Today’s events in Venezuela underline the fact that the United States is in a jam. All we want to do is pay people lots of money for their oil and what do they do in return? Burn US flags, subjugate women and blow up stuff. I had no idea that wanting to pay people lots of money for their oil was such a big deal.

The sad thing is that I don’t see too many good alternatives out there to paying people lots of money for their oil. Fusion will be a long time coming, coal is dirty, I hear that nuclear has this problem with radioactivity and then there’s wind power but that kills ridiculous numbers of birds and stuff. What are good energy loving Americans to do? We could go take ownership of Venezuela and get our oil for cheap but the Democrats would probably object to that. We could allow things to continue on the course they’re headed but funding terrorism so we can drive 40 miles to work from the house in the suburbs seems a bit unsustainable.

So there are many dimensions to this problem but I have a solution for it all – long-term interest-free government loans to purely solar energy utility companies.

Government meddling isn’t the sort of thing that I’m extremely excited about, usually, but here’s a case where I’ll make an exception. The current dearth of solar power plants is influenced by the fact that it takes a long time for solar installations to pay for themselves which means they’re a low margin business. This FAQ estimates between 10-15 years for a residential system to pay itself off but it also notes that if a long-term loan is used to purchase the equipment, the system can pay for itself immediately.

So with interest-free loans (and maybe even startup grants) the government makes it easier to make the small margins work for solar power business. Add to that the potential benefits of rebates or payments for carbon offsets and a solar power utility becomes almost plausible.

What do the American people get from this program? After all, government funding means that the people, through their taxes, would be paying for this program and should therefore expect some benefit. Understanding that massive scale solar energy production programs would take time to come on line, the benefits in the immediate term would be low. We would, however, begin to reap very significant benefits in a relatively short period of time in two ways and we would reap these benefits without significantly retooling our economy.

First, we would become relatively more shielded from geopolitical shocks than we are now. Because so much of our economy is tied to oil, and the price of oil is tied in part to the state of the nations that produce oil, we see price shocks as a result of everything from botched elections in Nigeria to aggressive posturing in Iran. Reducing our demand on the products of these nations will reduce the impact of their bad behavior on our economy, not because prices will stop gyrating but because the impacted portions of our economy will be fewer.

Second, our economy will be strategically placed to take advantage of the impending energy crises that will be impacting the developing nations of the world, in particular India and China, as their thirst for oil continues to grow. While their demand increases and further inflates prices of oil, our demand will decrease. This will in turn place the US in the unique position of being not only a world leader in technology and services but also a reasonable place to do manufacturing due to lower and more stable energy costs (see below). A lot of outsourcing could be turning right around if investments in domestic energy production take place now.

And from the perspective of a long term investment, there aren’t too many better alternatives than solar power. Do we really think demand, and therefore cost, of energy is going to be going down any time soon? Once the financing is set and the station is in place, there will be little fluctuation in the cost to produce power at a solar plant contrasted against the costs faced by other means of production.

Here are some resources that I read that inspired by thinking:

About 13.6 acres are required to produce a megawatt.

Some alternative uses of sites that are blighted or otherwise undesirable.

Doing the math about solar energy around the nation.

Wikipedia providing some perspective on general energy use in the US.