Howard H. Baker Jr. Center for Public Policy

Clean energy marches toward maturity using traditional path


It's tempting to believe the political rhetoric over renewable energy and assume the industry is dying without ever grabbing a foothold. In reality, it is following a well-worn path traveled by emerging technologies for dozens of years.

 A new report from the Howard H. Baker Jr. Center for Public Policy at University of Tennessee compares the stutter-step progress of clean energy with that of the automobile and other industries. The report cites the Chief Strategist of Shell Oil as saying, "It takes about 30 years for any new energy source to attain 1% market share."

From the report: "Only in retrospect is technology change smooth. Within its own historical context, it is rough and uncertain with many false starts and byways. The social history of technology change is replete with stories of early technology adoption in unexpected niches. Often the early innovators are not the ones who profit from the process."

Consider the early days of automobiles and personal computers. the report notes that horseless carriages powered by electricity electricity, steam, or internal combustion engines came on the scene in the late 1800s, but 40 years later only 7.7% of American families had an automobile. Then, there was a spurt: "Only a decade later, in 1929, 60% of American families had autos," the report states.

Personal computers struggled through the same torturous path. The Altair kit for hobbyists appeared in 1967. Early commercial computers debuted a decade later with Apple II, the Pet 201 and Radio Shack's TRS-80.

I used a TRS-80, or Trash 80, in the early 1980s. I lived near Clear Lake in Northern California, and was a correspondent for the daily newspaper in Santa Rosa. I would write a story on the TRS-80 and then look for a phone booth. I attached the acoustic couplers to the phone, typed in some numbers, and heard the distinctive whine of the transmitted story.

Today, I don't think I can find TRS-80, acoustic couplers or even a phone booth.

Solar power has expanded at a 77% annual growth rate over the last five years, thanks in large part to generous incentives, cheaper PV and state renewable standards. Despite that, solar energy provided less than 0.1% of U.S. electrical demand in 2010, according to this report entitled "Sunshot Vision Study" by the U.S. Department of Energy.

However, the expansion could be substantial, the Sunshot report states, if prices drop, transmission capacity increases and other advances are made. Assuming prices of  $1/watt  (W) for utility-scale PV systems, $1.25/W for commercial rooftop  and $1.50/W for residential rooftop, the penetration of solar power could reach 14% in the U.S. by 2030 and 27% by 2050.

An incentive to grow

The Baker study said incentives are most effective in young emerging industries such as clean energy, while subsidies in mature industries have the effect of suppressing the new technologies. "If the goal of incentives is to bring a resource to the point of full market penetration, one would expect larger incentives for fuels that have not reached maturity," the study said.

Incentives in mature industries (hello, oil) raise the overall cost of government incentives needed to expand new resources. From the Baker report:  "From an economic development perspective, a portfolio of incentives weighted toward mature industries will tend to insulate and maintain those profitable industries and suppress new industries."

Incentives have certainly worked in clean energy. This New York Times editorial notes the robust return of clean energy, and suggests this is the wrong time to end subsidies. The goal, it says, should be to use incentives to "get (clean energy industries) to a point where they can stand on their own."

Just getting started

Clean energy is gaining a foothold in many places. College campuses, the U.S. military, professional sports and farmers are following in the footsteps of Big Business, which is increasingly realizing that sustainability also generates a green bottom line. See examples here.

Incentives helped forge a foothold, and, hopefully, it won't be long until clean energy, which includes energy efficiency, can stand on its own.