On a bright cold day this past January, Bill Ball and I sat in his cavernous warehouse in Little Rock, Arkansas, talking about his passion for solar energy. Ball, a stolid man with wavy, graying hair and a full beard, had just come from an interview with a local television station prompted by a Christmas day snowstorm that knocked out power in much of the state and left thousands shivering for days and weeks. The TV interviewer wanted to know if the use of solar panels could have minimized the suffering. Ball has been trying to build a thriving business in the solar power industry since the 1970s and his answer was anything but hypothetical; during the storm he used solar-powered electricity to stay warm. Today, however, Ball cheerfully conceded that he didn’t have much else to show for more than three decades of commitment to clean energy. “I’m the largest going solar concern in Arkansas,” he said, “and I barely have two nickels to rub together.” 

Despite similar disaster-induced moments of local celebrity, solar has been more of a hobby than a vocation for Ball, who earns his living primarily as a custom homebuilder. The contents of his warehouse—which is stuffed with all the necessary panels, racks, and wiring required to tap the sun for electricity—are proof that he hasn’t been beaten by years spent, as he likes to say, “self-unemployed” in the solar industry.

For the past twenty years, starting well before even sunny and liberal California laid out a major plan to boost solar, Ball has been trying to convince policymakers to pass legislation to improve solar’s prospects. There have been some small victories, but most of the time he has come away from the Arkansas legislature empty-handed.

Ball’s struggles are emblematic of the tough slog solar has faced throughout the South. Although the overall market in the U.S. has shown tremendous growth in the past five years, solar development has been clustered mostly in the West and Northeast, with California and New Jersey leading the way, leaving the sunny South far behind. Until recently, there has been a simple formula for understanding where work crews will be busy installing solar panels: follow the policy, which is another way of saying follow the government money.

But suddenly things are changing. Almost unnoticed, a market-driven solar revolution is underway that promises to smash the already outdated notion that solar can be viable only when propped up by lavish government incentives. A precipitous and ongoing drop in the price of solar equipment has transformed this clean energy source from something we ought to pursue to avoid baking the planet into something we’d be stupid not to use more for selfish, economic reasons. For all the pessimism engendered by solar company bankruptcies and ferocious trade wars, the United States is poised to take large steps toward solar power. And it’s here in the South, a region with relatively few panels installed, where the forces propelling this quiet insurrection are most obvious.

North Carolina, which has followed a traditional policy-dependent approach toward encouraging solar, is now consistently one of the top ten state markets in the country. In September 2012, Georgia Power, that state’s largest investor-owned utility—and a subsidiary of the powerful Southern Company, one of the staunchest opponents to federal climate-change legislation—announced the most ambitious voluntary solar initiative of any electric company in the nation. Solar is even making progress in Texas, where San Antonio’s municipal utility is building 400 megawatts of new solar power plants capable of producing enough energy to power 70,000 homes. Solar’s inroads in the South extend to manufacturing as well. Most of San Antonio’s equipment will be manufactured locally, and both Wacker Chemie, a German company, and Michigan’s Hemlock Semiconductor have chosen Tennessee as the location for huge factories to produce and export polysilicon, a key ingredient in the solar cells that are electrically connected to form a panel. North Carolina’s growing solar demand and its proximity to eastern markets have led Schletter, a German company that makes solar equipment, to build a facility in Shelby, a small town west of Charlotte.

This is all happening because of simple economics. “The reality is the solar industry overall has really invested in getting more competitive. Their costs have come down considerably,” said Greg Wolf, president of Duke Energy Renewables, an arm of the North Carolina–based utility Duke Energy, the nation’s largest electric power holding company. That’s important in ways that are obvious and tangible to Wolf, whose job is to build wind and solar projects all around the country. But the financial logic will also help shift the conversation away from purely ideological debates. In other words, it gets people to stop talking about Solyndra. 

Tethered as it is to issues of the environment and climate change, solar has long stirred political debate. But the 2011 bankruptcy of Solyndra, the panel maker that famously received a $535 million loan guarantee from the Obama administration, made solar politically toxic. Not only did the bankruptcy spawn congressional investigations into whether the company received support thanks to the political connections of its investors, but it became a favorite talking point in the 2012 elections. Mitt Romney held a campaign event in front of the company’s empty headquarters in Fremont, California, and Paul Ryan frequently cited Solyndra as an example of “crony capitalism” and how the government incompetently chooses “winners and losers” in an otherwise free market. Leaving aside the bizarre premise that energy operates in anything close to a free market, the candidates omitted the primary reason Solyndra went belly up: it made panels that were far too expensive to survive cutthroat global competition. 

