ABSTRACT:
Estimated future energy cost savings associated with the development of cost-competitive solar thermal technologies (STT) are discussed. Analysis is restricted to STT in electric applications for 16 high-insolation/ high-energy-price states. Three fuel price scenarios and three 1990 STT system costs are considered, reflecting uncertainty over future fuel prices and STT cost projections.

STT R&D is found to be unacceptably risky for private industry in the absence of federal support. Energy cost savings were projected to range from $0 to $10 billion (1990 values in 1981 dollars), depending on the system cost and fuel price scenario. Normal R&D investment risks are accentuated because the Organization of Petroleum Exporting Countries (OPEC) cartel can artificially manipulate oil prices and undercut growth of alternative energy sources. Federal participation in STT R&D to help capture the potential benefits of developing cost-competitive STT was found to be in the national interest.

Analysis is also provided regarding two federal incentives currently in use: the Federal Business Energy Tax Credit and direct R&D funding. These mechanisms can be expected to provide the required incentives to establish a viable self-sustaining private STT industry. Discussions of STT impacts on the environment and oil imports are also included.