The scale of subsidies is in inverse correlation with the distribution of solar energy resources in some regions. Energy is the basis for development of material civilization. Since fossil energy can cause environmental problems, clean energy has become the trend of energy development. Solar energy is a kind of resource-rich and clean energy.
Governments have many reasons to subsidize energy, Duenas-Martinez says, and a variety of levers for controlling its price. “Energy is one of the main drivers of economies, and as soon as you get a spike in prices of energy—particularly when you are not the one producing them—immediately there is an impact on the economy.”
For solar panels and onshore winds farms, Duenas-Martinez says, heavy subsidies are accomplishing their goals. Those two renewables are now competitive with fossil fuels in most places, giving people a way to produce and use clean energy without paying higher energy bills.
The world’s total, direct energy sector subsidies – including those to fossil fuels, renewables and nuclear power – are estimated to have been at least USD 634 billion in 2017. These were dominated by subsidies to fossil fuels, which account for around 70% (USD 447 billion) of the total.
Subsidies to renewable power generation technologies account for around 20 % of total energy sector subsidies (USD 128 billion), biofuels for 6 % (USD 38 billion) and nuclear for at least 3 % (USD 21 billion), but potentially more, as already noted.
Subsidies that support renewable technology deployment that lead to the displacement of fossil fuels when the negative externalities of fossil fuels remain unaddressed therefore help improve the economic eficiency of the energy sector. They do this by shifting energy generation and use towards technologies that reduce those negative externalities.