A Sunny Forecast

By EUGENE LINDEN

Arrayed along the pipelines of Enron Oil & Gas in the American Southwest is a series of boxy monitors that transmit data about the flow of the company's precious fossil fuels. The telecommunications devices draw their power not from the fuels they monitor but from shiny panels that capture the energy of the sun. Are these solar-powered invaders of the oil patch the technological portents of a coming era? Or are they merely emblematic of the bit part solar has played thus far in the world's energy equation? No one knows for sure, but corporate investors, who have been wary for the past decade, are lining up to bet billions on the proposition that solar power will at last have its moment in the sun.

Few ventures have produced more noble failures than the quest to power civilization with renewable energy from geophysical forces -- the winds, the tides and, most of all, the sun's rays. "To date the history of solar has been the story of Tantalus: year after year the prize has remained, maddeningly, just beyond reach," noted a FORTUNE magazine story. It ended on a hopeful note: "The period of solar frustration is drawing to a close." Date of the story: September 1979. In fact, the period of solar frustration was just beginning.

The oil glut of the 1980s sapped any motivation to develop alternative energy sources. Solar moved to the fringes of public consciousness in the U.S. as the Reagan Administration eliminated most of the federal funding for research, and big oil companies dropped their development programs. Result: solar accounts for less than 0.5% of the power generated in the U.S. today, instead of the 2% to 5% envisioned in the late 1970s.

What then explains a renewed romance with renewable energy among governments and corporations, especially since oil remains relatively cheap? Shell International Petroleum in London, which forecast the oil shocks of the 1970s, predicts that renewable power, particularly solar, will dominate world energy production by 2050. Japan's electronics giant Canon has formed a joint venture with Michigan's Energy Conversion Devices to commercialize solar technology. Enron, Germany's Siemens and scores of other companies, including aerospace firms, engineering giants and utilities, are also exploring opportunities to plug into the renewable-energy business. Is this collective corporate madness? Perhaps not. The world has changed a great deal since 1979.

Pollution, like the recent oil spill in Russia, and the threat of global climate change have rudely reminded nations that fossil fuels carry with them heavy costs even when the purchase price is low. In the developing world, alternative forms of energy enjoy increasing cachet as governments wonder how to provide power for billions of people who lack electricity, knowing full / well that cities such as New Delhi, Beijing and Mexico City are choking under blankets of smog. Most important of all: renewables are beginning to earn respect in the marketplace. During the past decade, improvements in technology and manufacturing have sharply increased the cost-effectiveness and reliability of solar-power systems.

Some forms of renewable energy already compete with the cheapest coal- powered generators. Wind turbines produce electricity in California for between 4.5 cents and 4.8 cents per KW-H, roughly the same as the cost of power from a coal-fired plant. Amory Lovins of the Rocky Mountain Institute in Colorado believes that a new generation of gearless wind turbines will improve efficiency and lower the cost to 3.5 cents per KW-H by the end of the decade. Christopher Flavin, co-author of Power Surge, a Worldwatch Institute book, says that within the next year India will be installing wind turbines at a faster rate than any other country.

Geothermal systems also produce electricity at competitive costs in some locations. They pipe water past pockets of molten rock beneath the earth's crust, creating steam to drive generators. Nicaragua and the Philippines get more than 25% of their electricity from geothermal stations, and Flavin estimates that at least 40 countries have such resources to develop.

Oil and coal are facing new challengers even among hydrocarbons. As recently as 10 years ago, natural gas was considered a dead-end industry because analysts grossly underestimated global reserves. Now it is rapidly becoming a favorite fuel of electric utilities. More than 30% cheaper than oil, it burns efficiently, and it produces fewer pollutants and a third less carbon dioxide than oil. World production has risen 30% since the mid-1980s. Because of its advantages over dirtier hydrocarbons, natural gas may be a bridge between oil and coal and the solar era.

The array of sun-powered monitors on Enron's network is one of many signs that solar's time is fast approaching. The community of Tennant Creek in northern Australia is scheduled to receive power soon from what is called a solar-thermal system. It will use a series of parabolic dishes to focus the sun's rays and superheat steam, which in turn will drive turbine generators. The designer, Stephen Kaneff of the Australian National University, calculates that these modest-size systems can produce power for as little as 4 cents per KW-H, cheaper than the polluting gas and diesel generators Tennant Creek now relies on. In California's Mojave Desert, Pacific Gas and Electric uses a solar-thermal technology that employs mirrors to focus sunlight and heat liquids moving through pipes in long troughs. This array produces large amounts of electricity -- nearly 200 times as much as the Tennant Creek system -- for an estimated 8.5 cents to 14 cents per KW-H. That is at least double the cost of coal power, but solar proponents argue that the apparent price difference is highly misleading. They say the cost of oil and coal should be adjusted to reflect uncertainties over supplies, price volatility and environmental damage; estimates for the pollution costs of coal, for example, start at 1 cents to 3 cents per KW-H and range upward.

For the moment, power from solar-thermal systems costs less than that produced by photovoltaic cells, which convert sunlight straight into electricity. Advocates of PV cells point out, though, that the gap is narrowing and that PV cells have other advantages. Solar-thermal systems require direct sunlight, while PV cells work in cloudy weather. Even at 25 cents to 50 cents per KW-H, PV cells are economical for small amounts of energy in remote places. Homeowners find solar power less expensive than connecting to a utility if a house lies farther than a mile from the nearest power line. Even in urban areas, PV power can be cost-effective if new installations require costly upgrading of transformers and power lines, notes Flavin.

The real growth market lies in the developing world. Solar systems offer villages the opportunity to leapfrog developed nations and move directly to 21st century power generation. Mason Willrich, vice chairman of the U.S. Department of Energy's Task Force on Strategic Energy Research and Development, observes that developing nations gain a double benefit from renewable power because they can manufacture the components of their energy supply system, thus expanding their industrial base. Building solar- and wind- energy equipment and installations creates jobs and reduces oil imports.

The economics of photovoltaic energy may soon receive a boost from the work of Martin Green and Stuart Wenham, researchers at the Center for Photovoltaic Devices and Systems at the University of New South Wales in Australia. The two scientists recently unveiled a design for PV cells that has the potential to reduce the cost of photovoltaic electricity 80% -- to levels competitive with conventional power production. Paul Basore, who oversees research on . photovoltaics at the Sandia National Laboratories in New Mexico, predicts that within 20 years, homeowners and small businesses everywhere but in the gloomiest climates will find it most economical to generate their own solar power.

Daniel Yergin, president of Cambridge Energy Research Associates in Massachusetts and author of The Prize, is more cautious about forecasting the coming solar era; he has watched market pressures obliterate past predictions about the future of energy. He also notes that oil and coal companies are not standing idle but are vigorously trying to lower costs and provide cleaner- burning fuels. "The critical question," Yergin contends, "is whether any innovation meets the test of the marketplace." Older and perhaps wiser than they were in the 1970s, the apostles of renewable energy claim they are now poised to meet that test.