In political terms, the issues of climate change and energy took a back seat for most of 2011. There was some modest progress at the Durban conference in December. Moreover, having given up on the idea of cap-and-trade legislation, the Obama administration took some significant regulatory measures including new fuel-economy standards and restrictions on old coal-fired power plants.
The truly significant developments, however, were not driven by politics, although they will have profound political implications. In 2011, nuclear power ceased to be a serious option for meeting the world’s energy needs, and solar photovoltaics (PV) finally became an option worth noting.
The “solar vs. nuclear” dispute had been largely symbolic for several decades. After rapid growth in the 1960s and 1970s, new installations of nuclear power came to a grinding halt. This was partly a result of safety fears created by the accidents at Three Mile Island and Chernobyl. Economic factors were even more significant. Far from being too cheap to meter, nuclear power turned out to be far more expensive than its main rival, coal, primarily because of unpredictable capital costs and generally high interest rates.
As a result, since 1977, when the River Bend plant in Louisiana commenced construction, not one new nuclear-power plant has been ordered and completed in the United States. The situation in most other developed countries was similar. Only where some combination of military funding and concern about national self-sufficiency allowed for substantial subsidies was there any new construction of nuclear-power plants.
Meanwhile, the case of PV was reminiscent of what used to be said about Brazil as a country of enormous but permanently unfulfilled promise—that is, it seemed PV was doomed always to be the energy source of an ever-receding future. Despite decades of promising press releases from research labs, the average price of PV cells at the beginning of the twenty-first century was more than $5 per installed watt, leading to a cost of more than 50c per kilowatt hour. The global installed base of PV totaled a mere 1.4 gigawatts (GW), about equal to one medium-sized coal or nuclear plant.
But even this modest figure overstated the case, since it refers to the capacity of solar cells. Even in favorable locations, a PV system generates the equivalent of only six hours at full capacity per day, implying an availability factor of about 25 percent, compared to 75 percent for conventional sources. (On the other hand, solar output broadly coincides with peak demand, making the power more valuable.)
The picture changed with the emergence of concerns about climate change and particularly with the adoption of the Kyoto Protocol in 1999. Even in nonsignatory countries such as the United States, it became clear that the days of coal-fired electricity were numbered.
Growing demand for electricity in the late twentieth century was met almost entirely by coal-fired (the United States alone added more than 200 GW) and gas-fired plants.
Economists typically argued that the appropriate response was to put a price on emissions of carbon dioxide and allow markets to decide the appropriate mixture of alternative energy sources, improved energy efficiency and reduced energy use. Governments, however, generally preferred to look for technological solutions.
This search took two main forms. First, there were a wide variety of measures to promote renewable energy, which primarily meant wind and PV. Wind power has historically been cheapest, but its intermittent nature and dependence on specific locations mean that it is unlikely to provide a comprehensive solution. So, there was a strong emphasis on measures designed to promote solar PV, the most notable of which were feed-in tariffs, in which households or firms that installed PV systems received a payment for the electricity they generated, typically well in excess of the prevailing market price.
The other big initiative was an attempt to restart the nuclear industry, referred to somewhat grandiloquently as “the nuclear renaissance.” The idea was to promote a streamlined regulatory process for a small set of standardized designs. These designs, it was hoped, would address the safety concerns that had plagued older systems and reduce the time and cost of construction. In the United States, the big initiatives were the Nuclear Power 2010 program, unveiled in 2002, and the Energy Policy Act of 2005, which authorized $18.5 billion in loan guarantees. All of these initiatives were carried on and extended by the Obama administration, which proposed in January 2010 to triple federal loan guarantees.
For some years, neither of these approaches bore much fruit. Although installations of solar PV grew, the price remained stubbornly high. This was partly because the industry outgrew its low-cost source of polysilicon, taken from offcuts for wafers made for the semiconductor industry. As late as 2009, the average price of modules was above $4.50/watt. Prices began falling thereafter, and by the beginning of 2011 had fallen more than 20 percent.