Thursday, May 31, 2012

Three Charts That Illustrate Why Solar Has Hit A True Tipping Point

Three Charts That Illustrate Why Solar Has Hit A True Tipping Point:
A new report from the prominent global consulting firm McKinsey shows why solar photovoltaics have hit a tipping point.
As the economics of solar PV continue to improve steadily and dramatically, McKinsey analysts conclude that the yearly “economic potential” of solar PV deployment could reach 600-1,000 gigawatts (1 million megawatts) by 2020.
In the year 2000, the global demand for solar PV was 170 megawatts.
That doesn’t mean 1 million megawatts will get built per year after 2020; it’s just an estimate of the economic competitiveness of solar PV. When factoring in real-word limitations like the regulatory environment, availability of financing, and infrastructure capabilities, the actual yearly market will be closer to 100 gigawatts in 2020.
That could bring in more than $1 trillion in investments between 2012 to 2020.
The McKinsey report, appropriately named “Darkest Before Dawn,” highlights three crucial factors that are giving the solar industry so much momentum — even with such a violent shakeout occurring in the manufacturing sector today.

1. Because solar mostly competes with retail rates, the economic potential for the technology in high resource areas is far bigger than actual deployment figures would suggest. McKinsey predicts that the cost of installing a commercial-scale solar PV system will fall another 40 percent by 2015, growing the “unsubsidized economic potential” (i.e. the economic competitiveness without federal subsidies) of the technology to hundreds of gigawatts by 2020.

2. The most important cost reductions in the next decade will come not through groundbreaking lab-scale improvements, but through incremental cost reductions due to deployment. The McKinsey analysis shows how the dramatically these cumulative cost improvements can change the economics of solar. (For more, see: Anatomy of a Solar PV System: How to Continue “Ferocious Cost Reductions” for Solar Electricity.)

3. Solar is already competitive in a variety of markets today. As the chart below illustrates, there are at least three markets where solar PV competes widely today: Off-grid, isolated grids, and the commercial/residential sectors in high-resource areas. Of course, the competitiveness of the technology varies dramatically depending on a variety of local factors. But this comparison shows just how steadily the cross-over is approaching.

Wait, solar is actually competitive? Didn’t the death of Solyndra mean the death of the solar industry? Addressing the solar skeptics, the McKinsey analysts counter the notion that the solar sector is down for the count:
“Those who believe the solar industry has run its course may be surprised. Solar companies that reduce their costs, develop value propositions to target the needs of particular segments, and strategically navigate the evolving regulatory landscape can position themselves to reap significant rewards in the coming years.”
The short-term picture for solar is extraordinarily challenging, particularly for manufacturers trying to figure out how to make a profit with such a massive oversupply of panels on the market. But this is not an industry in its death throes; these are natural pains for a disruptive, fast-growing industry. The tipping point is upon us.

