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Solar Power’s Time to Shine?

Monday, May 14, 2007

Thanks to cheaper solar cells, the technology may finally be economically viable, says a new book.

Solar Revolution: The Economic Transformation of the Global Energy Industry by Travis Bradford (The MIT Press, September 2006)

Solar RevolutionI have a confession to make: I’ve never been concerned about energy.

I’m not worried about running out of fossil fuels because, as the marginal price of each barrel of oil increases, developing new technologies will be more cost-effective. Remember when we were supposed to run out of copper for the world’s wired telecommunications network—and then found out about fiber optics?

Instead, I’ve always been of the Economics 101 school that, at least until we reach the Star Trek world of replicaters that will obviate scarcity—and thus economics itself—the invisible forces of supply and demand will always fuel, as it were, exploration, development, and innovation. Necessity is, as the saying goes, the mother of invention.

Travis Bradford, financier and now president of the Prometheus Institute for Sustainable Development—a nonprofit dedicated to bringing the power of the business sector to bear on the development of sustainable energy—argues that solar power will step in to energize our economy when fossil fuels become too expensive and impractical. In Solar Revolution, he outlines a possible future in which we move to heavy reliance on solar power.

Developments in the photovoltaic (PV) industry over the last ten years have made direct electricity generation from PV cells much more cost-effective. The idea that solar cells appeal only to a niche market of the crunchy left-wing elite is a relic of a time when the cells cost more and the economic rationale for using them was correspondingly weaker. Bradford shows that PV electricity has already become the choice of hundreds of thousands of mainstream homeowners and businesses in many markets worldwide, including Japan, Germany, and the American Southwest.

PV-based energy systems are attractive, Bradford emphasizes, because they can bypass the aging and fragile electricity grid and deliver their power directly to the end user, fundamentally changing the underlying economics of energy. And as the scale of PV production increases and costs continue to decline at historic rates, demand for PV electricity will inevitably create its own supply of such systems.

The idea that solar cells appeal only to a niche market of the crunchy left-wing elite is a relic of a time when the cells cost more and the economic rationale for using them was correspondingly weaker.

Of course, the tale of a coming solar panacea has been told for decades, at least since the new class of post-war homeowners discovered they could heat their new kidney-shaped pools by running water through black plastic piping on their sun-drenched roofs. As with hydrogen and ethanol (or gasohol, or any number of other trendy products) for cars, however, we never quite seem to get there.

And we’ve rejected the one technology that has long been around to solve our problems. Any time anyone mentions nuclear energy, coal and oil lobbyists, in a Bootleggers and Baptists coalition with environmentalists, raise the specter of Three Mile Island and Chernobyl. This alarmism, combined with what could possibly be the most tangled bureaucracy in the entire regulatory state, has prevented the U.S. from joining the fossil-fuel-starved likes of Japan, Korea, and France on the nuclear bandwagon.

Bradford similarly dismisses nuclear energy for non-economic reasons, such as worries about weapons proliferation, the politics of waste disposal (e.g., the Yucca Mountain imbroglio) and construction approval, and the “hidden cost” of cleanup when nuclear plants fail. As for other “alternative” technologies, he brushes aside hydro, wind, biomass, geothermal, and ocean power for various economic and geographic (or geologic) reasons.

That is, only certain places can sustain hydroelectric dams (or wind farms, or geothermal reservoirs, etc.), and energy sources generally need to be deployed on a large scale to be cost-effective—let alone to revolutionize the world’s electricity provision. (Why the analysis of solar energy—fine for Arizona and Florida, say, not viable at current energy prices for Buffalo and Des Moines—doesn’t track the same way Bradford doesn’t say.)

Whether Bradford ultimately proves prophetic or not, one aspect of this story is particularly appealing to devotees of classical economics and Hayek’s concept of “spontaneous order” in particular: The shift from fossil fuels to solar energy will take place, he argues, not because solar energy is better for the environment or energy security, or because of future government subsidies or as yet undeveloped technology. Instead, he says, the “solar revolution” is already occurring through individual decisions made by self-interested energy users.

Perhaps most controversial, and difficult to swallow, is Bradford’s contention that the coming shift to solar energy, which he forecasts using standard business models, will be as transformative as the last century’s revolutions in information and communication technologies. On reflection, however, it’s not that bold a statement: Whatever replaces oil, gas, and coal as the fuel that powers the engine of world development will understandably be seen as revolutionary.

The jury is still out on whether solar energy will fit that bill, but Solar Revolution makes a compelling case for this clean, plentiful, and renewable resource.

Ilya Shapiro is an associate at the Washington office of Patton Boggs LLP. He writes the “Dispatches from Purple America” column for TCS Daily. The opinions expressed here are his alone.

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