Unlike small-scale wind power generation, "hundreds of photovoltaic applications are currently cost-effective for off-grid electric power needs."¹⁸⁹ Common remote-site applications include communications, lighting and switching. While such micro power is not cheap (a goal is to reduce rates to $0.12 per kwh by 2000¹⁹⁰), its niche is making power available in remote locations for small energy uses that would be even more costly to connect as grid power. Where there is grid-connected power, however, micro solar is an economic loser without government subsidy.

Solar for heating and cooling buildings competes head-to-head with existing electricity or natural gas infrastructure in most residential and commercial buildings in the United States. Spurred by federal tax credits, more than one million solar hot water systems have been installed. However, negative customer experiences over the years and high costs relative to conventional fuels have limited this option on a nonsubsidized basis.¹⁹¹ The DOE has spent $34 million on solar-building technologies, but the Yergin Task Force estimates $176 million more will be required beyond FY 1994 for commercialization.¹⁹²

The continuing economic challenge of distributed solar is demonstrated by PV-VALUE, a project of the Utility PhotoVoltaic Group scheduled to begin in the summer of 1997. It uses funding from the Department of Energy and industry (including utilities) to reduce the up-front cost of residential systems to "create an accelerated demand for solar electricity that will make the systems commercially competitive with other sources of electric power in three years."¹⁹³ The subsidies reduce the cost of rooftop solar to $4 per watt, 25 percent above the estimated market commercialization price of $3 per watt¹⁹⁴ but in the reach of dedicated "green" customers.

That project represents the latest in a series of DOE-subsidized distributed solar programs that began in September 1993. Two solicitations to date have resulted in 1,300 installations in 25 states totalling 8.2 megawatts. Of the $51 million spent, 20 percent was funded by DOE.¹⁹⁵ A third solicitation will take place in the summer of 1997 with a similar subsidy aimed at adding 7,000 new installations totalling 8.5 megawatts by the end of 2001.¹⁹⁶

The good news is that remote, micro and grid-connected solar is much more economical than central station solar farms. The bad news is that it is still uneconomic without government subsidy and is competing against grid electricity that is expected to significantly decline because of the industry restructuring just getting under way.