These days, if you happen to exchange e-mails with people working in the solar industry, there’s a good chance that their signature block will include some snippet of this quote from Thomas Edison: “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” The prolific inventor is said to have uttered this kernel of wisdom in 1931 while chatting with Henry Ford and Harvey Firestone, two of the industrialists responsible for popularizing carbon-spewing automobiles. Edison never figured out how to harness that great potential, even though the basics of how solar works had been known for a century. In the 1830s, a French physicist named Edmond Becquerel discovered the photovoltaic effect, the process that occurs when packets of energy from the sun, or photons, are transformed into usable energy. But it wasn’t until two decades after Edison’s declaration that the first actual solar cell was produced. After many false starts, in 1954 three researchers at Bell Laboratories created an inefficient yet workable silicon solar cell. If nothing else, the invention was great PR; at a press conference at company headquarters the cell was used to turn a 21-inch Ferris wheel. Bell was rewarded with front page coverage in the New York Times, which parroted Edison’s hopeful observation by saying that the scientists’ work could eventually lead to the “realization of one of mankind’s most cherished dreams—the harnessing of the almost limitless energy of the sun for the uses of civilization.”

For a very long time, though, the exorbitant price—a 1956 homeowner would have had to shell out nearly $1.5 million to get all of his electricity from the sun—relegated solar to wealthy, idealistic dreamers and a succession of niche applications. After the Soviets launched Sputnik in 1957, the United States government scrambled to catch up and saw in solar a lightweight source of reliable energy to run the communications equipment that accompanied satellites into space. In the 1970s, oil companies such as Exxon, ARCO, and Shell started purchasing solar panels to run lights on offshore oil rigs, places where it was simply too expensive to connect to a traditional power grid. Solar received a burst of interest and government funding thanks to the OPEC oil embargo during President Jimmy Carter’s tenure, but that boomlet ended when Ronald Reagan came to office and dismantled the White House solar hot-water system along with Carter’s budgets supporting renewable energy. What remained were a variety of off-grid uses that still exist today: panels that illuminate highway traffic signs and entire solar systems that, along with batteries, can provide enough juice to vacation homes far from electricity infrastructure. Then there were the buyers who wanted secrecy. Installation companies like Real Goods Solar credit pot growers with helping them stay in business in the 1970s and 1980s; these customers were interested in modern conveniences but not keen on the foot traffic required to extend the grid to their hideaways.

Had solar remained confined to this motley collection of astronauts, oil executives, and potheads, there is no way utilities, legislators, and businesses in the South would even be talking these days about installing panels. But economic arguments for solar come from far-flung locales like Berlin; Wuxi, China; and—in the United States—Sacramento and Trenton. In the mid-1990s, Germany launched an incentive, called a feed-in tariff, to encourage the deployment of more solar. The feed-in tariff went beyond green altruism and appealed to customers’ pocketbooks by guaranteeing a premium based on energy generation to those who decided to put panels on their roof. The feed-in tariff made solar a profitable investment. Italy and Spain followed Germany’s lead, and the combination of George W. Bush’s 2005 federal tax incentive and aggressive state-level incentives helped create demand for grid-connected solar here in the U.S. Collectively, these incentives gave solar a new advantage: scale.

Smelling opportunity from the large and growing global demand for panels and other equipment, Dow Corning, Dupont, and Panasonic jumped into solar, investing heavily in research and development. After the Chinese government decided that it wanted to dominate solar manufacturing, Suntech, Trina, and Yingli emerged as the biggest players in the international solar markets. With big multinational competitors serving huge markets, prices dropped dramatically. Back in 1976, solar panels cost $60 per watt. By 2010, the cost of solar panels had plummeted to just $2 per watt. 

Since then the simple dynamics of supply-and-demand have caused solar prices to nosedive even further, to well below $1 per watt. While Germany has continued to chug along as the world’s number-one market for solar installations, the poorly designed and overly generous feed-in tariffs in Italy and Spain have gone bust, creating hardship for manufacturers. “The problem is that they were building these modules and these other components of the solar system with the thought that this market would continue to grow,” said Anthony Kim of Bloomberg New Energy Finance, when I spoke to him in January. When the market didn’t grow as much as expected, what remained was a surfeit of panels and a host of manufacturers eager to sell at very low prices to maintain their share of an oversupplied market. That situation has translated into a tremendous opportunity for companies and individuals who might not have considered solar power in the past. “Some of these smaller markets that may not necessarily have made sense in the past, either non-sunny places or places that don’t have incentives, are in fact able to use solar.” Kim said. “Solar is in fact cheap.”

