The Chinese students brought this technology back to China and then the Chinese government said, okay, we are going to subsidize the production of this technology.
In 1953, the US purchased the first commercial silicon solar cell from Bell Labs. Although these first solar cells were not efficient, if used to generate electricity, it would cost $300,000 a month. However, fast-forwarding to the present day, solar energy is nearly 90% cheaper than in 2009 and in many places, it is now cheaper to generate electricity with solar than with coal, natural gas, or nuclear power. This is an unqualified success story and if the right lessons are taken from it, this story can help us create and deploy the other technology needed to keep our planet livable.
This success can be attributed to several factors. In the 1970s, with the oil crisis, research and development for alternative energy was heavily funded. With Project Independence, the US federal government allotted more than $8 billion to solar research and development, which doubled the efficiency of the cells. Japan also funded solar research and development, and the Japanese government announced a major subsidy for rooftop solar in the mid-90s.
Germany also played a major role in the success of solar energy. In 2000, the German government promised to buy renewable energy from power companies at double the market price for the next 20 years. This incentive led to the construction of solar farms and the installations of solar went up by a factor of 4.
Finally, China also contributed to the success of solar energy. In the 1980s, Deng Xiaoping sent a group of students to the University of New South Wales in Australia to work with a team that was producing some of the most efficient solar cells in the world. The Chinese students brought this technology back to China and the Chinese government subsidized its production. This allowed for solar energy to become cheaper than even Paul Maycock could have imagined. After a few years, one of those students went back to China and opened up the country’s first commercial solar manufacturer, Suntech, in 2002. With that new German law in place, the company had so much success selling solar panels to Germany that it attracted competitors, which helped drive down prices due to the unprecedented scale of production. Policymakers around the world noticed the falling prices and wrote laws to create new markets in their countries, including the United States.
The United States passed an important law, the Energy Policy Act 2005, which included an investment tax credit that allowed businesses to receive 30% of the cost back for a solar project. This sparked a phenomenon called solar leasing, where companies would look for places to put solar to reduce their federal tax payments. Other policies helped create markets for solar modules in Spain, Italy and China. The Chinese devised their own subsidy program that was modeled on the German one, providing a guaranteed price. By 2011, China was not only the biggest producer of solar, but the biggest producer of solar electricity.
In the course of a single lifetime, solar energy has transformed from a niche technology to the cheapest way to bring clean, reliable power to billions of people around the world. The markets that brought us these lower prices were created by political leaders in countries all over the world, who subsidized them for decades to the tune of billions of dollars. By investing that money, the cost of solar was reduced to the point where subsidies were no longer necessary. We are now using this same approach with batteries, electric vehicles, and heat pumps. Solar has provided us with a playbook for how to do this for other technologies.