Three policy issues related to the commercialization of solar energy

The fundamental policy questions that require some resolution before the next steps are taken to speed solar commercialization are 1.(1) Are present energy prices so biased by government action as to make “free competition” unfair to solar energy?2.(2) To what extent should solar energy be encouraged because it contributes to other less economic goals, such as maintenance of full employment and improved environmental quality?3.(3) What criteria should be used to evaluate any new solar incentives? The purpose of this paper is to summarize these issues and then draw conclusions from the entire body of research as to the “proper” role of the federal government in speeding the commercialization of solar energy. The organization of the paper follows the order of the points mentioned. Major conclusions are that 1.(1) present pricing practices and government policies seem to result in energy prices already favoring solar energy in tow of the three locations studied;2.(2) solar energy seems to require more unskilled labor than the technologies it replaces and seems to be less polluting; and3.(3) although present incentives appear to be effective, i.e. they have the potential to generate the market impact expected of them, they do not fare particularly well when measured against the standard externality, efficiency, and equity criteria suggested by the economics profession.