Elon Musk May Have Even More Cash To Roll In Thanks To Solar Subsidies
Elon Musk has made millions from government solar panel subsidies, and may have found a way to make even more if rumors Tesla will soon introduce a whole-home battery are true.
Musk, the CEO of Tesla Motors and chairman of solar panel manufacturer SolarCity, set off a wave of anxious speculation Monday when he tweeted that “[a] major new Tesla product line—not a car” would be unveiled on April 30.
Neither Musk nor Tesla have confirmed any details about the new product, but according to The Motley Fool, many observers believe the new product will be a home battery capable of storing electricity produced by solar panels.
Musk told investors during a February conference call Tesla would begin production of a home battery within about six months, and further reinforced expectations with a second tweet, in which he said, “With all that solar power being generated, it almost feels like something is needed to complete the picture …”
Many experts, however, claim much of the reason for all that solar power being generated is that state and federal subsidies make rooftop solar panels affordable in the first place. (RELATED: Solar Industry Demands Extension of Subsidies)
In an op-ed for Townhall, for instance, Ken Blackwell asserts that, “Very few people would install these rooftop solar systems at all if not for the federal tax break that comes with it,” which takes the form of a 30 percent non-refundable tax credit known as the solar investment tax credit.
Even the Solar Energy Industries Association, a national trade group, acknowledges as much on its website, noting that, “the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006.”
Another program that acts as an implicit subsidy for solar is net metering, which requires power companies to purchase excess solar from homeowners at the same price they charge their retail customers. Most states have their own net metering policies, and since 2005, federal law has required all public electric utilities to offer net metering to their solar customers on request.
Electric companies complain that net metering ignores the cost of operating and maintaining power grids, which they say accounts for about one-third of the price they charge for electricity. Because solar customers use the grid whenever they buy or sell power, the utilities argue net metering allows solar users to use the grid as a battery without contributing toward operating costs, forcing them to raise rates on other customers. (RELATED: Low-Income, Minority Households Bear Costs of Solar Subsidies)
According to a study from the University of Colorado at Boulder conducted by Chrystie Burr, “most of the investments in solar power systems wouldn’t have been made without the … upfront subsidy and the residential renewable energy tax credit.”
Similarly, a study by Kenneth Reddix II of the University of North Carolina at Chapel Hill concludes that in California, “over 54 percent of all purchases would have not occurred … in the absence of government subsidies.” (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)
If Tesla’s new product does turn out to be a home battery, as is widely expected, Musk will stand to profit twice from those subsidies—once from SolarCity’s sales of the subsidized panels, and then again from Tesla’s sale of home batteries to the same customers.
“Elon Musk is making a big play for American solar and all the subsidies that go along with it,” an energy industry consultant told The Daily Caller News Foundation. “If you’re getting millions from the federal government and a subsidized power grid, you might as well keep offering related products.”
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