The Defense Production Act as a Political Tool to Boost Solar Farms

Courtesy Dominion Energy

by James C. Sherlock

We have had multiple discussions, good ones, on the issues surrounding solar farms in Virginia.

Jim Bacon wrote an excellent column about it in February of 2021 titled “The Political Economy of Solar Farms.” It was good then and prescient as of yesterday.

He wrote another one two days earlier.  From that piece:

With the enactment of the (Virginia Clean Economy Act) VCEA, Freitas wrote in the press release, Virginia is experiencing extensive land leasing and acquisition by solar developers. More than 180 solar projects accounting for 140 million solar panels are in various stages of approval or construction. Full implementation of the ACT would consume 490 square miles of Virginia’s forests and farmland, an area twenty times the size of Manhattan.

Thanks to President Biden’s new political/industrial policy, those solar farms just got cheaper. And Chinese solar stocks just got more expensive.

Both of which were made to happen because the President removed the tariffs on Chinese solar panels. Readers rationally can be for that action or against it. But the left has settled on the Defense Production Act as a favored service animal.

So, the President, in addition to removing the tariffs, invoked that act as a national emergency response to mandate additional domestic production of solar panels.

Let’s try to pin down the nature of the emergency and the unintended consequences.

Tariffs. President Trump famously put additional Chinese tariffs in place as a punishment for hiding the emergence of COVID.

Consultants like KPMG made great amounts of money advising foreign firms how to avoid the tariffs. Other consultants made fortunes lobbying politicians to eliminate them. Virginia’s deep-pocketed greens, including newly-green Dominion Energy, lobbied the General Assembly to preserve the VCEA.

President Biden wanted the tariffs eliminated. Fair enough. Eliminate them.

National defense emergency? But he declared a national defense emergency to activate the Defense Production Act both to accompany and to justify eliminating those tariffs.

Seriously? What could go wrong?

Can consequences be both predictable and unintended? They can in BidenWorld. The Presidents’s thinking: “We’ll fail to deal with them later.”

National industrial policy is hard. Did anyone tell Mr. Biden that eliminating tariffs on Chinese solar panels will at best disadvantage domestic producers in that market? Did he invoke the Defense Production Act to replace those soon-to-be-broken businesses?

Or are they to be the subjects of new subsidies? You can never tell in the national industrial policy arena. Perhaps a five-year plan with production quotas will work.

The President did not indicate which American industries are supposed to convert their production lines to build solar panels. I guess we will find out. It will be very interesting to find out what they are ordered to stop producing.

That supply chain thing again.

Or maybe they can hire skilled labor from the existing solar producers that go out of business.

Nobody said national industrial policy is easy. If it were, the Soviets could have done it. Oh, that’s right.

Grid reliability is hard. From The Wall Street Journal:

Boosting domestic production of solar panels, heat pumps, building insulation, fuel cells and power transformers can reduce “risks to our power grid,” the White House says.

The North American Electric Reliability Corporation recently warned that most of the U.S. could experience power outages this summer. Blame green-energy subsidies that have forced the shutdown of fossil-fuel and nuclear generators that provide baseload power 24/7. Relying on electric heat pumps and solar panels will make the grid less reliable.

A political emergency requires action. President Biden did not declare that his green base and his party’s biggest donors love solar. Including those who have invested heavily in solar farm acreage. Like Dominion Energy.

The next stop in the emergency list — wind turbines. Another big investment of Dominion’s, or I should say of Dominion rate payers.

GE is the biggest American producer. It’s stock is below its 50- and 200-day moving averages. Danish company Vestas, the world’s leading wind turbine maker, is losing money. The stock of Siemens, the other large western producer, is at half of what it was in January.

The other four of the world’s top seven wind turbine producers are Chinese. Perhaps Mr. Biden can cut their tariffs. That should help. And maybe Ford can convert its production lines to wind turbine production. With laid off Danish engineers and production workers on special visas.

Even the State Department has to lean into a national emergency.

But they have broken out the champagne at Dominion. Someone else will have to worry about grid reliability.

Because the fall elections constitute a national emergency for the President.