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Recent industry-wide solar panel defects are causing an uncomfortable stir amongst renewable energy advocates and investors.[1] That is, except for one Jenya Meydbray, co-founder and CEO of PV Evolution Labs. Meydbray claims that recent solar panel failures are run-of-the-mill quality control speed bumps of the kind all industries face when manufacturing and testing products. Yet, the fact that many of these ventures have inevitably received public support is cause for concern, and calls into question the wisdom behind supporting unproven technologies with federal and state subsidies.

An article in the New York Times recently reported that solar panels covering a Los Angeles warehouse were expected to last 25 years, but failed after only two. The same article noted that disintegrated solar panel coatings and other problems resulted in two fires and the loss of thousands of taxpayer dollars. These problems do not appear to be isolated: Dissigno, a solar company based in San Francisco, has reported significant solar panel failures, and manufacturers in China and Europe are experiencing high rates of defect. The Times explains that these problems are occurring industry-wide, but confidentiality agreements with manufacturers have made it difficult to obtain general figures about the nature and scope of the problem. These quality concerns have emerged just as solar panel construction and adoption have reached an all-time high.

Industry proponents are trying to downplay the significance of the issue. “Every company and industry experiences quality problems.  That’s why there are vehicle testing labs and crash test dummies,” Meydbray said. He continued, “We’ve seen numerous car recalls, and most recently, compromised bolts on the San Francisco Bay Area’s new Bay Bridge.  Should we stop building cars and bridges?”[2]

Meydbray’s comments reflect unclear economic thinking. Generally, companies incur the losses for products unfit for sale or those recalled from shelves. Thus, these companies have a strong incentive to ensure products are rigorously tested for such problems prior to putting the product on the market, in an effort to avoid the profit losses associated with recalls. However, in the heavily subsidized solar industry, these profit-and-loss signals and incentives are less clear-cut, and it is the taxpayer—not just the company—that ends up being penalized for many of the faulty investments.

In addition to the risk-distorting effects of subsidies, Meydbray also ignores the question of return on investment for these ventures. Solar power produces 0.04% of electricity in the United States, and receives $775.64 in subsidies per megawatt hour of electricity produced.[3] This means that, on top of recent revelations about the alarming rates of defection in the production and lifetime of solar panels, solar energy is vastly more expensive to produce than other kinds of energy.

Failures like Solyndra illustrate vividly that markets have proven to be more effective in determining what technologies satisfy the needs of energy users than government officials. Thus, the question to ask is not “Why are solar panels malfunctioning?” or “How can we make them better?” but instead, “Do solar panels produce a product that is valuable to the people paying for the subsidies and using the electricity?” In an open marketplace, does solar power represent the best combination of tradeoffs between cost, efficiency, affordability, and environmentalism as compared to other sources of electricity?

The inability of solar to survive without the support of subsidies demonstrates that the answer to these questions is, clearly, no. This is because, in general, people value power that is reliable and affordable. Intermittent power that cannot be stored is neither of these things.  This explains why the Energy Information Administration predicts that traditional, hydrocarbon-based energy will continue to dominate our energy mix through the year 2040, providing 78 percent of our energy needs.[4]

In the United States, about 42 percent of electricity is currently produced by coal. Coal is one of the world’s most abundant fossil fuels. The United States has the world’s largest reserves of coal, estimated at 4 trillion short tons in total in the lower 48 states and enough to last for thousands of years at current rates of consumption. This does not include an estimated 6 trillion additional short tons in Alaska alone.[5]

Coal is energy-efficient and inexpensive, and the U.S. has it in abundance. Even after adding in the costs of regulation that affect coal-fired power plants, photovoltaic solar power production is almost 50 percent more expensive than coal power, and thermal solar is more than 160 percent more expensive.[6] Coal is also becoming more environmentally friendly with each passing year. Technology advancements such as flue gas desulfurization and selective catalytic reducers have greatly improved air quality since the 1970s, even as coal-fired plants have produced more power and consumption has increased.[7] Moreover, coal is not the only other option; natural gas and hydroelectric power are increasingly cost-effective resources.

But as the political power of the green energy industry grows, vital information about comparative costs and effectiveness of various resources is of little concern to proponents of solar panel production.

“Solar technology is mature and proven,” claims Meydbray. “…The solar industry offers a sound solution to our world’s growing electricity needs and carbon reduction targets.”

Meydbray and renewable supporters are unlikely to abandon this flawed rhetoric any time soon. However, the end of the myth of energy scarcity and the resurgence of American energy abundance alone should be enough to convince consumers and lawmakers that “renewable energy” alternatives are not only foolhardy endeavors, but futile government expenditures on the backs of hurting producers and consumers.

The Institute for Energy Research’s policy intern Portia Conant contributed to this post.