Over at Powerline, John Hinderaker posts about the limitations of solar energy in the north, when snow cover reduces the output of electricity. He also points out why utilities are pushing to construct more renewable generation facilities. He sums it up nicely in his concluding paragraph:
It is all about the rate base. Any capital expenditure that goes into a utility’s rate base provides a guaranteed return. Whether the expenditure makes any sense in terms of providing reliable energy is another matter altogether.
John is exactly right. Utilities like to build new infrastructure, because they can recover the costs of construction plus a nice profit. As John points out in his post, the utility Xcel Energy gets a guaranteed 7.5 percent profit on every dollar they spend on power plants, including solar panels, whether they produce electricity or not.
John’s post is well worth the read.