Solar Power Disadvantages

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Solar power is seen as an alternative energy that generate positive externalities in the society. It is a renewable source of energy that generates electricity as long as the sun exists, and it does not create pollution like fossil fuels do. Thus, solar power creates spill-over benefits to the society by enhancing the quality of air through reducing gas released by the burning and combustion of fossil fuels. Figure 1. Positive Externality of Solar-Powered Cold Storages Production Currently the solar powered cold storages are supplied at quantity Q1 at the price of P1. Here, marginal social cost is lower than the marginal private cost experience by firms. Thus, at the price of P1, there appears to be too little being produced. At P1, the…show more content…
It is very expensive, and especially in this case, conventional cold storages cost half that of solar-powered ones. Thus, the government may have to reduce expenditures elsewhere in the economy, or it may have to raise taxes. As a result, opportunity cost of granting subsidy to the solar power industry must be considered; for example, the government could allocate its budget on education and vaccinations instead. 30% of India’s fruits and vegetables are wasted due to shortage of cold storage facilities. If the government extends subsidy to solar-powered cold storages, the producers will be able to increase their supplies of fruits and vegetables to consumers in India. Figure 4. The Fruits and Vegetables Market in India The supply curve shifts to the right from S1 to S2, which automatically leads to a decrease in the price from P2 to P1. Demand for fruits and vegetables is generally regarded as inelastic due to their nature. Hence, the demand curve does not necessarily shift to the right. Due to the rightward shift of supply, equilibrium shifts from E1 to E2, resulting at a more efficient quantity with lower price. Here, workers who are trying to find new jobs are better off, because as output expands from Q1 to Q2, firms are likely to hire more workers to produce extra output. In figure 5, in the long run, a successful supply side policy will lead to an increase in the production possibility curve (PPC). Shift of production from point A to point B allows maximum employment of resources, resulting in overall economic growth of
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