Wednesday, May 23, 2012

Kilkenny People Article on Site Value Tax

Kilkenny People Article on Site Value Tax:
in the Kilkenny People
Jill Kerby: Preparing for the real property tax
Published on Sunday 22 April 2012 14:45
Next year we are expected to have a full-blown property tax – of some kind – that will replace the controversial €100 household charge and the second-property charge of €200.
The suggestion is that the government expects to raise at least twice as much – at least around €3.2 billion – than the €1.6 billion they will collect if every property owner signs up and pays the household charge.
The argument in favour of a property tax is that taxing property is a more sustainable source of exchequer funds than taxing labour (via income tax), which can de-incentivise workers and affect employment levels. It is claimed that it is also a fairer form of taxation, especially if the tax pertains to the site value or productive value of the land on which the dwelling exists, and not just the market value of the dwelling.
If the government adopts a site tax next year – and not everyone is singing off the same hymn sheet after junior minister Jan O’Sullivan implied on RTÉ recently that house values would determine what tax is paid – they will have to ensure that the complex will have to be both fair and transparent.
If you are interested to know how a site tax will work and how much you might have to pay, you should consider downloading a study that was done by the economist Ronan Lyons last December for the Smart Taxes Network. (See
In the study Lyons presents a very convincing argument in favour of taxing residential – and commercial land for that matter – on the grounds that “the supply of land… is fixed and thus a parcel of land cannot be ‘withdrawn from supply’; it can merely lie idle. Thus, SVT cannot affect economic outcomes: it is not distortionary.”
Furthermore, says Lyons, “land values vary. Much of the value of a site is created purely by its designation as residential, not agricultural land, i.e. at the stroke of a pen. More generally, land values vary with the value of surrounding amenities. These amenities are typically public goods, either directly, i.e. provided by the Government with taxpayers’ money or indirectly i.e. amenities created by the populations living there, such as social capital, or a rich market for jobs, services or cultural activities. All these amenities incur costs of maintenance or costs of opportunity. Therefore, if public goods create private value, the fairest way of paying for their maintenance is to recoup some of that value from those who benefit.”
He argues that a site value tax “is not a tax in the conventional sense. It is better thought of as a maintenance charge for the value of amenities enjoyed by landowners and residents.”
A site tax also discourages land being left idle or underdeveloped for speculative purposes, and derelict land zoned residential is taxed at the same rate as residential land with houses on it.
In the ideal site value tax world – and Lyons goes into great detail about how site values could be calculated, which households might be exempt or at least be able to postpone their payment (such as low-income pensioners living on high-value sites – their payments would be collected from their estate) and how previous costs to homeowners, such as high stamp-duty payments during the boom years, could be offset by tax credits. He also notes that a proper system of income distribution will have to take place between high-site-value areas and low-value ones if there are to be any services provided to people who live in more remote or poorer areas.
One thing is very apparent from this study, and that is that owners of even modest homes in busy, high-amenity towns and cities will pay a great deal more than €100 if such a tax is introduced. If a 2% equivalent SVT is introduced, top-ranked sites – where the land is valued at, say, €2 million an acre, could result in annual tax bills of €1,200; a €10 million an acre valuation would see an owner paying as much as €4,960 a year. (Incidentally, these are not untypical UK council tax values or property/site taxes for homeowners in Canadian and American cities where many readers may have family members residing right now.)
Ireland is very unusual in not having a formal property tax, but the old rates system was incorporated into our income and consumption tax system in the 1970s. Consumption taxes are high here and the marginal income tax/PRSI/USC is now around 52% and as high as 56% for higher earners.
Is it fair to burden already stretched middle earners, many of whom are mortgage holders in negative equity and arrears with a potential site value tax of a few thousand euro without reforming and reducing income and consumption taxes? (The Commission on Taxation said absolutely not in its last property tax report.)
As you read this, a new state body is compiling all property prices achieved since 2010. A new property registration authority will report to the government soon on the type of property tax that should be introduced, and everyone who has registered for the household charge will be on that property tax list.
The Smart Taxes Network report (which includes a number of property case studies at the end) could be the framework on which the new tax is based.
Read it and then act: Open a savings account called “Site Tax” at your local bank or credit union and start making contributions.
And get used to the idea that you are no longer just the King of your Castle: you’re now a tenant of the state and the tax you will pay is rent.

Wednesday, May 09, 2012

The Fossilpower: 25 trillion dollars.

This is the estimated value of the fossil fuel industry, according to Mulga Mumblebrain.

The fossilpower deserves to be compared to the slavepower in the ante-bellum US, or the landpower in Georgist theory, or the moneypower in the context of monetary reform. It's a huge vested interest which generates propaganda and deluded followers in equal measure, and which will use any tactic - including violence and war - to prevent serious discussion of the issue, and the inevitable reform which by definition eliminates its value.

The fossil fuel industry simply has to be shut down - and replaced with renewables where possible but shut down in any case. The carbon tax (or better, the carbon fee and dividend) would be a smooth and efficient way to achieve this, but if that is not possible because of corrupted politics and media, then direct action might be necessary.

It's just good luck that concentrated solar electric power can now be produced at an estimated 20c kw/h, and expected to fall with deployment close to the current market price of electricity of 16c kw/h.