Ashort drive from the tourist-thronged Alamo and Riverwalk in downtown San Antonio is a very good example of what Kim was talking about. Driving south from downtown on I-37, I saw that the landscape was all office parks, car dealerships, and fast food, just the kind of suburban sprawl you’d expect to find in the country’s seventh largest city. Exiting onto a series of “Farm to Market” roads, I slipped into a rural enclave, still within city limits, where long driveways lead to homes that can’t be seen, and sprawling oak trees and brown fields, dry from winter and endless drought, stretched out as far as I could see. The relentless sun is the dominant feature of this countryside.

At the end of Valley Road, the flat, arid expanse was broken up by a shimmering oasis of glass and metal: a sea of more than 83,000 solar panels stretching in long rows and covering nearly 200 acres. On a balmy late-January day, it was quiet here at Centennial Solar Farms, except for the sound of the brisk wind and the occasional groan of the trackers that adjust the panels throughout the day to better follow the movement of the sun across the sky. From certain vantage points amid the panels—which were put in the ground in just six months and generate nearly 20 megawatts, enough to power about 2,500 homes annually—it was possible to see, well, the past.

On the horizon, just a few miles away, two smoke stacks billowed white plumes skyward, the most visible sign of an energy-producing complex that includes the hulking J. T. Deely Station, a coal-fired power plant—a facility that has provided electricity to customers of CPS Energy, the municipal utility, since the 1970s. Not for much longer, however; in 2011, CPS Energy announced that it would shutter Deely in 2018, making it the first publicly owned coal facility in Texas to be shut down. CPS Energy will still generate electricity by burning coal after 2018—its fleet will include natural gas and nuclear power, too—but it will also buy more wind energy, along with another 400 megawatts of solar. Because CPS is a municipal utility, it can’t take advantage of federal tax incentives. Instead, CPS contracted with OCI Solar—which can use such credits—to oversee the construction of enough panels to provide power to 70,000 homes and will purchase the electricity at a set price over the next twenty-five years. Known as a power purchase agreement (PPA), this sort of arrangement has driven much of solar’s recent growth in the U.S. and is attractive to companies like Walmart because it helps them project energy costs decades into the future.

CPS has used its purchasing power—400 megawatts is a very big deal in the still nascent American market—to make San Antonio a solar manufacturing hub. As part of the deal, OCI will bring more than 800 new jobs to the city. “What that 400 megawatt PPA does is give us the foundation to bring in manufacturers that will have enough backlog for the first couple of years to get the rest of their business going through the Americas,” said Tony Dorazio, the president of OCI Solar and a longtime veteran of the energy industry. During my stay in the city a deal for a panel factory to be built on the grounds of an old military base was finalized; across town, welders were busy converting a nondescript warehouse into a factory to produce trackers; and on the reception desk at OCI Solar’s new downtown headquarters, on the twenty-second floor of the Bank of America building, was a thick stack of blank employment applications.

Given that his company had successfully lured a new industry to San Antonio, creating hundreds of new jobs, one would assume that Doyle Beneby, the CEO of CPS Energy, would be clamoring to talk about his accomplishments. Yet just minutes before our appointment, while I was still in the parking lot outside of the utility’s headquarters, I received word that Beneby did not want the videographer accompanying me to be present at the interview. Despite the praise he’s received for his solar initiative—he was named the utility CEO of the year by the Solar Electric Power Association in 2012—Beneby has also experienced painful blowback. In October 2012, CNN ran a negative story about the deal claiming that because OCI Solar is the subsidiary of a South Korea–based conglomerate, San Antonio ratepayers were sending millions of dollars overseas. The story failed to mention any of the local jobs being created in conjunction with the solar project and emphasized the support the effort had received from Mayor Julian Castro, a rising political star who recently delivered the keynote address at the Democratic National Convention. The dark insinuation was that CPS was playing politics, acting like Solyndra. Other stories—about expensive business dinners Beneby hosted while negotiating the terms of the solar initiative—were damaging enough that Beneby was compelled to issue an apology.

