In 1954, Bell Laboratories researchers announced the development of a silicon solar cell with a 4.5-percent energy efficiency, sparking photovoltaic (PV) cell development that has progressed from space applications in the late 1950s to terrestrial applications today. Over this period, research and development have resulted in lower prices for solar cells and modules and higher efficiency. U.S.-based photovoltaic manufacturers' development efforts have benefited from a partnership with the Federal government. Similar partnerships at the State level have also been beneficial. Additionally, rising electricity prices and an increase in the cost of building new generation, transmission, and distribution capacity have had a positive impact on photovoltaic system economics and sales. Also during this period, photovoltaic system sales have expanded as a solution to remote distributed generation require- ments. In such markets, photovoltaic systems often prove to be cost effective when compared to the common distributed generation alternative, diesel generators, which may be high priced because of the cost of transporting fuel to remote regions

The market for photovoltaic systems has developed in three stages, distinguished by the type of application and by the focus of State, Federal, and international market development initiatives.

Space Program

During the first stage (1950s through 1960s), PV development was motivated primarily by a need for electricity generation technology that would be suited for the space program. In 1958, Vanguard I became the first PV-powered satellite. The 0.1 watt (W), approximately 100 cm2 (square centimeters), silicon cell system powered a 5 milliwatt backup transmitter for 8 years. It offered a relatively lightweight solution to power supply for satellites and spacecraft. The single-crystal silicon photovoltaic cells deployed in space in the late 1950s had cell efficiencies that ranged from 8 to 10 percent. By 1998, efficiencies of modules made from such cells had increased to between 14 percent and 16 percent.

Oil Price Pressures

The second stage (1970s through mid-1980s) commenced with the Arab OPEC oil embargo of 1973, which resulted in a significant increase in oil prices. One response in the United States and other countries was to fund development of renewable and energy-efficient technologies that would relieve dependence on fossil fuels. Federal and State tax credits for both residential and commercial customers subsidized expansion of terrestrial applications markets during this period. In addition, in 1978, the Public Utilities Regulatory Policy Act (PURPA) provided another market development support by guaranteeing "qualifying facilities" access to the electricity utility grid and requiring utilities to purchase the electricity. In California, the Standard Offer Number 4 electricity purchase contract offered renewable electric "qualifying facilities" a very attractive purchase price, which was guaranteed for a period of 10 years. Qualifying facilities included renewable electric generators, such as photovoltaic systems. By the late 1980s, Federal tax credits had expired and other market mechanisms for new applicants were terminated. The result was a significant drop in the addition of new photovoltaic electric generation capacity.

Globalization of the Market

The U.S. photovoltaic industry is now in the third market development stage, which began with increased sales to the international terrestrial electric power market in the late 1980s. U.S. Energy Information Administration (EIA) data show that in 1985, the year in which Federal tax credits expired, U.S. exports of photovoltaic cells/modules represented approximately 29 percent of total U.S. photovoltaic shipments. This percentage jumped to about 49 percent in 1986 and has remained at or above 55 percent since 1987, as photovoltaic cells and modules manufactured in the United States have been shipped internationally to serve terrestrial markets for PV in areas remote from a central station power grid Such areas face the high cost of diesel power generation, which make PV cost-effective. The 1990s have witnessed continued growth of these markets aided, for example, by initiatives of donor agencies (e.g., World Bank, United Nations Development Programme, U.S. Agency for International Development) and regional development banks. Additionally, the 1990s have witnessed a growing interest in renewables as a means to address environmental problems such as global warming. This interest is driving programs such as the Million Solar Roofs Initiative and State initiatives to promote renewables in a deregulated electricity generation market. In addition, the governments of Japan and Germany strongly support PV programs.


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