How Wall Street Once Killed the U.S. Solar Industry

Why is the American solar-power industry so small? It’s less obvious than it may seem. The global industry is a $65-billion business, and the United States has been involved in it from the beginning. NASA first improved and perfected panels for early satellite and Apollo missions. American firms have been manufacturing and selling solar panels for 40 years.Yet North American firms produce only about 3 percent of the world’s solar panels. China and Taiwan, meanwhile, make more than 60 percent of them.Labor in East Asia is often cheaper than it is in the United States, but that’s not the only factor. Consider the global semiconductor industry. Both computer chips and solar panels emerged from the Cold War research-and-development boom. Both were commercialized before 1980, as American-invented products sold by American-owned firms. And both markets were essentially controlled by the United States before the rise of Asian firms in the mid-1980s and ’90s. But chips, which first went to market a decade earlier than solar panels, did not suffer the same catastrophe that solar panels did. Today, the United States still leads the computer-chip industry, holding more than half of global market share for 20 years. Why hasn’t solar followed suit? A new paper in Science Advances argues that enormous changes transformed the structure of the U.S. economy in the 1970s and 1980s, making it impossible for American firms to develop new industries and markets. They specifically gutted the solar industry, depriving the technology of funding at a critical moment in its development.