After some feverish discussions between Beneby and his press people, the videographer and I were ushered into Beneby’s office without any assurance that we’d be able to tape our interview. ESPN played on a large flatscreen television; we were seated at a long conference table, set far away from his large desk. On the walls were framed photos of power plants, including a solar farm. Beneby is a large, imposing man who played basketball at Montana Tech while earning his undergraduate degree in engineering. Like so many engineers in the energy business, he seems reflexively reserved, even shy. His caution is well-known among utility employees, where he has put safety at the top of his company’s priority list. A colleague of his recalled the look of panic that came over Beneby’s face as he walked out of an event at San Antonio’s Witte Museum after a rain and saw a bunch of children playing on some slick elephant statues. Being the target of politically charged attacks must be odd for someone who has spent his entire career in the conservative utility industry and is fond of telling coworkers that he is politically agnostic.

Yet in so many ways, this low-key engineer is just the sort of spokesperson solar energy has always needed. There were no photos of Jerry Garcia on his office wall and he happily quoted Winston Churchill, not John Muir or Ralph Waldo Emerson. He was eager to discuss financial models and solar’s role in hedging risk and saving money for the utility—not how it could save the planet. When Beneby first arrived at CPS in 2010, there was a plan to build 50 megawatts of solar in the city by 2020. “To me, that seemed very, very low,” he said. Beneby had been closely watching solar prices sink and he saw the opportunity to avoid the expensive regulatory mandates that govern other kinds of energy. In particular, Beneby was concerned about the cross-state air pollution rule and the clean air interstate rule, which limit the sort of sulfur dioxide, nitrous dioxide, and heavy metals that are emitted by burning hydrocarbons. Rather than spend half a billion dollars to retrofit the Deely coal plant to meet those regulations, he opted to divert the money to low carbon generation sources, like solar.

Other economic factors buttressed his decision as well. Solar does not require water, which is very important in drought-stricken Texas. Beneby also told me that the PPA arrangement that locks in the price of solar—he wouldn’t give me the exact number, other than to term it “very, very competitive”—for a quarter of a century is “an incredible predictable hedge” against the risk of higher energy prices from other sources. Another very important economic consideration in solar’s favor is that it provides a ready source of electricity during periods of peak demand. For San Antonio, as with many places around the country, peak demand usually falls between 5 p.m. and 7 p.m. in the summer, when people get home from work or school and crank their air conditioning, turn on their TVs, or jump in the shower. If the demand for electricity outpaces what is available from their regular fleet of power plants, utilities have no choice but to pay exorbitant prices to avoid blackouts. Solar plants can generate a great deal of electricity on those late summer afternoons. “The traditional way to satisfy those peaks is with high heat rate, highly inefficient natural-gas-fired peaking plants. That can be very, very expensive,” said Beneby. “Solar at fixed prices can shave quite a bit off that peak for us because, unlike wind, it’s very much coincident with that peak load.” 

Although solar will only account for around three percent of all of CPS’s power generation by 2020, Beneby believes that it will steadily grow, especially as storage capabilities improve and the efficiency of modules increases. He even envisions going into existing solar power plants a decade from now and upgrading to more efficient panels. As we wrapped up our interview, Beneby made a point that would have been almost unthinkable even a few years ago. “I think it’s also important you didn’t hear me talk about climate change,” he said. “That is not why we do this. It’s an extra, added benefit.”  

B

eneby’s embrace of solar is important but it hardly represents a break from the traditional utility model: large, central-station power plants that use miles and miles of wires to deliver electricity to customers. Solar plants differ in scale from nuclear or coal plants, but the idea is the same. Distributed generation, by contrast, makes use of solar panels installed on the roof of a home or business; such panels provide energy where it’s consumed, eliminating the need for extensive systems of transmission and distribution wires to move electricity long distances. There are some obvious benefits to distributed generation. For one thing, energy is lost as it moves from, say, a large coal plant in Mississippi to customers in Alabama. Such “line losses” can be as high as eight percent. A system of widespread distributed generation would require fewer large power plants and a less expensive grid infrastructure. There’s also the question of security. Former CIA director James Woolsey is a big fan of small-scale distributed solar because he believes rooftop solar, linked by micro-grids, is a way to avoid a potentially catastrophic attack on our still very centralized electrical grid. Despite these benefits, many utilities have traditionally fought distributed generation. According to the conventional view, which sounds plausible enough, every homeowner who opts to get some or all of her energy from the sun is a lost customer. If a solar system is large enough—and if there’s a decent net metering law—it’s possible for customers to kiss their utility bills goodbye. While this is obviously a big selling point for companies wanting to install solar panels, utilities complain that solar customers maintain their connection to the grid and can rely on the utility to keep their lights on at night or if something goes wrong with the solar system. Solar customers thus benefit from having a dependable backup in the conventional grid without having to bear the costs of maintaining the grid infrastructure. 

