Title: How Solar Energy Became Cheap: A Model for Low-Carbon Innovation
Author: Professor Gregory F. Nemet, University of Wisconsin-Madison
Solar energy’s path to widespread adoption provides a successful model that can be applied to other technologies we will need to address climate change. Solar photovoltaics (PV) has become a substantial global industry—a truly disruptive technology that has generated trade disputes among superpowers, threatened the solvency of large energy companies, and prompted serious reconsideration of electric utility regulation rooted in the 1930s. But, How did solar become inexpensive? And why did it take so long?
As a 2017 Andrew Carnegie Fellow I have had the opportunity to dive deeply into these questions, drawing on new data sets, analyses, and interviewing over 60 individuals in more than a dozen countries. The concept of National Innovation Systems provides a theoretical structure for this assessment and helps explain that PV’s success has been the result of distinct contributions mainly by the US, Japan, Germany, and China—in that sequence. Flows of knowledge from one country to another—often embodied in equipment, and also as tacit knowledge in the heads of internationally mobile individuals—have been central to solar’s progress. One payoff from understanding the reasons for solar’s success is that it can serve as a model for other low-carbon technologies. However other technologies would have to progress much faster than PV to be helpful for climate change. Possible approaches for accelerating innovation include: dynamic R&D foci, codification of knowledge, public procurement, robust markets, enhancing knowledge mobility, and addressing political economy considerations.
Gregory Nemet is a Professor at the University of Wisconsin–Madison in the La Follette School of Public Affairs and the Nelson Institute's Center for Sustainability and the Global Environment.
His research and teaching focus on improving analysis of the global energy system and, more generally, on understanding how to expand access to energy services while reducing environmental impacts. He teaches courses in energy systems analysis, governance of global energy problems, and international environmental policy. Professor Nemet's research analyzes the process of technological change in energy and its interactions with public policy. These projects fall in two areas: (1) empirical analysis identifying the influences on past technological change and (2) modeling of the effects of policy instruments on future technological outcomes. The first includes assessment of public policy, research and development, learning by doing, and knowledge spillovers. An example of the second is work informing allocation between research and development and demand-side policy instruments to address climate change.