Probable Impacts of Budget Reductions on the Development and Use of Photovoltaic Energy Systems

In response to a congressional request, GAO examined the impact of the reductions in the fiscal year 1982 Federal photovoltaic research and development budget on the achievement of the goals of reducing the average installed photovoltaic energy system cost and reaching a total annual photovoltaic energy system production of 2 million peak kilowatts. In addition, GAO obtained information on the probable impacts of budget reductions on U.S. leadership in photovoltaic energy technology and on small businesses in the photovoltaic industry.

The Administration has substantially reduced the budget for the Federal program to develop solar photovoltaic energy systems. The Department of Energy has been conducting an aggressive photovoltaic program to bring about the economical use of photovoltaic energy systems as quickly as possible. As a result of budget cuts, many of the activities in the program have been curtailed or eliminated. Funding for the program, which was originally $160 million per year, has been reduced to $74 million per year. A previous GAO review showed that the Act's goals had little likelihood of being achieved within the Act's timeframe; however, due to the reductions, the goals now have even less likelihood of being reached. Neither the Federal program nor private industry is now expected to undertake the efforts needed achieve the goal of reduced costs in the 1988 timeframe. The Act's 1988 production goal has been essentially eliminated by the budget reductions. The United States is currently the world leader in photovoltaic technology, but reduced Federal funding, coupled with increased support of foreign photovoltaic industries by their governments, has caused concern about whether U.S. leadership can be maintained. With the reduced Federal program, small businesses in the photovoltaic industry may not survive, since they will not have the funds to compete successfully with larger businesses. However the photovoltaic industry is expected to endure and the Act's goals achieved at a later date with private industry continuing the efforts to develop the energy systems.