Boy, has this guy got chutzpah. Only a complete economic moron could seriously support such a preposterous proposal. And Kaese is no moron. His response to critics of his company's economically insane project is to declare that they represent vested interests that need to be ignored. Irrespective of Siemens' assertions to the contrary its ridiculous solar project is not sustainable in anyway whatsoever. It would require a permanent flow of massive subsidies to survive, even then there would still be huge rises in electricity prices with devastating consequences for industry. In other words, buying a solar project from this mob would be like buying a bridge from a Brooklyn taxi driver.

Siemens — and therefore Kaese — knows that the economics and science of solar energy make it impossible for it to replace centralised electricity generation. Yet the company has the gall to tell gullible politicians and journalists the exact opposite. Given this fact I cannot see how Siemens — and those companies engaged in similar actions — can be described as anything other than corrupt. (One could argue that this situation is an excellent example of how government intervention in the market place can so easily lead to corporate corruption.)

All that is needed to prove my case is the example of the Florida Power & Light Group's solar plant. It was built next to their Florida natural gas electricity generating plant in Indiantown at a cost of US$476 million. The contrast was striking and unintentionally provided the kind of comparison in energy production that solar fanatics ordinarily try to avoid. The plant occupies 500 acres and can generate a maximum of 75 megawatts (that's 75 million watts for those journalists who think you can run an economy on sunbeams) whereas the gas plant generates 3.8 gigawatts (3.8 billion watts!) on a mere 15 acres.

This means that the gas plant can generate 1 gigawatt whenever needed on 3.95 acres. To generate the same amount of electricity from our solar plant (and then only during the hottest part of the day) would require 6,666.7 acres. (These are the sort of figures that only innumerate economic illiterates that infest the media could love. No wonder Siemens has had an easy time of it.) Bad as this is, the reality is even worse. Whichever way one looks at it, solar energy is grossly inefficient. Nevertheless, Siemens is apparently spending a great deal of money trying to foist this monstrous swindle on the Australian public.

Siemens could argue — and I would love them to try it — that improvements in efficiency will eventually make solar competitive. Really? What makes solar inefficient is not an immature technology but the scientific fact that the maximum amount of solar energy striking the earth under optimum conditions is just under one 1 kilowatt per hour per square metre. That is approximately 11 square feet.

There is absolutely no way that this natural obstacle can be overcome, unless Siemens is planning on buying us a bigger sun. In plain English, it is the diluteness of solar energy that makes it grossly and irredeemably inefficient from an economic perspective. Furthermore, the diluteness leads to terrible diseconomies of scale (Carbon taxes energy production and technology: more green nonsense).

Unfortunately our rightwing have let us down very badly on this issue. Alex Robson¹, for example, bases his criticism of alternative energy sources on the Treasury's  cost benefit analysis. If he had bothered to think seriously about the diluteness of solar energy as well as capital theory he would have realised that the Treasury's figures are absolutely worthless, irrespective of any discount rate they use. Des Moore and Sinclair Davidson satisfy themselves with the banal observation that a carbon tax would lead "to less efficient production techniques".

This invites greens to argue that "renewable energy" techniques will become more efficient in time, for which Davidson and Moore have no answer. Yet it is self-evident that if Moore and Davidson had bothered to do the necessary research they could easily have refuted the green case for alternative energy. Instead, they played into the hands of the greens by inadvertently giving the impression that improvements in technology can solve the inefficiency problem.

This returns us to the destructive carbon tax, which I am told Siemens has been secretly funding. (Some so-called defenders of the free market are cheaply bought.) By heavily taxing carbon you destroy those capital combinations that release the largest amounts of carbon. By pure coincidence a good many of these would be coal-fired power stations. Defenders of the tax then have the nerve to argue that this is a free market result, a spurious argument that Siemens and similar companies enthusiastically endorse.

But the effects of the tax make it clear that it is a direct tax on capital — the material means of production — a fact that its defenders are desperate to bury. (Carbon taxes versus living standards and Why the ETS report and Rudd's carbon tax are a threat to the economy). Once this is realised we get a true glimmering of its devastating consequences for the standard of living.

Ray Evans, Secretary of the Lavoisier Group, gets it, or at least some of it, with respect to a carbon tax and the true costs of so-called 'renewable energy' sources. (Oddly enough, when I raised similar objections I was met with a hail of abuse by a mouthpiece for Greg Lindsay's Centre for Independent Studies. Now why was that, Lindsay?) Alan Moran basically made the same point as Evans². Although, in my opinion, Evans was more forceful he, like the others, completely missed the vital question of the diluteness of solar energy and the importance of the country's capital structure.

¹I'm a little tired of those economists who claim to have studied Hayek while revealing a staggering ignorance of his work on capital, booms and busts, and monetary theory. One of them once bragged to me about his knowledge of Hayek yet he had never heard of "forced savings", conclusively proving he had not actually read Hayek. Equally annoying is their insistence on ignoring the fact that Hayek is a prominent member of the Austrian school of economics. To speak of Hayek while ignoring the Austrian link is a bloody disgrace.

²Although some members of our rightwing have privately made scathing comments about Greg Lindsay's "treachery" none of them have been prepared to go public.

Gerard Jackson is Brookesnews' economics editor

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