Utilities have already made efforts—successful in Virginia, unsuccessful in California—to levy a “standby charge” on solar customers as a way to ensure that there’s no leeching off the system. This adversarial relationship between utilities and solar advocates is very common, which is why a lot of attention is being paid to an experiment underway just an hour or so northeast of San Antonio, in Austin. The municipal utility there, Austin Energy, is pioneering a program that aims to cover as many residential rooftops as possible with solar panels. Karl Rabago, who led the design of what is known in typically dry utility parlance as the Value of Solar Tariff, which went into effect last October, told me that addressing the mindset and worry caused by distributed generation solar is no small matter. “These utilities were raised for one hundred years to do nothing more than make and sell and distribute electricity down through smaller and smaller wires,” he said. “This is really threatening to the business model.”

It doesn’t have to be this way, insisted Rabago. But in order to figure out whether a fulsome embrace of small-scale solar and its benefits was suicide for Austin Energy, Rabago and his team had to do a lot of number crunching. They concluded that the typical net metering arrangement, in which solar customers receive credits at a retail rate for the energy they produce, was the result of convenience rather than rigorous analysis. To come up with a true value of solar to the utility, Austin Energy formulated numerical values for all of the benefits yielded by each kilowatt-hour of distributed generation. These included not only the actual electricity produced but also the elimination of line losses as well as costs the utility could avoid by not building, or even delaying, construction on more generation. “If you put off a billion-dollar decision for one year, that’s at five percent interest,” said Rabago. “It’s a big savings in cash each year.”

In the end, Austin Energy determined that net metering was actually shortchanging solar customers. Now the utility credits homeowners who have installed solar at a rate three cents higher than retail for every kilowatt-hour produced, which could mean the near elimination of utility bills for some of Austin’s customers. And Austin’s new arrangement does something else that’s different from traditional net metering arrangements. While customers receive more credit for the solar energy they make, they are still charged at regular retail rates for the electricity they consume. “You have a cloudy month where the utility has to provide a lot of electricity, then they collect what they need to,” said Rabago. “This was a major internal selling point.” 

Rabago is now educating executives, policymakers, and regulators around the country about Austin’s approach to solar. To his mind, it’s a vision of the utility of the future. “There’s an upside for the utility to actually encourage the customer to get on the wagon to get more solar, to be part of their generation fleet,” he said. “When people always talk about distributed generation being a game changer or whatever the current buzz words are out there about utility transformation, it is true. This is disruptive shit.”      

It may be tempting for supporters of solar to latch onto San Antonio and Austin as models that can be replicated throughout the South, but the reality is that municipal utilities are islands. They operate under very different conditions and pressures than the much larger investor-owned utilities that are dominant around the region. In the case of municipal utilities, or munis, local politicians and citizens can have a more direct impact on business decisions because mayors and city council members also typically act as regulators. But the vast majority of energy customers around the South are served by large, publicly traded, investor-owned utilities such as Georgia Power and Duke Energy and Florida Power & Light, all of which answer to shareholders and regulators at state public service commissions. Having a responsibility to investors along with customers and regulators inherently means that these behemoth utilities are driven by short-term economics—they issue quarterly reports to Wall Street, after all—in a way that munis aren’t. But there’s something else at work around much of the South that complicates solar development even more. Until recently, the large investor-owned utilities across the U.S. were vertically integrated, meaning that they owned the power plants that generated electricity as well as the distribution and transmission lines that delivered those kilowatt-hours to homes and businesses. In what is often called the “regulatory compact,” utilities were granted monopoly status to sell electricity to end users as well as a guaranteed rate of return. 

Then, in the mid- to late 1990s, a wave of deregulation swept across the country, upending the traditional model. A number of states, including California, Texas, and much of the Northeast and Midwest, opted to unleash a free market for generating electricity, more or less transforming utilities into distributors of energy. As a result, people in large portions of the country can now shop around and choose the company that will supply their energy. The parallel that supporters of deregulation bring up is telecommunications after the break-up of AT&T and the Bell System. But with the exception of Texas, which jumped on the deregulation bandwagon, the Southern states did not break up their energy monopolies; electricity prices were low enough that even market-oriented Southern conservatives were unwilling to experiment with deregulation.

