Governors' Wind Energy Coalition

Solar has the best potential to be the cleanest, most sustainable form of energy to fuel the world long term, a new study from the Massachusetts Institute of Technology says.But to be able to light up the world on a large scale, significant changes in technology, price and policies are needed.

“Further advances are needed to enable a dramatic increase in the solar contribution at socially acceptable costs,” according to “The Future of Solar Energy” study, released yesterday by the MIT Energy Initiative.

Solar has become more accessible because the technology and installation costs have fallen, and some states have changed their policies to make it easier for customers to add the panels to their home or business. Large companies, including utilities and technology companies, also are working on battery technology that can store solar so it can be used all the time.

But more is needed to make solar more reliable and economical if people want to use it on a large scale, the study says. Recommendations include putting more federal dollars toward developing thin-film solar technologies that are based on abundant materials; creating new rate pricing systems that are perceived as fair to customers and utilities; and encouraging national or regional efforts to set up common permitting, interconnection and inspection procedures.

“The market structure for solar energy is changing, particularly at the residential level, with the evolution of new business models, the introduction of new financing mechanisms and impending reductions in federal subsidies,” the study says.

Photovoltaic systems made up more than 90 percent of the solar installed in the United States, according to the study. About half of this is utility-scale solar, with the rest balanced between commercial-scale and residential installations.

Utilities typically favor large-scale solar because they most resemble centralized power plants. Utility-scale projects also make the most economic sense, utilities and solar developers say.

Reported PV prices have fallen between 50 and 70 percent per installed watt, the study says. This low cost also is without federal subsidies, which in the past have been needed to make solar more cost-competitive.

The report criticized the primary level of federal incentives for solar projects. This is because the incentives encouraged investment in solar arrays but use tax credits to fund it.

The report argues that solar would be more effective per taxpayer dollar spent if those incentives rewarded solar generation, not investment. It also encourages Congress to replace federal tax credits for solar with direct grants because they are transparent and more effective.

If tax-based incentives, such as the lucrative 30 percent production tax credit, are used, they should not be dependent on the tax equity market, the study says.

The group behind “The Future of Solar Energy” is presenting the study to lawmakers and senior White House officials in Washington, D.C., this week.