So Close: How the U.S. Ceded Solar Energy Leadership to China

Bell Telephone Laboratories (better known as Bell Labs) was established in 1925 as the research and development arm of AT&T and Western Electric. Bell Labs’ scientists and engineers were responsible for innovations in electronics and telecommunications that paved the way for many of the basic essentials of modern life. Silicon transistors, fiber optics, the laser, electronic switching and the photovoltaic solar cell are all products of Bell Labs research.

In 1954 Bell Labs researchers produced the first silicon solar cell, which generates electricity when light strikes a silicon chip. The technology was too expensive for heating and lighting homes, but the U.S. Navy employed solar cell technology to power the radio transmitter on its Vanguard satellite launched in 1958, replacing heavy mercury batteries. Solar cells became a staple of the U.S. space program.

In 1973 the world oil crisis led the government to search for alternative energy sources, and funding for solar power research and development took off, involving thousands of scientists and engineers, financed principally by the new Federal Energy Research and Development Administration and the Solar Energy Research Institute.

All of that changed with the election of Ronald Reagan in 1980. His conservative government favored free markets and limited government. In his first year in office U.S. government spending on solar energy research fell by 60%. Reagan’s personal reaction was to remove the solar panels installed by President Carter on the roof of the White House. Cheap oil and reduced Federal spending forced the solar energy industry to shrink.

With a different perspective on the potential for solar energy, Germany began in the 1990s to subsidize both the manufacturers of solar panels and the consumers purchasing them. In the new century China subsidized the development of solar energy, dedicating itself to rapid growth and reduced cost. Today, China produces 77.8% of the world’s solar panels.

Germany and China recognized the necessity of government funding for scientific research. The process of discovery is expensive because it is “hit and miss;” uncertainty and long-shots are not favored by profit-oriented businesses. Initial investigation takes commitment without guarantee of success. Ironically, the history of Bell Labs proves the point: Bell Labs owed its success to its monopoly status. As a government-sanctioned monopoly, Bell Labs was free to “follow the science” without concern for profitability.

Is the U.S. playing such a role in Artificial Intelligence research? According to a 2024 report, the U.S. led other countries in number of machine learning models, private investment in AI and number of AI data centers. However, generative AI is more widely used in China than in the US. And China is the world leader in AI patents.

In January, President Trump announced the Stargate Project, a $500 billion joint venture to fund AI infrastructure, focusing on building the first data center in Texas. Stargate comprises technology partners NVIDIA, Microsoft and ARM, with financial backing from Oracle, OpenAI, Japanese Bank SoftBank and the Emirati sovereign wealth fund MGX. By 2029 the project plans to build a network of data centers across the U.S., providing the infrastructure to support AI research.

Addressing the extreme energy requirements of these data centers will benefit future renewable energy technology, reducing dependence on fossil fuels.