FY2013 Budget Process Shapes Future of Solar R&D

Solar Panels

At this point in the budget process, several diverse scenarios have been proposed for the next fiscal year, indicating many possible progressions for the future of federal energy innovation investment.  As an example of the variety of possible outcomes for the next fiscal year and those that follow, the figure below examines three possible scenarios for the future of solar research and development investment.  As captured in the Energy Innovation Tracker, the Department of Energy (DOE) is not alone in supporting solar R&D – it is accompanied by the Department of Defense, the Department of Commerce, and the National Science Foundation.

Solar R&D investment saw a 30 percent average growth rate between FY2009 and FY2012. Scenario 1 assumes that the average rate of growth experienced for solar R&D investment during the last four years will persist into FY2013 and beyond.  Considering this scenario, solar R&D investments could reach over one billion dollars within a few years. In the figure, the first line indicates the actual spending investments from all federal agencies on solar R&D from FY2009 to FY2012, as well as the investments funded through the American Recovery and Reinvestment Act (ARRA).  The split at FY2013 reflects a variety of outcomes that could become reality at the conclusion of the budget process – it also communicates how much is at stake under some circumstances.

Solar R&D investment saw a 25 percent average growth rate between FY2009 and FY2012. Scenario 1 assumes that the average rate of growth experienced for solar R&D investment during the last four years will persist into FY2013 and beyond.  Considering this scenario, solar R&D investments could reach over one billion dollars within a few years.

The second scenario assumes a more gradual – and realistic – rate of growth in solar R&D investment modeled on the FY2013 Presidential Request for key offices within the DOE.  The request suggested close to a seven percent increase for FY2013 from FY2012 omnibus levels.  If this trend was applied to all solar energy R&D and was extended into the next few years, by FY2015 solar energy R&D could amount to over $770 million.  This scenario is closely aligned with the FY2013 Senate Appropriations proposal for DOE’s key offices.

The last scenario depicted here suggests an outcome that cuts solar energy R&D by 55 percent in FY2013 from FY2012 omnibus levels, and holds investment at this decimated level for future years.  Although this situation seems drastic, this scenario is modeled on Rep. Paul Ryan’s (R-WI) FY2013 “Pathway to Prosperity” budget resolution, which was approved by the House earlier this year.  This proposal implies significant setbacks not only to solar R&D in the U.S., but to the country’s entire energy innovation capacity.

The Energy Innovation Tracker will continue to follow the FY2013 budget process as further proposals unfold with analysis and commentary.

Originally posted on the Energy Innovation Tracker, a database capturing U.S. energy innovation R&D investment since FY2009.  For additional analysis, keep an eye on the Tracker’s blog and follow the Tracker on Twitter: @energyrdtracker.

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About the author

Megan Nicholson is the Research Assistant at ITIF. She graduated magna cum laude from Mount Holyoke College in May of 2011 with a B.A. in Economics and Environmental Studies. Before joining ITIF, Megan interned at the Global Environmental Facility, where she assisted with the research and writing of a publication on the organization's 20-year contribution to eliminating barriers to energy efficiency investment in developing countries.