In retrospect, that decision appears wise. California, thanks to Enron, became the poster child for the follies of deregulation, which resulted in price gouging and rolling blackouts. But even if the overall results of deregulation have been mixed, one real benefit has been that it opened the door to more solar and wind development. “Part of the deregulation package was an agreement to allow renewables to participate in the marketplace just like any other competitive resource,” said Steve Kalland of the North Carolina Solar Center. “In many cases there were actually subsidies created to help support that entry into the marketplace.” But that didn’t happen in most of the South. Even where net metering is available, homeowners have to do a fairly grim calculation. With no state subsidies to defray the upfront cost, solar customers have to figure out how long it will take to earn back their investment in solar panels. In Hawaii, where retail rates are around thirty-six cents per kilowatt-hour, the economics can make sense fairly quickly; in Arkansas and Louisiana, where the utility can offer rates below ten cents, it’s a much tougher sell.

Because the monopoly utilities are the only ones who can sell electricity to customers in most of the South, the region is missing out on one of the major financing developments driving solar installations around the country. Called third party leases, the arrangement is simple. National companies like SolarCity, Sunrun, and Sungevity put solar panels on the roof of a home or business for little or no money upfront. Customers who agree to this arrangement don’t own the solar system on their property, but instead agree to purchase the electricity produced by the panels. Besides eliminating the steep upfront bill—best described as paying decades’ worth of energy bills at once—leases also offer the sweet deal of rates that are lower than that of the utility.

The specific legal hurdles to third party leases vary from state to state. In Georgia, the obstacle is known as the Territorial Act, and its prohibition of such financing helped spawn an odd political coalition. Last summer, Colleen Kiernan, the state director for the Sierra Club, was whipping up opposition to a referendum to pay for transportation projects with sales tax revenue when she heard from a colleague that a leading Tea Party activist named Debbie Dooley was a “salt of the earth” type who was willing to work with anybody on issues of common concern. “I called her up out of the blue,” Kiernan recalled. “Especially in Georgia, where it’s a tougher political climate, to get anything done we have to look outside our coalition.” The two women got together for lunch and quickly realized that there were obvious areas of collaboration beyond just the transportation initiative, which they ended up crushing. “We may disagree on ninety to ninety-five percent of the issues,” said Dooley, a grandmother who has focused a lot of her efforts on tough ethics legislation and fighting plans to use taxpayer funding to build a new stadium for the NFL’s Atlanta Falcons. “But when we work together it has been highly successful.” 

In Dooley, Kiernan found someone who was already at odds with Georgia Power over the utility’s construction of the Vogtle nuclear power plant in the far eastern part of the state. Cost overruns and delays are irritating, of course, but so too is the fact that Georgia Power has been permitted to begin recovering its costs for the Vogtle project from ratepayers before a single kilowatt-hour has been produced. Usually, that doesn’t happen until after a generator comes online. Once she learned more about the Territorial Act, Dooley was ready to sign on to dismantle it. “We believe in private property rights,” Dooley told me. “If someone has private property and they want to bring in solar power they should be able to contract with whomever.” The Sierra Club/Tea Party–led coalition failed to topple the Territorial Act in 2011, but Dooley vows to try again this year.

Other unlikely opponents of the Territorial Act and Georgia Power’s attitude toward solar have also emerged. Dr. Sidney Smith, a soft-spoken dermatologist from Savannah, was the first Georgian to install a residential grid-connected solar system. Smith sees solar as a potential engine of economic development, which his state desperately needs. “It looks like a depression through this area,” he told me. “I’m from South Carolina and I’ve seen much better times. Cotton was king, then tobacco was king, and now nothing is king.” His idea is to build solar power plants that sell electricity directly to customers and require that one percent of the gross receipts go into a trust fund that benefits the county where the plant is located. Anticipating that Georgia Power would send him a cease and desist order for violating the Territorial Act, Smith named his company Lower Rates for Customers LLC—court documents listing Georgia Power versus Lower Rates for Customers would undoubtedly generate media attention. So far, Smith hasn’t been sued. 

And then there’s Georgia Solar Utilities, a company that filed a petition with the Georgia Public Service Commission (PSC) claiming that Georgia Power’s failure to pursue solar energy was a violation of its charter to act in the best interests of ratepayers. Georgia Solar Utilities presented a plan that would give itself the right to build 2,000 megawatts of large-scale solar parks, enough to supply five percent of that state’s electricity, over the next two years. Not only did the company ask for the right to operate as a utility and sell solar electricity to customers—using Georgia Power’s transmission lines, mind you—it also requested that the commission grant it monopoly status so that it could attract low-cost capital to build its fleet of large solar parks. In return for the right to shove aside Georgia Power, the solar utility proposed paying for its use of the power grid and rebating a portion of its profits to customers. By a vote of three to two last fall, the commission basically punted on the idea and sent it to the legislature.

