Let Them Have Solar Panels: New Obama Plan Doesn’t Help Poor, But Reducing Regulations Would

Posted on Wed 07/08/2015 by

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Nick LorisBy Nicolas Loris ~

The White House is planning to give more than a half a billion dollars in government and private funding for solar panel installations for low and moderate-income households.

Too bad the White House is simultaneously hurting those same struggling Americans by pushing energy regulations that will hike their utilities costs.

Rooftop Solar Panels300The Obama administration plans to modify existing federal programs through executive order to triple the amount of solar systems on federally-subsidized housing. The administration also wants to make it easier for low-income families to take out loans up to $25,000 to install rooftop solar panels.

Is this really helping low-income families?

Actually, this could backfire and hurt low-income families by encouraging them to be exposed to more financial risk. The White House is directing the Federal Housing Administration to make it easier to borrow  money and provide “flexible underwriting to recognize the reduced cost of utilities for energy efficient homes.”

In theory, the loans make sense because people could repay the loans with the money they’ve saved with lower utility bills. But if the solar electric systems installed fail to deliver the anticipated savings, home owners would still be on the hook to payback the full amount of the loan.

Furthermore, taking out a loan for a 20-year solar lease could present problems for low-income homeowners who opt to sell their homes. The seller would have to convince potential buyers to take over the loan, pay off the loan themselves or pay the solar company to take down the solar system and install it on their new homes.

Solar technology’s rapid development also creates potential problems. As the White House notes, the average cost of a solar electric system dropped 50 percent in the past 5 years. Do people want an old technology on their roof? How difficult will it be to renegotiate the contract? How easy will it be to transfer the system to a potential home buyer if that technology is already outdated?

If there is truly an opportunity to save money through solar installation, then private investors and developers should bear the risk of providing the loans. If solar (or any energy technology) is such a good idea, we shouldn’t need to convince anyone to install.

But when the government provides generous carve outs, that risk is distorted and places taxpayers on the hook for any failures.

What about the energy savings? Rep. Elijah Cummings, D-Md., who was born, raised and currently lives in Baltimore, remarked, “The difference in a monthly bill of $10 or $15 means a lot to the people who live on my block.”

Cummings’ statement is undoubtedly true. Higher energy bills essentially act as a regressive tax. While the median family spends about 5 cents out of every dollar on energy costs, low-income families spend about 20 cents.

We do need to make energy more affordable. But encouraging families through loans and subsidies to install solar panels is the wrong solution for that problem.

Energy costs for families would go down if regulations decreased. But instead of decreasing them, the Obama administration is implementing a series of energy regulations that will drive up costs and drive people out of work.

One of the biggest threats facing low-income Americans is the administration’s climate change regulations for new and existing power plants that will likely be finalized by the end of the summer.

According to a new study from the National Black Chamber of Commerce, the regulations “would have serious economic, employment, and energy market impacts at the national level and for all states, and that the impacts on low-income groups, blacks and Hispanics would be especially severe.” The study finds that from 2015-2035, black median household income would drop by more than $5,000 and Hispanic median household income would drop by more than $7,000. By 2020, black job losses total nearly 200,000 and Hispanic job losses total more than 300,000.

And the environmental benefit of the economic sacrifices low-income families that are struggling to make ends meet? A change in the earth’s temperature of a few hundredths of a degree Celsius.

Energy policies rooted in the principles of economic freedom lead to increased production, competition and access. Let’s not be duped by federal government gestures and special interests pursuing political and environmental agendas that deprive Americans access to affordable energy and greater prosperity.

As Bill Gates said, the cost of decarbonizing of our energy economy is “beyond astronomical.”  And it’s the America’s poor who pay the highest cost.

Nicolas Loris is the Herbert and Joyce Morgan Fellow at  The Heritage Foundation . http://www.heritage.org/  Nick Loris researches and writes about energy and other economic effects of environmental policies and regulations.

Read more informative articles at The Daily Signal    http://dailysignal.com/