Unbind Solar Energy From Washington's Red Tape

FROM 1984 to 1991, Luz International Ltd. and its subsidiaries built nine solar thermal generating plants in the Mojave Desert. Together, they produce 354 megawatts of electricity - 90 percent of the world's solar energy. This is enough electricity to meet all the power needed by 540,000 people in southern California. And these plants will do this for the next 30 years without polluting the atmosphere and at a cost per kilowatt hour that is competitive with nuclear power.

Luz's generators were built in three groups, each more efficient than the last and each having greater generating capacity and lower per-kilowatt costs than the previous one. The next generation of plants, planned for construction in 1994-95, would have brought costs down to 6 or 6.5 cents per kilowatt hour - less than the cost of natural-gas electric generation.

Unfortunately, they may never be built. Luz International filed for bankruptcy in November.

The demise of Luz International had nothing to do with the least expensive forms of electric generation. Indeed, Luz was profitable even in this first stage of research and development, operating without economies of scale. And, of course, the solar plants did not entail the enormous social costs of fossil fuel or nuclear generation. They produce neither the emissions that threaten global warming and contribute to acid rain, nor the radioactivity that threatens nuclear-plant catastrophe and creates appar ently insoluble problems of dealing with radioactive waste. From the point of view of society as a whole, solar power is the healthiest and least expensive energy source.

As Luz International Chairman Newton Becker said when the company filed for bankruptcy, its demise could not be attributed to technical or economic failure but was simply the result of our not having a national energy policy. "What little federal support we've gotten," Mr. Becker noted, "has been on-again, off-again, and what little we've got has been much less than for fossil fuels and nuclear energy."

Nuclear plants are the beneficiaries of massive federal subsidies, and gas and oil companies benefit from an array of tax benefits.

In contrast, federal and state support for solar power, briefly substantial in the wake of the '70s oil crisis, became more and more uncertain after 1986. Beginning then, renewal of federal tax credits for solar and geothermal energy was made part of a package of orphan laws known as "extenders." And it was this governmental red tape that tripped Luz International.

"Extenders" had to be approved by Congress every year, so starting in 1987, Luz had to lobby Congress for an extension of its tax credit at the beginning of the year, then frantically raise capital and, finally, build the plant before the end of the year when the tax credit ran out.

These uncertainties increased the cost of financing - new money had to be raised every year - and led to cost overruns as Luz rushed to finish new construction every year. And last year, when Congress extended the tax credit for only nine months, the burden became too much and the company failed.

Virtually all the candidates in the presidential election are talking not only about the environment, but also about the need to end dependency on foreign oil - thereby improving our balance of trade - and to develop leadership once again in developing new technologies. Solar power, whether solar-thermal, solar-hydrogen (in which solar energy is used to generate hydrogen for use as a clean-burning fuel), or photovoltaic (in which sunlight is used to generate electricity directly) could be a major contrib utor to the attainment of all these goals.

If dependence on foreign oil is a real concern (and all the candidates in both parties say it is), if global warming and acid rain really threaten the future of the planet (and most scientists believe they do), and if the United States needs to regain leadership in the industrial world, then federal and state aid to solar power should surpass aid to the nuclear and fossil-fuel industries. It's time for a national energy policy that puts the public interest first and the special interests of oil and nucle ar companies last. And that means getting rid of those political leaders whose first loyalties are to these industries and not to the American people.

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