Public Investments in Energy Technology
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Public Investments in Energy Technology

Michael P. Gallaher, Albert N. Link and Alan C. O’Connor

Escalating energy demand may be the most important issue facing the United States and the world today. There is little disagreement that research and development (R & D) is needed to develop new energy technologies for the future; however, there is less agreement over the specific research agenda to be pursued and how that agenda is funded. This book addresses the social importance of new energy technologies, illustrates policy-relevant applications of evaluation techniques and proposes new perspectives for a US energy investment strategy.
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Chapter 5: Investments in Solar Energy Technologies

Michael P. Gallaher, Albert N. Link and Alan C. O’Connor


This chapter presents the benefit-cost analysis of the DOE’s investments in Photovoltaic Energy Systems. As reviewed in Chapter 4, the DOE helped the US PV industry in the development, scale-up, and maturation of core PV technologies and manufacturing processes. Benefits accrued directly to PV module producers and consumers in the form of increases in product quality, operational efficiency, reliability, and reductions in production costs. Following methodologies pioneered by Griliches (1958) and Mansfield et al. (1977), economic benefits were quantified by comparing actual technological progress to counterfactual scenarios under which DOE technical expertise, technology infrastructure, and financial support were not available and PV module companies pursued their technology R&D strategies without DOE support. Our approach was to conduct primary and secondary research on technology advances in photovoltaics funded or co-funded by the DOE and ascertain how, when, or if those advances would have been made in the absence of the DOE’s programs. This process defined the next best alternative against which economic benefits were measured and, definitional to this approach, established attribution to the DOE. Where technical accomplishments may have economic impacts outside the PV market, such as the accelerated adoption of wire saw technology in the semiconductor industry or processes for refining high-grade silicon, these externalities were also included in the quantitative analysis. OVERVIEW OF THE BENEFIT-COST ANALYSIS Within the Photovoltaic Energy Systems cluster, the technologies of focus were those that supported the development of c-Si and thin-film modules, including R&D for solar cells, module manufacturing, and technology...

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