Alexander Hamilton and the principle of infant industries

December 31, 2015 at 11:08 am

Alexander Hamilton on the $10 bill.

Recently, Republican utility regulators in Nevada rolled back incentives for solar energy. One of the big arguments put forward is that these subsidies “distort markets.”

In 2013, fossil fuels accounted for 115x the amount of production from solar energy. Source: Forbes In 2013, fossil fuels accounted for 115x the amount of production from solar energy. Source: Forbes[/caption]

Solar power accounts for roughly 0.7 quadrillion Btus of annual power generation compared to 81 quadrillion Btus of annual power generation from fossil fuels.

In other words, the energy market is already “distorted.” If you think about it, we all know the problem with these distortions. It’s hard to break into a market already dominated by big existing players. Even if something better exists.

Here’s a little bit more about how markets work.