Why Green Energy Subsidies Don’t Pay
Look for renewable energy subsidies to get much closer scrutiny under a new administration in Washington and new legislative majorities in St. Paul. But a recent Star Tribune story celebrating taxpayer-subsidized green energy projects in Twin Cities suburbs demonstrates how far we have to go.
Fortunately American Experiment’s Kim Crockett sets the record straight in a rebuttal headlined “How Much is ‘Green Bling’ Costing Your Town or City?” in today’s editions. It’s based on a 2014 study American Experiment conducted to audit claims that feel-good solar and projects make economic and environmental sense.
Currently, cities are using federal and other grants to offset the costs of these “consciousness raising” projects. We found that cities view the grants as “free money” when calculating the return on investment, as if local taxpayers do not pay the federal taxes used to fund the grants.
For example, Edina installed a $200,000, 24-kilowatt solar power plant on top of its City Hall in 2011 that saved about $1,300 a year in electricity purchases from Xcel, producing a 154-year payback period. The solar panels only have a useful life of a few decades, so the project makes no fiscal sense. That is where the grants come in: The installation cost was offset by a federal grant of $80,000. The remaining cost was covered by a grant from Xcel, funded by other Xcel ratepayers.
It’s time to take a hard look at Minnesota’s GreenSteps Cities program and other subsidizes. Too often these green grants mask the true cost of renewable energy projects that gouge taxpayers and ratepayers with little pay-off for the environment.
In the end, Edina contributed nothing except staff time to get the grants and the rooftop at city hall. Sounds brilliant, right? The city got someone else to pay all the costs, and gets to pocket the savings each year. But of course somebody did pay for it: federal taxpayers and Xcel ratepayers, 50,000 of whom live in Edina.
The city, knowing all this, still proudly viewed this as a “demonstration project” to encourage residents to use energy that does not produce greenhouse gases. When asked about the costs around the production and eventual disposal of the solar panels, both of which use lots of carbon-based energy and involve toxic sludge and waste, the city said it had not taken those factors into account.
This is why we fondly called the project “Green Bling.”
Other cities we looked at did not do as well as Edina in getting someone else to cover their costs. As a result, uneconomic solar projects, taking 50 to 100 years to pay for themselves, are being built around the state with taxpayer and ratepayer funds.
This is where the educated voter comes in: Cities are still very much within the reach of the average citizens. We encourage Minnesotans to take a closer look at what your city staff is putting in front of your city council. And take a look at who is volunteering on local committees: That is where many of these ideas begin. Ask hard questions about the return on investment, and help your councils make better decisions. When it makes sense, help them to just say “no” to “free” grants and federal money while embracing true conservation measures that better our cities.