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New Technology Needs Government Support. Solar Energy's No Different

Subsidies on solar in Canada are essential until it reaches grid parity and can generate electricity at the same cost or lower than traditional fuels.

12/12/2017 09:49 EST | Updated 12/12/2017 09:50 EST

Canada made an extraordinary promise in 1997 by signing the Kyoto agreement. A commitment to reduce greenhouse gas emissions (GHG) by six per cent by 2012 compared to 1990 levels. Consequently, the parliament in 2002 ratified the Kyoto accord. However, GHG emissions led to 24.1 per cent increase between the base year 1990 and 2008.

Canada, with a weak reputation, has made yet another promise to the international community. A commitment to intensify decarbonization efforts by signing the Paris accord of 2016 that requires countries to restrict global warming to two degrees Celsius above pre-industrial levels.

Stephane Mahe / Reuters
Prime Minister Justin Trudeau delivers a speech during the opening session of the World Climate Change Conference 2015 (COP21) on Nov. 30, 2015.

As an ambitious coalition partner with an eagerness to improve its global reputation, Canada went to the COP21 climate conference and pressed developing countries like India to sign onto the ambitious climate change accord. Since signing that agreement, not much has been done to meet our climate promises. Here in Canada, we don't seem as enthusiastic as India is in cleaning up the way we produce energy.

In my previous post, I had discussed how India undertook a challenging task, a massive solar push, which doubled its solar capacity compared to 2015. Furthermore, India is taking fast strides towards the national goal of generating 175 GW from renewable sources by 2022, which includes 100 GW from solar. Until quite recently, India seemed like more of an obstacle in the fight against climate change. That reputation looks entirely obsolete now as India significantly increased its investments in cost-effective renewable energy sources and is heading towards to meet climate goals earlier than promised.

Other countries have jumped headlong into the solar industry, achieving excellent results. Cities in Canada also have a solar energy potential comparable with that of many major international cities. According to Natural Resources Canada, about 50 per cent of Canada's residential electricity requirements could be met by installing rooftop solar panels. Canada's use of solar energy has expanded in recent years, although it has very poor market penetration.

I think subsidies on solar in Canada are essential until solar reaches grid parity.

There are several reasons for the reduced market penetration:

  1. Getting people on board is difficult — especially the government, which seems blissfully unaware of the future of our energy.
  2. Burning coal and other fossil fuels are still accessible, and many consider them viable and economical in spite of the pollution they generate. Even today, solar has to compete with a ​​​​​heavily subsidized fossil fuel industry.
  3. Solar requires massive investments in infrastructure and large solar farms. For instance, setting up a 10 MW solar farm that could serve 3,000 homes requires around 50 acres of land, which is a significant chunk of land.

Although the solar industry has expanded in Canada, criticisms are quite sharp. The most prominent criticism of the solar industry is that it has been supported by government subsidies. In my opinion, a nascent technology like solar can't mature and provide a decent return to the taxpayers without government help.

In the past, government subsidies have probably helped rural electrification; without these aids, we wouldn't have seen the electrical grid reaching the remotest places. Indeed, subsidies are essential to the growth of clean technology that is still nascent. However, they are evil when they are used to preserve a declining industry such as coal to maintain jobs. Any mismanagement of energy systems due to subsidies across Canada doesn't qualify the idea that subsidies are harmful.

Bloomberg via Getty Images
Solar panels stand at a solar farm in Sarnia, Ont.

I think subsidies on solar in Canada are essential until solar reaches grid parity and it can generate electricity at the same cost or lower than traditional fuels, like coal or natural gas. In some parts of the globe, solar has already attained grid parity, and hitherto subsidies have been removed from the cost calculation. The factors that have led them to a subsidy-free solar generation are falling prices of solar panels and lower construction costs. However, the real breakthrough will come from an efficient and cost-effective battery storage technology. A suitable battery storage could provide solar developers freedom to sell their stored power during the peak hours and take advantage of peak prices. It is important to note that in Canada, storage solutions are emerging and evolving faster than anticipated.

Whether there will be a modest return on taxpayers' investment rages across the world. Between 2007 and 2015, according to the data extrapolated from the Energy Information Administration (EIA), the U.S. government spent between $50 billion and $80 billion in subsidies for solar and wind industries. According to an analysis of Nature Energy, due to the fossil fuels not burnt during that period, the U.S. saved between $35 billion and $220 billion because of avoided deaths, fewer sick days and climate-change mitigation.

Strictly speaking, the solar industry is now historically carbon-negative.

Another hyperbole used by critics is that solar technology may be using fossil fuel energy in the panels' manufacture, and emitting GHG, faster than it was able to offset. We are aware that it takes a lot of energy in making solar panels, mining of copper and quartz and conversion of raw material to wafers — adding to which the shipping of the solar panels all over the world. One would wonder: has the solar industry paid off its long-term energy and climate debts?

According to a nature communications study, since its inception 42 years ago, the solar-panel industry has almost certainly prevented more GHG emissions than it has emitted. Strictly speaking, the solar industry is now historically carbon-negative.

In this blog, I have tried to answer the criticisms revolving around the electricity from solar energy. The good news is that people are starting to encourage solar energy in Canada. However, we must speed up. When Canada's GHG emissions are rising, electricity from solar power could be the smart choice for Canada's future. It is an intelligent choice because solar is superabundant, clean and can generate thousands of jobs. Primarily, it will displace approximately 1.5 million tonnes of GHG emissions per year the equivalent of moving 250,000 cars and trucks off the road each year and thousands of lives could be saved from pollution and other hazards of the traditional energy systems.

I know this is a challenging task for Canada to stand up to the promise it made to the international community and I am very confident that Canada has the potential to deliver its commitment.

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