U.S. Solar Policy Reform Called for in New Study

solar policy

According to a new Stanford study, the fast growing solar energy industry could only contribute to curbing climate change meaningfully if the private sector and governments approach it more efficiently and economically.

Scientists from Stanford’s Steyer-Taylor Center for Energy Policy and Finance urge the United States to reassess a wide selection of its solar energy policies. Doing so could maximize the industry’s long-term benefits to the U.S. economy and the global climate.

A significant recommendation is that China, as the major driver of the global solar industry, and the United States work closer together. In doing so, each country should take advantage of on its own specific strengths.

Dan Reicher is the executive director of the Steyer-Taylor Center, a joint research center involving Stanford Graduate School of Business and the Stanford Law School. As co-author of the report, Reicher notes that the Chinese are not only the world leader in terms of the manufacturing of solar equipment, but they are also the largest user of solar energy.

Reicher added that although the U.S. has historically dominated the research and development area, the Chinese are getting increasingly competitive in that arena. He believes that with a new federal administration and a new congress, the time is ripe for the U.S. to be thinking about what they want their role in the solar industry to look like five, or ten years from now.

Only about one percent of global electricity is currently supplied by solar power. The International Energy Agency does however predict that solar photovoltaic technology could grow to 16% by the middle of this century. Other sources predict even bigger growth.

The researchers suggest that the U.S. government embrace a globalizing solar industry and prioritize plans that decrease the cost of solar power. They also recommend that it should continue investing in the deployment, and research and development of solar energy.

Jeffrey Ball, the scholar in residence at the Steyer-Taylor Center and the report’s lead author notes that right now, a huge amount of money is being thrown into solar energy. He added that the team is attempting to identify public policies and private financing mechanisms that would result in money being spent more efficiently and economically, thus scaling up clean energy for all.

Substantial funding from the U.S. government has helped R&D of solar technologies. The Stanford group recommends that the U.S. increase spending on solar research and development and encourage international research collaborations between the U.S. and China. They note that although such collaboration might raise concerns such as national security and intellectual property protection, cooperating intelligently is key to solar power’s growth.

It is also suggested that a specific federal policy should be reformed. This policy requires that those who accept U.S. federal funding for solar R&D pledge to manufacture the resulting technologies in the U.S. “substantially”. This policy may be diminishing the quality of the research ideas being funded by the federal government. The researchers feel that solar manufacturing has a lesser long-term economic value to the U.S. than solar R&D does.

Reicher, who also serves as a non-resident senior fellow at the Brookings Institution notes that a number of decisions the U.S. government is in charge of making will have serious repercussions for the future of the U.S. solar industry. He feels that this is a good time to consider them in depth.

The researchers also debunked several myths about the current state of China’s solar industry that are widespread in Western countries.

There is for instance a perception that China’s solar market is largely closed to foreign investment. The researchers however found that China’s dominant solar companies are progressively using international capital and expanding their operations across the world.

The study also found that top Chinese corporate executives and officials are keen to apply a range of more efficient financing mechanisms that have been used in the West. This would scale up solar deployment in China dramatically. According to the report, this interest on the part of Chinese leaders represents a valuable opportunity for America and other countries in the West.

Another Western perception is that China doesn’t innovate, but imitates to bring down its manufacturing costs. Although manufacturing processes have always been China’s strength, the country is escalating its solar R&D efforts and Chinese researchers are producing increasingly noteworthy results in solar research.

Trina Solar is a Chinese company and one of the world’s largest solar manufacturers. It was recently recognized by the U.S. National Renewable Energy Laboratory as having achieved a world record in the efficiency of a laboratory scale solar cell.

Ball concluded that China has very ambitious targets for solar and that it already dwarfs the U.S. as a manufacturer and deployer of solar. The United States should not try to beat China, but should play to U.S. comparative advantages by crafting policies to reduce the cost of solar power for the benefit of the world and, as a result, for the benefit of the U.S.