This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
One of the truisms of the 1970s was that solar power was a pipe dream. The price was too high — not just a little too high, but absurdly high. When Ronald Reagan came into office and ripped out the solar panels that Jimmy Carter had put on the White House, conservatives saw it as a triumph of economic rationality over wooly-headed fantasies.
But like so many other things we learned in the '70s, this fact is rapidly becoming a non-fact. The cost of solar power has fallen off a cliff — it is now less than 1 percent as expensive as it was in 1977. This "Moore's Law for solar" — echoing the amazing progress in computer processing power — is a human technological triumph for the ages. We're right at the point where solar starts to replace coal and gas in some markets.
Still, before solar can give us energy too cheap to meter, we need to overcome the intermittency problem. Solar skeptics insist on reminding us that the sun isn't always shining. That creates a problem for utilities that have to keep their gas or coal plants fired up all night — and all day, in case the sun goes behind a cloud.
This is at the root of the current legal fight over net metering, the practice of forcing utilities to buy back excess solar electricity from homeowners at retail prices. Meanwhile, if we don't find a cheap way to store electricity in a high-density form, solar won't do much to reduce our dependence on oil. Basically, without energy storage, solar remains a marginal solution, defraying energy costs and saving us from any risk of a dark age, but not delivering us to a world of abundance.
Energy storage, therefore, is now the world's No. 1 technological challenge. U.S. companies are attacking the problem with all of the entrepreneurial fervor they can muster. Battery startups are proliferating. Tesla is investing in factories that will bring economies of scale to bear. Other companies are experimenting with alternative forms of storage, such as compressed air, fuel cells, molten salt, even flywheels.
But batteries just might win the day. It turns out that for the past few years, battery storage costs have been falling in a way that suggests they might be on an exponential downward trend. In other words, there might now be a Moore's Law for batteries!
Still, a few years doesn't constitute a reliable trend. Exponential cost reductions don't happen all by themselves — it requires human effort to push them along. And in addition to the monumental effort that the private sector is putting forth, we need government to help make sure storage costs keep falling.
This isn't a message that is going to make conservatives happy. After all, when Solyndra went belly-up after receiving more than $500 million in cheap government loans, conservatives had a field day mocking the follies of central planning and the Obama Administration. Only 30 percent of government-supported solar firms have provided a good return on investment. As for batteries, when A123 Systems, a Michigan-based battery manufacturer, filed for bankruptcy in 2012, it looked like Solyndra 2.0.
But government's impact on technology can't always be measured in the same way as the return on investment of a venture-capital fund. If it could, then it would in fact be optimal to leave investing to the private sector. Government is needed, though, when there are spillovers from investment that exceed the private return. In the case of solar and battery power, these could come from economies of scale, and from networks of manufacturers and suppliers. Also, government can afford to be more patient than private investors — after all, A123 Systems recovered from its bankruptcy, and is now growing again.
But government's most important function is the area where positive externalities are the most important — research. In order to keep driving battery storage costs down that exponential curve, a continuous pipeline of scientific discoveries will be required. Government investment in research was essential in developing fracking technology, which is now causing a U.S. energy boom and possibly even a manufacturing revival. Energy storage, in the long run, will be even more important than fracking.