Key Takeaways
The Energy Information Administration, in its Short-Term Energy Outlook, is predicting a slowdown in the deployment of solar capacity in the United States, even before the Trump administration begins examining the technology’s relative costs and benefits to U.S. energy and economic security.
2024 was a record year for solar deployment as companies raced to cash in on lucrative tax treatments and subsidies offered by the Biden administration. Thirty-seven gigawatts of new capacity was added.
EIA predicts 26 gigawatts of solar capacity additions this year and 22 gigawatts next year.
Solar performs at about 25% of its capacity since it is weather-driven and inherently intermittent. This requires backup power from duplicate systems or expensive batteries, which do not produce energy but store it from other generation sources.
Solar panels are primarily imported into the United States, and China controls the world’s supply chain of solar panels and polysilicon.
In its Short-Term Energy Outlook, the Energy Information Administration (EIA) is projecting 26 gigawatts of solar capacity to be added to the power grid this year and another 22 gigawatts of solar additions in 2026. That expected growth is down from the record 37 gigawatts of solar power capacity that was added in 2024 and may dwindle further as some analysts believe that solar power may face Trump administration policies that will stagnate project development or continue it at a slower pace. Like wind, solar is an intermittent technology operating only about 25% of the time because it needs the sun to shine to energize it. Also, like wind power, it needs backup power from coal, natural gas, or nuclear generators or stored energy from expensive batteries that climate activists and some politicians are pushing. The massive batteries do not generate energy; they store excess energy from wind, solar units, or other generation sources if excess power exists. Battery facilities in California and Arizona have also had fires, with one at a facility in Monterey, California, causing evacuations and raising concerns about air quality.
Similar to wind power, solar power is promoted by large federal subsidies and state mandates for renewable energy. Solar projects get a 30% investment tax credit from the Democrat-passed Inflation Reduction Act — President Biden’s signature climate bill. That is, taxpayers essentially pay 30% of the capital costs for solar projects. According to EIA, federal support for renewable energy cost taxpayers upwards of $15.6 billion in FY 2022 — more than double the cost in 2016. With record additions in 2024, taxpayers are subsidizing solar power at even higher levels — a technology that can supply power roughly 25% of the time. On a per unit of production basis, its federal subsidies in FY 2022 cost $38.18 per megawatt hour — a subsidy value over 76 times greater than nuclear power received. While solar’s costs have dropped with its deployment over the last several decades, it still requires backup power, which adds costs for consumers — essentially a redundancy in capital expenditure made necessary by solar’s intermittency. According to EIA, its capital costs are 23% higher than the natural gas combined cycle, but its generating costs are 46% less after considering federal subsidies and fuel costs for natural gas.
Not only does solar power receive tax subsidies, but it has also garnered sizable federal loans, particularly during the Obama-Biden administration. Solar plants are touted to operate for around 25 years — half the time or less that fossil fuel or nuclear plants operate. The Ivanpah solar plant in California — touted to be the largest of its kind — shut down after ten years of operation. Obama’s Department of Energy (DOE) provided a $1.6 billion loan guarantee, and his Treasury Department provided a $535 million grant. The plant owners did not pay the usual credit subsidy cost (the expected default liability for the federal government) under the DOE section 1705 loan program. The $535 million grant under the Section 1603 program was to pay back part of the loan guaranteed at no charge by the DOE. The loan guarantee and grant were on top of the investment tax credit, the accelerated depreciation (an assumed plant life of five years), and a depreciation bonus of 50 percent in the first year that the plant received.
Furthermore, California utilities were forced to buy the power produced by Ivanpah due to the state’s “renewable portfolio standard.” The price the utilities were committed to paying for the project’s electricity was five times the going electricity rate, which was passed on to consumers. The Ivanpah plant was not only a financial boondoggle but an environmental disaster. It allegedly killed 6,000 birds a year and raised concerns about its impact on the habitat of the threatened desert tortoise. It destroyed desert habitats and numerous rare plant species. The Ivanpah solar plant is a good example of government waste that Trump’s Department of Government Efficiency is to flesh out.
Solar power also requires great swathes of land — far more than a traditional coal, natural gas, or nuclear power plant —that must come from cutting down trees that absorb carbon dioxide or from farmland. In 2021, Iowa’s largest solar facility, the Wapello Solar project, began operation, covering 1000 acres, 900 of which had previously been used to grow row crops such as corn and soybeans. The Illinois crop budget estimated non-land costs of $815 per acre for corn in 2024. A 100-megawatt plant like Wapello cost about $155 million to build and $2.16 per megawatt hour to operate in 2024, which translates to a levelized cost of $47 per megawatt hour, based on cost numbers for solar from the National Renewable Energy Laboratory. Using this information, an Energy Institute blog comparing the profitability of corn vs. solar found that solar panels are not profitable without government subsidies. That is precisely what Warren Buffet told us years ago about wind power. Subsidies are supposed to be used to help get new technologies “off the ground.” As such, they should no longer be provided to wind and solar power, which have had decades to prove their worth. Today, wind and solar power represent about 16% of the nation’s electricity and less than 3% of the nation’s energy supply due to the enormous subsidies and state mandates forcing utilities to purchase their output.
Conclusion
President Trump has issued an executive order on wind energy, withdrawing U.S. offshore areas from leasing wind and reviewing the federal government’s leasing and permitting practices for wind energy. Little has been said about other renewable energy technologies, including solar power, except for geothermal, which is receiving favor because it can produce energy 24/7. Solar power produces energy less often than wind power, which has an average capacity factor of about 10 percentage points higher than solar.
Solar also has a lot of the same issues as wind power in that it is as unreliable as it is intermittent, requires backup power that is either redundant or an investment in expensive batteries, requires massive amounts of land compared to coal, natural gas, and nuclear-generating technologies; operates at a life that is half or less than half that of the traditional generating technologies; and requires large federal subsidies to be economical. These are just a few of its problems. Another major one is that China dominates solar manufacturing and polysilicon production due to its cheap coal-fired power. The United States imports most of its solar panels, many of which come from China or factories in other Asian countries that China supports to avoid U.S. tariffs on Chinese solar panels.
