by Emma Foehringer Merchant
September 21, 2020

As the coronavirus pandemic has raged, calls for a clean energy stimulus in the U.S. have increased. The clean energy platform of Democratic presidential nominee Joe Biden, which includes significant spending on research and development as well as policy support, has added fuel to those flames.

Those in favor argue that although the U.S. has many of the commercialized technologies it needs to beat back climate change, it does not have them all. Investing significantly in the types of game-changing technologies that could help the nation confront that challenge would be good for the ailing economy, too, as demonstrated by the American Recovery and Reinvestment Act of 2009.

I’ve sketched out a broad vision of what a modern clean-energy stimulus package might look like. But in a report published last week, researchers with the Columbia University Center on Global Energy Policy offered a more specific roadmap for how the U.S. can achieve a cleaner electricity grid in the near term. The authors suggest the U.S. needs to spend significantly more on national energy innovation, growing investments to $25 billion by 2025.

It’s not the first such proposal thrust into the national debate on coronavirus stimulus plans. In March, a group of environmental, energy and social policy experts joined up to publish “A Green Stimulus to Rebuild Our Economy.” It proposes a $2 trillion stimulus package that automatically renews at 4 percent of GDP each year until the economy is decarbonized and unemployment falls below 3.5 percent.

Both proposals include investment and policy recommendations, but the recent Columbia report focuses more closely on investment in innovation, calling for the U.S. to launch a “National Energy Innovation Mission” — echoing a Paris Agreement commitment called Mission Innovation designed to stimulate clean-energy innovation — and bemoaning the relatively paltry $9 billion the U.S. now spends each year on energy innovation (for context, researchers say that’s less than one-tenth of what the U.S. spends on innovation in defense).  

If the U.S. agrees to decarbonize its economy, solar will play a leading role. It was the largest source of new generation additions in 2019 and 2016, and second only to natural gas in the intervening years. But since the technology is relatively mature, technological innovations expected in the near term are largely incremental.

So where does solar fit into this innovation-focused mindset?

Columbia's vision

Of the $25 billion in investment the Columbia authors recommend, not all will go to renewables.

A large sum would be spent on nascent technologies such as carbon capture and storage, which scientists with the U.N. Intergovernmental Panel on Climate Change say is necessary to fight climate change, though it remains a controversial and early-stage technology. The Columbia researchers contend that incipient technologies need more support because they are further from maturity.

Credit: Columbia SIPA

Under the Columbia plan, the Department of Energy’s Solar Energy Technologies Office would see its budget increased only slightly in the next couple of years, from about $280 million in 2020 to $303 million in 2022. But there are certainly more possibilities for innovation in the solar market. Efficiencies could increase, high-efficiency perovskite could be commercialized and additional cost reductions could be achieved to make solar more competitive with natural gas in more regions across the country.

Xiaojing Sun, a senior solar analyst at Wood Mackenzie, said the U.S. continues to lead in developing new solar technologies, but few of them have the support necessary to successfully navigate the technological “valley of death” and move from early stages to commercialization.  

“We have all the technologies that we need to solve the climate change problem; where we’re falling behind is really in commercialization — scaling them up and creating demand for them,” said Sun. “That go-to-market step is the most important.”

The Columbia research team states that advanced energy R&D has lagged in both the public and private sector after investors realized how much money is required for energy innovation and how long investments take to pay off.

“Overall, firms in the energy industry are stingy spenders on innovation, investing just 0.5 percent of revenues into research and development,” the authors write.

Credit: Columbia SIPA

Around the world, clean-energy investing in the last two years has risen back near the levels seen a decade ago, according to the authors of the Columbia report. But the number of early-stage venture capital deals related to clean energy has dropped by half since 2012, according to a recent report from the International Energy Agency. And the U.S. lags behind numerous countries in the amount of money it spends on energy R&D.

Globally, solar ranks also among the sectors with the lowest levels of corporate spending on R&D, according to IEA.

IEA recognizes that “the dominance of existing solar PV” in markets including the U.S. may discourage researchers from working to better it. But at the same time, the agency points out how essential R&D has been to the resource historically, estimating that about 60 percent of solar price declines in the last several decades are tied to research and development, either private or public.  

And the U.S. does have the capacity for innovation. As the Columbia report notes, 10 of the 15 largest corporate R&D spenders in the world, including Amazon, are based in the U.S.

Why not solar?

So why isn’t solar seeing more investment, seeing as it is likely to lead U.S. renewable additions in the near term?

Like onshore wind, solar has reached a certain stage of maturity that means it may only have so much room to grow, and gains are less likely to be game-changing. The mainstream solar technology for large-scale arrays, p-type monocrystalline PERC, is now relying mostly on incremental efficiency increases and panels with more watts to improve performance.

Columbia’s report also points to the mixed outcomes for ARRA-supported companies. Many solar companies, such as First Solar and Tesla, saw success after receiving loans through that law. Others, like bankrupt solar manufacturer Solyndra, ultimately failed.

To counteract potential flops across all sectors, the Columbia authors recommend the government employ investments along with policies that push markets to take up economic clean energy, and quickly. They suggest a carbon price — a controversial policy, but one that may be able to win Republican support — public procurement, tax credits for emerging technologies and clean electricity standards.

WoodMac's Sun sees global cooperation as another possible solution. While the U.S. excels at early-stage technology development, it has a lackluster domestic supply chain and minimal solar manufacturing.

“A little bit more collaboration could help,” she said.

Working together, according to Sun, would help commercialize more fledgling technologies such as n-type and perovskite cell technologies, which do have the capacity to significantly change utility-scale solar. The U.S. has been working to make the latter more affordable over the last decade, announcing $20 million in August for more development. Despite significant gains, perovskite still is not ready for prime time.