Published on March 13th, 2008 | by Timothy B. Hurst7
‘Feast or Famine’ Cycles of Clean Energy Development in the US (part II)
The Solar Thermal Edition
In my first post about the feast or Famine Cycles of American Clean Energy Development, I discussed renewable energy more broadly and used the example of wind to show my point. I also touched upon the up and down nature of federal funding for renewable energy deployment in the late 70s and early 80s. With that said, the following examination adds some more context with a historical-institutional perspective of what went down in the early 80′s, how, and why. And in the spirit of some of the earlier posts this week that covered the technology of solar thermal, and the practical application of solar thermal technology to entire neighborood developments, I have decided to follow suit by writing about solar thermal as well. I hope to show that the decline and slow fazing out of federal support for solar thermal research and development during the Reagan and George Bush administrations has had a substantial effect on where the industry is today.
In 1976 Congress began giving serious consideration to enacting federal solar tax credits as a subsidy to lower the cost of solar energy systems. New Mexico, followed by California, had already passed state tax credit incentives to aid the budding industry. Unfortunately, the debate over national incentives had a negative impact on the growth of the solar industry. It seems that when it appeared Congress might pass legislation, consumers stopped buying in anticipation of new federal incentives. The pause in market confidence deepened in 1977 and lasted over a year.
But after a major energy message President Carter gave in April of 1977, the federal government responded with a grant to consumers of $400/system for residential water heaters in eleven states. This federal program ultimately allocated funding for 10,000 solar water heaters to the eleven states involved.
However, in anticipation of another tax credit for solar energy systems, production actually declined in 1978. But in April of that same year, Congress did pass solar tax credits in the National Energy Act. Consumers eventually received a credit equal to 40% of the cost of their systems (the same figure in the tax credit just passed by the House).
At the time, Carter’s goal was the installation of 2.5 million active solar systems by 1987 – a figure the industry would fall well short of.
When President Ronald Reagan took office, it quickly became evident his senior energy advisers did not believe solar energy should be a priority. Add to this a President who had a strong belief that governments should not be involved with supporting the commercialization of new technologies, something that Carter was a strong supporter of.
According to LaPorta (1996), the Reagan administration “reoriented the Department of Energy away from commercialization programs and towards the support of high-risk, long-range research and development.” Reagan also tried to repeal the solar tax incentives before they would expire. By 1985, funding for both passive and active solar fell from $89 million in 1980, to 10 million by 1985. And by the the end of the eighties and the beginning of the nineties, federal support had slowed down to a trickle of $2 million or less per year (LaPorta 1996) – just a fraction of what investment numbers had been ten years earlier.
Photo: Radford University