Not surprisingly, Georgia Power—which declined to make anyone available for an interview—responded negatively, saying that the plan wasn’t really a plan at all because, unlike existing companies, Georgia Solar Utilities has no customers, no existing generation, no power lines or billing capabilities, nothing more than a plan to be a parasite. Despite all the attacks Georgia Power has experienced for not doing enough solar, its public attitude is clearly changing. The utility has committed to a 210 megawatt solar acquisition, approved last fall, that will increase the utility’s admittedly meager solar portfolio by 344 percent.

Regardless of this huge jump in its plans for solar generation, Georgia Power is not what anyone would call a progressive utility. In fact, the company has always been outspoken in its criticism of solar energy. Paul Bowers, the company’s CEO, along with Southern Company CEO Tom Fanning, have publicly declared that renewable energy will remain a niche for decades to come. Even so, it may not be up to them. Just over a decade ago, the national energy strategy espoused by Vice President Dick Cheney was simple: build more coal plants. Today it’s impossible to finance coal generation, and old plants are being set for retirement by the hundreds. It may turn out that Georgia Power’s voluntary step is just the beginning of a long journey. “It’s a good thing, it opens the door,” said Carrie Cullen Hitt, a vice president of the Solar Energy Industries Association, a trade group. “We’ll get some solar in the ground and people can see that it is cost effective and it’s not some weirdo liberal thing. It actually works.”

Plenty of knowledgeable observers agree with Bowers and Fanning that solar production will remain a minor element of the overall energy mix. In part, their argument follows from the very real impact of the current historically low natural gas prices. Just south of San Antonio, for example, the Eagle Ford shale contains recoverable reserves of natural gas estimated to range from 300 billion to 150 trillion cubic feet and is said to be the world’s largest oil and gas development in terms of capital investment. Buck Martinez, who heads up renewable energy development at Florida Power & Light (FPL), the state’s largest utility, observes that solar would be in a much better position today were it not for the recent fracking-induced pricing swoon. “Had solar seen this precipitous drop and if gas prices had stayed where they were five or six years ago, solar would be a no-brainer for every state,” he told me. Even so, Martinez, who estimates that FPL will get 70 percent of its energy from natural gas by 2016, believes there will eventually be a crossover point at which gas will become more expensive than solar. That price convergence, he said, combined with affordable storage that allows solar energy to be used even when it’s dark, will be a transformative moment for American solar development.

Martinez is not alone in his opinion. The assertion that solar can compete even against persistently low natural gas prices (and there’s no guarantee that gas prices will remain low, especially if gas developers continue to see profits plummet because of low prices and decide to scale back their investments) was backed up in some economic modeling done recently by the Electric Reliability Council of Texas (ERCOT), the state’s grid operator. In the past, using cost data from 2006, ERCOT projected that virtually no solar would be built in the state over the next two decades. But in December of 2012 ERCOT published a new report using up-to-date information about solar costs and performance and came to the drastically different conclusion that 10,000 new megawatts of solar would be coming to Texas by 2032.

Of course, critics are right to point out that solar is still a very small part of the overall energy market. In 2010, for instance, solar accounted for less than a tenth of a percentage point of all the energy produced in the U.S. But historical perspective is always useful when confronted with such statistics. In 1960, nuclear power provided only an infinitesimal percentage of America’s energy, yet by 1980, with government support, nuclear accounted for 11 percent of the energy mix; a decade later it was up to 19 percent. The U.S. Department of Energy believes similar growth is possible for solar and has issued a possible route to get there. Launched in 2011, the Energy Department’s SunShot Initiative offers a comprehensive roadmap, laying out what needs to happen if solar is to provide 14 percent of America’s electricity by 2030 and 27 percent by 2050. The nearly three-hundred-page SunShot Vision Study is essentially an elaborate to-do list, including investing in transmission, improving the efficiency of panels, and creating better and cheaper financing models. The report is also remarkably sober about the assistance the solar industry can expect to receive from government. In fact, it assumes that no new policy incentives will be enacted and that fossil fuel production will continue to benefit from a huge array of unnecessary government subsidies.  

Ultimately, the mantra of the SunShot report is pretty simple: solar electricity has to get a lot cheaper. If the overall price of installed solar were to decline 75 percent from 2010 levels by 2020, solar production would be economically competitive in all fifty states. As it happens, this transformation is speeding along ahead of schedule. The SunShot blueprint says that solar panels need to be available to utility systems for about fifty cents per watt by 2020; large purchasers can already snap them up for seventy cents per watt or lower. Developers of large solar projects in certain states are already reporting that they can build power plants and profitably sell the output at rates as low as six or seven cents per kilowatt-hour to the utilities, who can turn around and sell the energy at much, much higher retail rates. 

