The power of the sun is what makes life on Earth possible. Efforts to harness solar energy in concentrated form have long been a human pursuit. Solar technology has existed since the 19th century and has received substantial government support since at least the 1970s. Despite vast amounts of subsidies, solar power comprises less than 1 percent of US electricity generation and should no longer be propped up by taxpayer dollars.
Initial Development of Solar Power
The development of solar cell technology, or photovoltaic (PV) technology, began during the Industrial Revolution when French physicist Alexandre Edmond Becquerellar first demonstrated the photovoltaic effect, or the ability of a solar cell to convert sunlight into electricity, in 1839. About four decades later, American inventor Charles Fritts created the world’s first rooftop solar array in New York in 1883, one year after Thomas Edison opened the world’s first commercial coal plant. Fritts coated the panels with selenium to produce a very weak electric current. However, the process of how light produces electricity wasn’t understood until Albert Einstein wrote a paper explaining the photoelectric effect in 1905, which won him the Nobel Prize in physics in 1921. Becquerellar’s and Einstein’s research formed the basis of future developments in solar technology.
The modern photovoltaic (PV) cell was developed by Bell Labs in 1954 and while solar power remained too costly for commercial use, the U.S. military funded research on PV technology’s potential to power satellites in the 1950s. The U.S. Naval Research Laboratory launched Vanguard I, the first spacecraft to use solar panels, in 1958, and NASA launched the first satellite equipped with panels that tracked the Sun, Nimbus I, in 1964. The U.S. government pioneered much of the early PV technology.
The federal government’s oil price controls of the early 1970s, followed by the Arab oil embargo of 1973, and the federal government’s Emergency Petroleum Allocation Act of 1973 created an energy crisis in the United States. This energy crisis catalyzed the federal government’s commitment to develop solar energy. Congress passed five energy bills in 1974, two of which cited solar power as a potential solution to the energy crisis. The “Solar Heating and Cooling Demonstration Act of 1974” ordered the installation of solar heating and cooling units in federal buildings by 1977 to acclimate the public to the new technology.
Essentially, Congress was attempting to turn federal buildings into billboards for solar energy, and it simultaneously passed additional legislation to mobilize several government agencies for research and logistical support to make solar technology affordable. Congress passed the “Solar Energy Research, Development and Demonstration Act of 1974” to create the Solar Energy Coordination and Management Project, an organization designed to direct agencies like NASA, the National Science Foundation, and the Department of Housing and Urban Development to improve solar energy technology and use it to heat and cool government-owned buildings. The act also created a new federal office, The Solar Energy Research Institute, to conduct research and facilitate the industrial use of solar power. The Institute, which began operating in 1977, still exists today as the National Renewable Energy Laboratory.
The Energy Research and Development Administration (ERDA), another organization created by the 1974 bills, was responsible for delivering comprehensive reports on the development of the agency’s solar program to the highest levels in government, including the president and congressional leadership. The overall goal of the agency was to commercialize solar energy. ERDA installed solar heating and cooling buildings in schools, placed government-sponsored systems in commercial buildings, and built the largest solar installation in the world in New Mexico.
The creation of new energy policies continued throughout the 1970s. President Carter labeled the energy crisis as the “moral equivalent of war,” and made energy policy a top priority of his administration. President Carter signed the Department of Energy (DOE) Organization Act in 1977, and the agency was activated on October 1 of that year. Congress passed the Public Utility Regulatory Policies Act of 1978, which, among other things, laid the foundation for future net metering policies by requiring utilities to purchase electricity from “qualifying facilities” such as distributed solar generation.
The goal of this coordinated federal effort was to make solar viable and affordable and market it to the public. Thus, through the Energy Tax Act of 1978, Congress created the commercial investment tax credit (ITC) and the residential energy credit (or residential ITC) to provide financial incentives for the public to purchase solar properties. The residential energy credit was calculated at 30 percent of the first $2,000 spent on qualifying solar expenditures and 20 percent of the next $8,000 spent on solar for a maximum of $2,500.
To further push solar toward commercialization, Congress passed the Solar Photovoltaic Energy Research, Development, and Demonstration act of 1978 directing the DOE to “prepare a plan for international marketing of PV systems.” At the signing, President Carter framed the bill as authorizing “an aggressive program of research, development, and demonstration of solar photovoltaic energy technologies” and said its “long-term goal is to make electricity from photovoltaic systems economically competitive with electricity from conventional sources.”
Despite the government-wide commitment, the credit failed to have the desired effect of increasing America’s use of solar power, as solar comprised a negligible amount of electricity generation. President Carter even tried to generate interest among Americans by installing solar panels on the White House in 1979. Opponents of the energy credits in Congress argued that the credits were ineffective and geared toward the wealthy. In 1979, Representative Bill Frenzel remarked:
The principal tax credit bill we passed last year does not seem to have given great incentive in the marketplace… The tax credit does not motivate, but rather simply occurs at the end of the year when the fellow finds there was a tax credit available. And I do not think that is a very efficient and effective stimulus.
Opposition in the House of Representatives successfully phased out billions in energy tax incentives in the Crude Oil Windfall Profit Tax Bill of 1980, but both solar tax credits were extended through the mid 80s. While the residential ITC expired in 1985, the commercial ITC was set at a 10 percent rate in the Tax Reform Act of 1986 and extended four additional times until the Energy Policy Act of 1992 made it permanent.
Declining domestic oil production and rising oil imports throughout the early 2000s helped lead to the passage of the Energy Policy Act of 2005 (EPAct), the first omnibus legislation dealing with energy policy since 1992. President Bush said at the signing ceremony that the bill “launches an energy strategy for the 21st century,” citing “high gasoline costs” and “the rising dependence on foreign oil” to justify the legislation. EPAct raised the commercial ITC to a temporary 30 percent rate and reinstated the residential ITC after a 20-year hiatus. The residential credit was capped at a $2,000 benefit for PV solar installations and was scheduled to retire at the end of 2007.
The Tax Relief and Health Care Act of 2006 extended the credits through 2008 and opened the residential credit to all solar technologies, eliminating the previous language that limited it to PV property. Through the Emergency Economic Stabilization Act of 2008 (P.L. 110-343), also known as the “bailout,” Congress extended the ITC again through 2016 and eliminated the $2,000 cap for solar PV properties in the residential credit.
The American Recovery and Reinvestment Act of 2009, also known as the federal stimulus, extended massive new subsidies to the solar industry. One of the most significant and expensive energy policies in the stimulus was Section 1603, which allowed companies to take a cash grant equal to 30 percent of the cost of their solar system in lieu of the ITC. It also funneled money into the Department of Energy’s (DOE) section 1705 loan guarantee program, which has been one of the Obama administration’s primary methods for funding renewable energy projects, including $535 million to the infamous Solyndra.
In addition to tax credits and grants, the government continues to heavily subsidize the industry with research and development, commercialization, and regulatory support. The Government Accountability Office found that there were at least 345 solar-related initiatives supported by six government agencies in 2011 and 2012.
As a technology that has been around for well over a century, solar power is neither novel nor new. Nevertheless, the government has given vast sums of money to the solar industry since the 1970s, and the stream of special interest handouts has only accelerated in recent years.
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