Spencer Hunt of the Columbus Dispatch has a story on the overwhelming demand for state tax credits to homeowners and businesses that install solar panels on their homes and buildings. The two takeaways from the reader would get from this story is that demand to install solar panels is incredibly high and the cost of solar technology is coming down. The real takeaways of the story should be that if you subsidize something enough, people will buy it, and that the cost of generating electricity from solar panels is still prohibitively high to compete in the marketplace without subsidies.

Hunter reports that “The price of solar panels has dropped substantially in recent years, said Geoff Greenfield, co-owner of Third Sun Solar, a company based in Athens that installs alternative-energy systems. A 10-kilowatt solar-panel system that cost $80,000 in 2005 now sells for $50,000, he said. With the help of state grants and federal tax credits, the electricity generated would help a home system pay for itself in about eight years.”

Although the cost of manufacturing solar panels has gone down, which is not true with all types of solar technologies, the cost of selling electricity produced from solar is still high. The government’s own Energy Information Administration’s projected levelized costs for the year 2016 (in 2008 dollars) per megawatt hour are $78.10 for conventional coal power $149.30 for onshore wind power, $191.10 for offshore wind power, $396.10 for photo-voltaic solar power, $256.60 for thermal solar power. Solar is by far the most expensive even compared to other renewables like wind.

The article does mention that the state tax credits were financed by a 9-cent monthly fee added to the majority of Ohio residents. Although the fee was not re-authorized, which is why the demand for the tax credits is exceeding the supply of funds, this is another clear example of concentrated benefits given to recipients of the program and dispersed costs borne by Ohio’s ratepayers.