This remarkable story of solar’s economic progress has gone largely unnoticed, and not just because of the Solyndra scandal. Ongoing solar trade disputes involving the U.S., China, India, Canada, and the European Union also generate plenty of bad press. Even worse, the wave of consolidation that winnows out uncompetitive manufacturers churns out so many pink slips that it’s easy to conclude that an entire industry is dying. Even people who work in the energy industry seem unaware of what’s happening. “When we talk to folks, whether they be utilities or other companies or other developers or the financial consortiums who would underwrite these types of projects, oftentimes the belief is that the cost of PV-generated electricity is on the order of two or three times what reality is,” said Steve O’Rourke, chief strategy officer at SunEdison, a company that builds solar power plants all over the world. “That is because the whole cost curve, which has accelerated over the past couple of years, hasn’t caught up with people’s perception and knowledge of the industry.” 

The solar revolution is not lost on everyone. In March of this year, Royal Dutch Shell, parent company to one of the world’s largest oil companies, issued its latest New Lens Scenario, a comprehensive report that details what the world’s energy mix could look like fifty years from now. Shell has been issuing similar glimpses into the future for forty years, analyzing social, economic, and political forces and trends in order to come up with plausible predictions of future energy needs. Shell offers its scenario reports as a guide to business decisions, and for an energy company such decisions have everything to do with how dependent our children and grandchildren will be on coal, oil, gas, and alternative forms of energy production.

Of the two scenarios posited by Shell’s analysts, one foresees a cleaner energy system thanks largely to vastly increased natural gas development, energy efficiency efforts, and carbon sequestration. That might sound good, but this possible future is really just a development of the current economic status quo in which the power of wealthy individuals, businesses, and institutions becomes cemented, with educational and economic opportunities increasingly available only to a small elite, while the rest of us fight over the crumbs. It is, in short, a rather grim new Gilded Age, though Shell’s researchers predict that the rigid power structures of this scenario will hamper economic development as social stability and the maintenance of “our way of life” become more important to elites than economic dynamism and opportunity. One upside of this world is that poor economic performance would lead to lower carbon emissions, thus slightly delaying the effects of global climate change.

The other possible scenario envisions a future in which the elite accommodates middle-class frustration and permits a wide array of reforms that lead to dispersed political and economic power and increased opportunities. Not all is well in this world, however, since political and economic dynamism often leads to social disruption and displaced hierarchies. Oil and gas prices are high and carbon emissions continue at an accelerated pace, especially in the near term. Unstable and violent weather and underperforming natural gas production eventually lead to a global embrace of solar power, with the developing world taking the lead. In many regions, populations that previously had no electricity at all make a quick transition to solar electrification. By 2040, Shell’s analysts see solar catapulting from its current position as the thirteenth largest global energy source to fourth, behind coal, oil, and natural gas. By 2100, in this scenario, solar emerges as the number-one source of primary energy in the global economy.

Shell’s two predictive scenarios rely on different assumptions about energy resources—whether reserves of natural gas recoverable via fracking turn out to be as large or accessible as expected, for example—as well as political behavior. In one possible future, cheap natural gas is king and solar plays a lesser role; in the other solar comes to dominate the energy mix by century’s end but carbon emissions nonetheless continue to rise far beyond sustainable levels, leading to serious economic and political disruptions as a result. Both futures represent extreme outcomes that are very far from desirable. But neither is inevitable or necessary. What’s refreshing about the Shell analysis is that it recognizes that the events described in its two scenarios are largely driven by human choices—not abstract market forces that somehow exist independently of human decision making and collective governance.

Our eventual future could also turn out to be some mix of Shell’s two plausible scenarios. Whether a mix of bad attributes or good will depend in great part upon the decisions we make. Likewise, the fact that solar energy production makes good economic sense today has resulted from the efforts of idealistic believers in the social and environmental value of clean energy no less than the mercenary economic decisions of venture capitalists. In the real world, human motivations are rarely either one or the other. The goal, for entrepreneurs like Bill Ball as well as for everyday energy consumers and designers of national and international energy strategies, should be some healthy combination of the two. The same might be said of our most desirable energy mix. In 2010, electricity composed only about 18 percent of total energy demand, so even if renewable sources such as wind and solar power come to play a decisive role in future energy markets, sources such as natural gas and biofuels, combined with carbon capture techniques, will remain necessary. Getting the mix just right will require smart politics in addition to smart economics.