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  • Writer's picturePacific Sun Technologies

Making Solar Big Enough to Matter

Solar energy has become big business. Over the past decade it has plummeted in cost, surged in volume, and, as booming industries do, benefited some investors and burned others. The International Energy Agency has predicted photovoltaic solar could provide up to 16 percent of the world’s electricity by midcentury — an enormous increase from the roughly 1 percent that solar generates today. But for solar to realize its potential, governments will have to grow up too. They’ll need to overhaul their solar policies to make them ruthlessly economically efficient.

The widespread view that solar power is a hopelessly subsidized business is quickly growing outdated. In some particularly sunny spots, such as certain parts of the Middle East, solar power now is beating fossil-fueled electricity on price without subsidies.

Even where — as in the United States — solar needs subsidies, it’s getting cheaper. American utilities now are signing 20-year agreements to buy solar power at, and in some cases below, 5 cents per kilowatt-hour. Those prices, which reflect tax breaks, are in some instances low enough to compete with electricity from power plants that burn plentiful American natural gas. Solar will be all the more competitive if gas prices rise — something many predict — and as more governments impose prices on carbon dioxide emissions.

The market is concluding that solar makes sense. In part that’s because of technological advances that have made solar cells more efficient in converting sunlight into power. In part it’s the result of manufacturing scale, which has slashed the cost of solar-panel production. And, in places that tax greenhouse-gas emissions, it’s in part because solar produces carbon-free power.

But much more needs to be done. Ratcheting up solar to produce approximately 1 percent of global electricity has required a lot of technology and investment. Making solar big enough to matter environmentally would be an even more colossal undertaking. It would require plastering the ground and roofs with billions of solar panels. It would require significantly increasing energy storage, because solar panels crank out electricity only when the sun shines, which is why, today, solar often needs to be backed up by fossil fuels. And it would require adding more transmission lines, because often the places where the sun shines best aren’t where most people live.

The scale of this challenge makes economic efficiency crucial, as we argue in a report, “The New Solar System,” released on Tuesday. The policies that have goosed solar have been often unsustainable and sometimes contradictory. One glaring example: With one hand, the United States is trying to make solar cheaper, through tax breaks, and with the other hand it’s making solar more expensive, through tariffs it has imposed on solar products imported from China, the world’s largest maker and installer of solar panels.

The tariffs are prompting Chinese solar manufacturers to set up factories not in the United States, but in low-cost countries that aren’t subject to the levies. And the Chinese government has responded with its own tariffs against American-made solar goods. Those tariffs have eroded the United States share in the one part of solar manufacturing — poly-silicon, the raw material for solar cells — in which America once had a s