You can, of course, eat the zucchini you grow, the manager might say, but once you start trading zucchinis with the store, you can’t expect to get the same price on sales to the store as you pay on purchases from the store. The margin the store makes between the wholesale and retail price is what pays for the building, heating and cooling, labor, and other costs that are mostly fixed with respect to the amount you buy.
The same economics applies in electricity, only more so.
But in promoting renewable energy, the government is saying that electricity companies have to make those sorts of trades. Pointer from Mark Thoma.
How much of the electricity will eventually be sold? As a former bookseller, what stopped me from paying customers for books as much as I would have liked, was the knowing that not all books would eventually sell. Same with groceries – some of the produce will end up being thrown out.
The sad thing is that consumers without solar foot the bill for consumers with solar. Solar consumers tend to be affluent and the least in need of subsidies. So these subsidies represent a transfer of wealth from less affluent electricity consumers to the most affluent consumers. Not exactly progressive taxation.
The authors rejoinder is that we will give still more subsidies to the least affluent people since they are footing the bill for the most affluent people. Fair enough, I am all for helping the least able in our society.
So now we have two subsidies, one to the most affluent and one to the lease affluent. Somebody has still gotta pay, so who is left to foot the bill for for not one but two sets of subsidies? Since the most affluent are subsidized and the poor are also subsidized, that leaves only those in between the two. I ask why they ultimately get stuck with the bill for both the rich and the poor?