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Low-Energy Fridays: It Came from Outer Space


By Philip Rossetti, R Street

An interesting energy innovation landmark was recently achieved when solar energy produced from outer space was beamed down to Earth. This “Space-based solar power” (SSP) is a novel concept that was first conceptualized by science fiction author Isaac Asimov in a short story in 1941 and was first seriously explored during the energy crises of the 1970s. Basically, you create a big collection point for solar energy in space and then beam it down to specific locations via microwave or laser. And its potential applications are also fascinating. For example, you could power equipment or far-flung installations without the need for fuel or transmission infrastructure.

But while SSP is novel, let’s be clear: it is nowhere near being a commercially viable energy source (and may never be, due to the high cost of sending anything into space). Rather, the whole exercise tells us something critical about energy innovation: It takes a very long time to make good ideas a reality, and the market is essential to commercialization.

This isn’t too different from other forms of energy innovation. We’ve always known shale contained oil, and we’ve been getting shale oil in small quantities since 1837. But the idea of directional drilling technology to unlock huge quantities of oil and gas wasn’t seriously explored until 1977 by the Department of Energy, and even that has science fiction roots, as the 1957 science fiction novel Atlas Shrugged featured major shale oil production as a plot point. Today, shale oil accounts for more than half of U.S. production (and the United States is the world’s largest oil producer). Similarly, things like photovoltaic solar cells which are commonplace today were invented in 1954, and before that concepts were first demonstrated in 1883.

Innovation takes a significant amount of time. This is because innovation is not just about coming up with good ideas—it relies on economic conditions that influence the practicality of changing how things are done. Part of the reason shale oil is so commonplace today is because oil used to cost over $100 per barrel, which made fringe and relatively unproven technologies suddenly profitable. Shale oil production increased, economies of scale and improving labor expertise with directional drilling caused costs to fall, and directional drilling became just as common as conventional drilling.

But why didn’t something other than shale oil fulfill that energy demand? Why not SSP, or batteries, or fusion or something else? Because none of these options were as low cost to meet market demands, and the market naturally steers capital toward efficient allocations to satisfy demand for the least cost. This is a good thing, because if politicians direct resources rather than markets, they will select technologies poorly as they have no incentive to be correct—and every incentive to pick whatever technologies their constituents produce, regardless of cost or practicality.

The visible part of innovation is the research, development and demonstration; the invisible part is the constantly fluctuating market that determines the conditions under which new technologies will either thrive or die. These conditions also separate genuinely impactful energy innovation from pipe dreams. It’s easy to identify technical ways to handle problems of energy scarcity or climate change, but it is the market that ultimately determines if they can practically be solved.


Philip Rossetti is an R Street Resident Senior Fellow, Energy. He conducts research on energy, climate, and environmental policy to identify low-cost and free-market opportunities to improve environmental outcomes.