Chapter 4: U.S. Technology Push
The combination of federal funding, new institutions, procurement, and crucially, expectations that PV’s time for commercialization had arrived entrained thousands of people to the field and matured the industry to become more international, more cost conscious, and more specialized.
The 1970s transformed PV technology and the industry by making energy issues a top social priority for nearly a decade. Cell efficiencies tripled, costs fell by a factor of five, innovative policies were adopted, and thousands of people entered the field. This burst of activity was concentrated in the U.S., which since the 1940s continued its role as the global leader in PV until the mid-1980s when the U.S. federal government purposively dropped PV as a priority technology and thus shifted the focus of effort to other countries.
The Arab Oil Embargo in October 1973 quadrupled the price of oil over three months and instantly put energy issues at the center of public debates in the U.S., Japan, and other countries affected by the price shock. President Nixon launched Project Independence and made energy the centerpiece of his 1974 State of the Union address—a dramatic change in that energy had never existed as a distinct policy area before.
Although PV was never more than on the sidelines of the US government response to the pressing energy security challenges, the crisis was still transformative for the industry. The embargo opened a massive policy window, which the industry was well poised to take advantage of due to efforts that preceded the crisis. Momentum had been building in solar before the embargo and the Cherry Hill Conference on R&D priorities for PV took place fortuitously just the week after the embargo.
The U.S. Federal government primarily adopted a “technology push” approach investing $1.7 billion in PV R&D from 1974 until 1981 when budgets were slashed. Ninety precedent of that $1.7b was under the four Carter Administration budget requests. While much progress was made, ambitious plans for making PV competitive with oil-fired electricity production by 1986 and grid electricity by 1990 were far from met.
Key U.S. institutions were established during this period including the Department of Energy (DOE) and the Solar Energy Research Institute (SERI), which was later renamed the National Renewable Energy Laboratory (NREL). Novel policies emerged such as a public procurement program known as the Block Buy and an early version of a feed-in tariff in California known as the Interim Standard Offer Contract #4. The combination of federal funding, new institutions, procurement, and crucially, expectations that PV’s time for commercialization had arrived entrained thousands of people to the field and matured the industry to become more international, more cost conscious, and more specialized.
The US program attracted people from around the world to work in the US, to contribute to the US effort, to visit, and to study. The federal emphasis on solar peaked in 1979 with the highest PV R&D budget in 1980. Thereafter PV became a lower priority and with the election of President Reagan in 1980, the US PV program was systematically dismantled. Combined with the crash in energy prices in the mid-1980s, the surviving firms in the industry were left to survive on niche market applications. As a result, the knowledge developed in this period—on the technology, on manufacturing, and on policy design—migrated to other countries where prospects for support and for markets looked far brighter, such as Australia, Germany, and Japan.
From a National Innovation Systems (NIS) perspective, the U.S. followed its highly successful strategy that began post-World War II with the notion that public investment in scientific research is the key to developing the technologies to improve society and bolster economic growth, and which was used to justify the establishment of the National Science Foundation). This idea, sometimes known as “technology push” was central to the success of the Manhattan Project and the Apollo Project. Indeed, Nixon cited those two programs specifically when he announced Project Independence. The ten billion dollars spent on energy R&D in the Project Independence era was of the same order of magnitude as those other two projects, higher than Manhattan and lower than Apollo. A quite critical review of large U.S. R&D programs pointed to PV R&D in this era as a much more successfully run program than the other programs. The emphasis on high technology and military applications was strongly representative of the US NIS. PV also revealed a split in conceptions of where the US NIS should be headed around 1980. The demand-pull advocates pursued an activist strategy in which the government should become active in procuring early technology as had been successful in jet engines and semi-conductors. A distinct approach emerged with the Reagan Revolution of 1980, which advocated a return to the early Post-WWII technology-push emphasis, albeit a quite limited version, in which the government should fund only basic research and leave it to the market to create opportunities for those nascent technologies. The Block Buy program was an initial demand-pull program that in 1981 was cut severely to move to a technology-push-light strategy, in which the government focused only on basic research.