The Swiss scientist Horace de Saussure is credited with inventing the world's first solar collector or "solar hot box" in 1767, and the French scientist Augustin Mouchot patented his solar engine in 1861. At that time, the primary uses of solar technologies ranged from cooking food and distilling water to pumping water for irrigation.

In the early 1880s, American engineer John Ericsson launched the solar energy industry in the United States. Ericsson developed several solar-driven engines to power steam generators for ships. But the man considered to be the father of solar energy in the United States was Clarence Kemp, who patented the first solar water heater in 1891. His invention was marketed in California, where in 1897 it became popular enough to heat the water of 30 percent of the houses in Pasadena.

In 1908, William J. Bailey of the Carnegie Steel Company invented the solar collectors that were to become the predecessors of those popularly used today. By the end of World War I, more than 4,000 rooftop solar water heaters had been sold, and more than 60,000 were in place by 1941. By the late 1940s, the demand for "solar homes" became so great that a large number of housing developments across the United States were built with both active and passive solar applications.

In 1954, Bell Telephone researchers discovered the sensitivity of a properly prepared silicon wafer to sunlight, and the "solar cell" was developed. Beginning in the late 1950s, photovoltaic cells were used to power U.S. space satellites, and they continue to be the prime power source for both manned and unmanned space projects today. The success of photovoltaics in space also spawned commercial applications for the technology that continue to be used and developed today.

The oil embargoes of 1973 and 1979, and the accompanying severe increases in the price of petroleum, created a new climate for the development of all renewable energy technologies, especially solar technologies. President Jimmy Carter stressed the importance of solar energy in reducing U.S. dependence on foreign oil, and he did everything from installing solar panels on the White House to promoting a wide range of incentives for solar energy systems to stimulate their use. By the early 1980s, the U.S. solar industry had grown to more than 100 national solar manufacturers and component suppliers producing solar water heating, solar thermal-electric, and photovoltaic equipment.

Other factors spurring the increase in solar energy use and development in the 1970s were the creation of the U.S. Department of Energy (DOE) and the Solar Energy Research Institute (now the National Renewable Energy Laboratory [NREL]), as well as several Federal initiatives, including investment tax credits for solar equipment and the enactment of the Public Utility Regulatory Policies Act of 1978 (PURPA).

One of the stated functions of DOE and NREL was to provide support for research and development of solar and photovoltaic technologies. This Federal assistance boosted the industry and advanced the technologies. PURPA greatly simplified the process of connecting small power sources to a utility grid and obtaining power purchase contracts from the utility. It exempted certain small power producers, called qualifying facilities (QFs), from rate regulation, mandated electric utility interconnection, mandated power purchases from QFs at the avoided cost (the amount the utility would have paid to generate or obtain the power elsewhere), and led to standardized contracting processes.

Luz International, the pioneering solar electric company in the United States during the 1980s, was created in 1980 and completed its first solar power plant in 1985 in California's Mojave Desert (see Lutz International inset). By 1991, Luz had brought 354 megawatts of solar electricity on line at nine different sites. Although the company went out of business in 1992, its plants continue to produce electricity today. During Luz's existence, the cost of solar electricity was cut from 25 cents per kilowatthour to less than 8 cents.(5) Luz's Solar Energy Generating Station failed economically because: (1) natural gas prices and electricity costs did not rise as expected; (2) operating and maintenance costs for the station did not decline as rapidly as had been expected; and (3) key tax incentives were expiring or uncertain.