PART I: Context

Photovoltaic (PV) technology has enormous potential to reduce pollution, diminish energy-related emissions of greenhouse gases, expand access to electricity for rural populations, supply reliable power to urban centers, and accelerate the global transition to a clean, distributed energy system by providing high-value products. Unfortunately, despite two decades of steady technical progress and price reductions, markets for photovoltaics remain small and scattered.
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In part, the predicament of PV power reflects astonishing declines in the price of fossil fuels. The past two decades witnessed increasing mechanization of the U.S. coal industry, deregulation of the natural gas industry, and an inability by the Organization of Petroleum-Exporting Countries to maintain its cartel intact after the mid-1980s. In fact, in March 1998 the real price of oil neared its all-time low, to some extent lowering the ceiling on all energy prices.

Photovoltaic power, while ever cheaper, has been unable to catch the moving targets set by competing resources, which in any case began the price race from a point far in front. In addition, consumers wishing to install PV systems face substantial non-price barriers. These include, for example, lack of appropriate credit and jumbled protocols for connecting systems to the grid, which vary not only among states but even within them. Finally, of course, photovoltaic power will seem less attractive than its competitors as long as the price of conventional energy sources ignores the environmental and geopolitical cost of using energy, as well as the non-energy advantages of PV systems.

Numerous past research projects have explored barriers to the expansion of markets for photovoltaics. Today, a confluence of political, environmental, and regulatory factors persuades us that the time is right to ask the next, more challenging question: how can we best apply available resources to increase the size and stability of such markets?

To address this question, in early 1998 the Renewable Energy Policy Project (REPP) initiated a broad inquiry into the issues surrounding PVs. As described in Action Recommendations for a Project on Expanding PV Markets, a separate scoping document, we interviewed some 40 professionals from inside and outside the PV industry. These included representatives of module manufacturers, system assemblers, financial firms, multilateral development institutions, trade associations, and energy companies, as well as architects, financiers, environmental advocates, tax analysts, and numerous others.

The challenge: "Who has to do what to expand PV markets?
Taken as a whole, our scoping process indicated that several interrelated areas merited further research: public policies to increase volume — and thereby lower manufacturing costs — through subsidized purchases; measures to develop high-value PV products for existing markets without subsidies; policies to encourage distributed energy generation; capital formation; public education; professional training; markets in developing countries; and government procurement. In addition, the experts helped us identify researchers capable of undertaking a deeper analysis of these areas. After hiring our team (see Section IV) in early summer of 1998, we laid before them the challenge: “who has to do what to expand PV markets?” We stress here that we explicitly avoided the narrower question of what public policy tools could best establish PV markets; we assumed from the beginning that public policy would constitute only one avenue — and governments only one set of actors — for the expansion we seek.

Although the authors collaborated and interacted through frequent telephone conferences, each team concentrated on one piece of the puzzle. To help us bring the “big picture” into focus, we assembled several members of our Board of Directors and other experts into an Advisory Committee:

This group helped us extract the most promising insights and recommendations from the various reports and form them into an integrated PV strategy.

We also instituted a professional review process, inviting well over 100 experts from academia, multilateral development institutions, federal and local governments, environmental groups, federal laboratories, the solar industry, and other sectors to inspect our drafts, which we posted on a confidential section of our Web site. (Several of these reviewers distributed the address within their organizations, to their students, and so on, increasing the scope of the process.) In Part IV of this report, we present our executive summaries of the final papers.

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