Hillary Clinton’s solar plan would add more than $60 billion in new subsidies, according to a report released by the American Action Forum.
The Democratic presidential nominee is promising to expand the amount of solar panels to generate 140 gigawatts by 2020, an increase of 700 percent.
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The plan would require 10 times more subsidies than are provided today, at an estimated cost of $62 billion.
"Secretary Clinton has made a bold promise to install ‘half a billion’ new solar panels in her first term, increase total solar power capacity to 140 Gigawatts (GW), extend renewable energy subsidies, and create new incentives for renewable energy investment," said the American Action Forum, a center-right policy institute, in a new report released Friday. "Such a policy will be un-abashedly pro-solar, even if it comes at the expense of other clean energy sources."
"On the topic of expense, promising to both extend subsidies and reach 140 GW of solar power has the potential to increase subsidy costs between $27.5 and $62 billion," the group said. "This amount alone does not even address the enormous gap between her goal, and the projected demand for solar. The end result of such a policy will be massive government spending that does not succeed in efficiently achieving energy or environmental policy goals."
Clinton’s plan would rely on extending the Business Energy Investment Tax Credit (ITC), a subsidy that provides up to 30 percent of solar costs for investors.
"As a budget item, the tax credit is effectively a cash rebate," the American Action Forum said. "This means that the tax credit of the ITC will have to be paid for either from other taxes now, or by incurring more debt to pay for it with future tax revenue."
Based on current projections, there will be 56.65 Gigawatts of solar power generated in the U.S. by 2020. In order to meet Clinton’s goal, an additional 83.35 Gigawatts would need to be generated.
"This estimated 83.35 GW of solar can be applied to the [Energy Information Administration’s] capital cost estimates of solar," the report said. "Their latest estimate is $2,480 per kW of capacity, which is $2.48 per watt. Applying this to the difference, yields a capital cost of $207 billion, all of which will be eligible to claim an Investment Tax Credit."
When applying the ITC tax credit at 30 percent, subsidies for the solar investments would reach $62 billion, or roughly $500 per taxpayer.
"To put this in perspective, the average annual tax credit of the ITC from 2012-2016 was $1.5 billion," the American Action Forum said. "Spreading out this new tax liability over four years would raise the subsidy’s cost by more than tenfold. Note that this $62 billion is in addition to current law energy subsidies" [emphasis in original].
Even using a cheaper estimate of solar prices for 2020 would result in a $27.5 billion tab for taxpayers, though the American Action Forum notes these estimates are "unrealistically optimistic."
"In essence, Secretary Clinton’s solar plan is to increase spending in order to push solar power to an artificially inflated level of market competitiveness," the report concluded. "From either an energy or environmental policy, this makes little sense."