Making Solar Technology a Competitive Force in the U.S.

In an effort to reframe the renewable energy conversation in the U.S., many pundits have resorted to good old-fashioned competition.

And who better to serve as antagonist? The one country that seems to make everything these days: China.

China currently makes nearly half of the world's solar modules and is far and away the world's leading producer of the silicon-based cells.

But by exporting 98 percent of that product, the country hasn't made much of an effort to power itself with the sun. Until now.

China has set an audacious goal of 10 gigawatts (GW) of solar power by 2020. Putting that into perspective, the world today has, in total, a little over 6 GW of installed solar photovoltaics.

Similar growth in wind production can also be expected, judging by the country's aggressive expansion in the sector.

A Green Race?Installation Solar Decathlon 2009

But the U.S. isn't exactly lollygagging around. In fact, the country has seen a steady climb in solar growth. And despite a rocky economy in 2009, the domestic PV industry still managed to expand by 38 percent in installed capacity, while total installed cost of solar panels and systems dropped by 10 percent.

The solar power industry is expected to grow in the coming years, but it's uncertain at what pace, or whether it will be great enough to compete with more traditional sources of electricity generation, such as coal.

As environmental and economic concerns surrounding fossil fuel use mount, Rocky Mountain Institute believes that solar PV offers enormous potential to enable a low-carbon electric system and to stimulate the economy. But with solar currently accounting for less than one-half of a percent of the energy mix, multiple efforts are needed to make the technology a real player.

A Federal Shot in the Arm

Louvers Solar Decathlon 2009A new study by the Solar Energy Industries Association found that extending tax breaks for solar manufacturing companies under a federal grant program, which is slated to expire in December 2010, could inject an additional $48 billion into the industry. In turn, the investment would create 200,000 extra jobs.

In addition, U.S. Department of Energy Secretary Steven Chu recently announced new funding for the solar industry. Nearly $170 million could be distributed to several efforts aimed at driving the U.S. solar market. The bulk of that funding, about $125 million, seeks to spark the PV manufacturing industry in the U.S.  It's an important move, and one that will help promote competition across the market.

Whether the U.S. will ever catch or surpass China in the solar PV market remains to be seen. It will certainly be difficult, which is why two other DOE-funded programs valued up to $40 million over the next three years could play an important role.

The programs are looking to attack two areas in need of improvement: a fractured supply chain and a workforce that still hasn't developed best practices for assembling and installing panels. As module prices continue to decline, the U.S. would do well to apply its resources to this side of the solar cost equation.

Next Page: What it will take to win the race.