm Skadden, Arps, Slate, Meagher & Flom—finds that consumers are ineligible for a 30-percent federal investment tax credit under FITs and VOSTs. These people will also owe income taxes on the payments they receive for the solar power they feed back to the grid.
Exchanging tax credits for taxes? Sounds like a raw deal to me. But it makes perfect sense for big utilities to push legislation that allows them to maintain their monopoly status.
These “rentseekers” want to live in a world where cool ideas go to die. Where maintaining the status quo trumps public health. Where expediency is more important than efficiency.
Our only saving grace is that human innovation almost always prevails in the long run, and technology advances faster than those who try to contain it. Just like Yelp and OpenTable have revolutionized the restaurant industry, and Reddit has turned the news market on its head, so will Uber and Airbnb and the scrappy solar industry find a way to upset the status quo and move us one step closer to a truly free market. All it takes is a little Silicon Valley creativity and the will to persevere.
Peter Allen is an independent communications consultant and a proud native of San Jose.