Readers Question: What effect it will have (on electricity market) if there is an introduction of subsidies to consumers who install green energy sources e.g. solar panels?
If there is a subsidy to green energy sources it will shift supply (of solar panels) to the right and therefore reduce the price of solar panels. The effect will be a slight reduction in demand for conventional electricity sources as some people now get energy from solar panels.
Diagram Showing Effect of a Subsidy
However, even with a subsidy solar panels would be an expensive investment. Generally consumers are unwilling to invest money now, if it requires several years to make a return. Therefore, demand for solar panels is quite inelastic. In the short term there will only be a very small reduction in demand for conventional electricity.
A more effective way to increase renewable energy sources would be government regulation to require new houses to be fitted solar panels.
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I agree to that. Solar panels are costly, but still the feed-in tariffs can give every homeowner a tax-free income per year. It’s an advantage in the part of the homeowner because they can get more benefits from the product. Click this site for more facts about solar panels and feed-in tariff.
The coalition government have protected incentives for domestic solar pv installations by restricting feed in tariff levels for systems above 50kW. Now is the perfect time to invest in solar panels before the FIT levels drop in April 2012.
Solar Panels are a great way to warm up your house and recharge your laptop.
Thanks for a good read. I agree that it can take a while before your investment in solar panels returns. But on the other hand, it is a very positive thing for our environment and it really helps!
It took me some time before finally doing it, though. But I’ve stopped worrying about my energy bill since I got them installed, which is a big relief.
Solar panels provide clean and renewable energy. I use one, and I’m really happy with it.