We bought a solar photo-voltaic system during a window of opportunity in which you get both the lifting of the $2000 fed tax credit and the , in the midst of the Financial Chaos Round defined by period after the $700 Billion TARP and before the TARP became the Head-Fake-No-Look-Pass-to-Direct-Equity-Investment.
We had looked seriously at solar in January 2008, but I don't like spending money. I like investing. And while the rate of return appeared to be there, it was not attractive enough to want to finance $10K and pay $8K, even though it would positively impact cash flow between $350 to $400 for the first year and grow at an annual rate of %10+ plus from there. There are lots of ways to 'crunch the numbers on solar photovoltaic, some impacting cash flow (cost of electricity off the grid, price at which the utility will buy back electricity ) and some impacting equity (increase in value of home, expected lifespan). I liked eliminating the equity and focusing on simple cash flow return. I came up with 4% to %6 guaranteed. Not bad for an illiquid conservative investment in 2008, but not great either. Better return than a FDIC backed short term CD, but no liquidity.
Then came TARP, and with it an earmark, that in my opinion is not a dirty word. The earmark lifted the $2000 cap on tax credit for residential solar energy. Now the system installed will be only $3300 after tax credit and rebate. That boosted the rate on return to a conservative $12%. A 12% guaranteed, even an illiquid investment is tough to come buy these days. However, you won't be able to come by it any more. XCEL, the public utility mandated by a ballot generated Colorado initiative in 2006 to meet requirements related to the percentage of its electricity generated from renewable energy has reduced the amount of the rebate it offers. This is not a knock on XCEL--this is an example of effective government initiated energy transformation. Give the utility a goal, and let it figure out how best to achieve it. Let it be tied into market forces as much as possible. We took advantage of the window of opportunity before they rolled the rebate back.
Since then, I have researched consumer generated energy sources, and if you were to ask me, "Can we truly do what Obama suggests: commit to an energy policy that would be conducted with the urgency and success of the space race,?" I would say, "Yes, we can. And here's how."
National Purpose
In post WWII USA, we perceived there to be a threat from the Soviet Union. They had beat us in an intial heat of the space race by launching Sputnik. This fear drove us to do what we do best: innovate to win. We put a man on the moon.
However, America can be at both its best and worst when it is focused on a goal driven by an existential threat to its existence. In 2001, it became the War on Terror. By 2008, Americans were discovering what Al-Qaeda already knew: that the War on Terror would look more like the War on Crime, the War on Poverty, and the War on Drugs than it resembled WWI or II, the Civil War, or even the War on Polio. And as such, there could never really be a defining 'moment of victory' after which we would never have to revisit this threat again with any more seriousness or gravity than demanded by this Civil War inspired themepark.
We need a mission with positive measurable results. We need to believe in our regenerative ability to lead the world by transforming our nation, as we have done so many times in the past. An economy that transformed its ability to generate energy would reduce the risk, cost, and threat of being dependant on foreign dominated fossil fuel. It would be consistent with our Fore Fathers and Mothers empasis on frugality and saving. Not "Drill, baby, Drill," but "Save, baby, Save" Save those fossil fuels for our great grandchildren.
The Power of the Productivity of Power
As the IT age boomed and busted throughout the turn of the Century, we discovered the power of technological innovation increasing productivity. We led the world. At the time, we were worried about Japan overtaking us economically. Technology brought us great rewards. The same innovations could be applied to increasing the productivity of power generation. Innovations would not be limited to technology. They would also include finance and tax policy. For example, rather than the government lending/giving billions to the banks, the government could create sound solar photovoltaic financing that would be made direct to the consumer. The soundness of it would come from using as collateral the stream of payments that the utility makes to the owner of the solar system. In the case of default, the US government would be the recipient. For example, a home owner buys solar photovoltaic and is being paid 10cents per kilowatt hour of electricity generated sold back to the utility through the grid. The home owner defaults on the house note and the bank takes possession. The bank sells to a new buyer. The Federal government would still receive the revenue from the electricity generated from the panels. The new owner would have the option to buy system at price level determined by a factor applied to the amount of debt left on the original solar note. This would be set at a level to meet specific policy goals.Perhaps it would be such that the new buyer could make a return of X + Libor, while the government's losses would be less than without any collaterol. Home owners would have a new asset class to invest in. With the right tax rebate and financing options, it could be a very attractive option.
Nationally, our goal would be to produce X amount of energy from renewable sources each year. It would have the added effect of directing finance right at the source of our problems: housing.
The Military Industrial Complex: conservatives' dirty little socialistic secret
Socialism as defined by conservatives is when the government takes money away from you and spends it on what it thinks is important. Elected liberals, too afraid to be labeled as"Weak on Defense" have never challenged conservatives on their hyper-socialism. Money spent on the military, currently the largest portion of our spending except for maybe debt service, is socialism. The government tells me that a certain amount of my income goes to the military. The government tells me what countries we are going to invade and when, and tells me what weapons it is going to build. I get no choice. The Iraq War is the largest experiment in socialism that the US has ever taken on. However, there are good lessons from our military socialism that could be applied to an energy policy, with the added benefit of private ownership and choice. We would need to re-examine our military policy--and soon because we are strategically in a weak spot now. Colin Powell's doctrine of overwhelming force and being able to fight two wars simultaneously is no longer a doctrine--it is reality. As such, our enemies have learned much about us strategically.
Conception of a new politics
Tenets of a new political thinking will be caused the left fertilizing the right. So this blog is not about repudiating All that is the Right.
However, we kicked your ass, and there will be some new ground rules. Every time the government wants to spend money, the right can no longer cry 'socialism.' Invading Iraq is the epoch of socialism. It takes up 30% of our budget.
The right can no longer cry 'free markets.' I am an Adam Smith fundamentalist. I am a believer in free markets. I am not a believer in the bastardization of Adam Smith's writings that the right calls 'free markets.'
I am willing to trade: I am willing to let die some lefty ideas.
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