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A lot of new technologies turn out to be long on promise but short on economics, and there is probably no better example than solar power.

More than a decade ago, I wrote in the Los Angeles Times that even though generating electricity from photovoltaic cells had for many years been one of those technologies that was just around the corner, "at the risk of ridicule, I'm here to tell you that widespread use of solar power is just around the corner."

As I read a New York Times story this weekend by my friend Gregg Zachary, in which he discusses venture capitalists' new-found interest in solar energy, I could only think to myself, "ah, still just around the corner."

That investors are interested at all, of course, means that the corner may be a little closer. But the iron laws of energy – namely that fossil fuels dug from the ground produce power more cheaply than anything else – seem to be holding quite fast. In the energy business, unlike the technology business, government policy, or the lack thereof, is everything.

There are really two aspects of public policy that are make-or-break in the energy world. The first is the straight subsidies for renewable energy technologies. Solar, wind, and other alternatives have enjoyed on-again, off-again tax credits in the US for many years, and the biggest subject among alternative energy promoters is often whether Congress will extend the tax credit.

The credits are again set to expire at the end of this year, and Congress is again debating if and how to extend them. The economics of many a solar project – including some of those being backed by free-market-loving venture capitalists – depend almost entirely on this subsidy. For biofuels, particularly ethanol, there is a straight 51-cent-per-gallon tax subsidy which, together with an import tariff, has been central to the ethanol boom.

The other critical aspect of regulation is environmental policy. Those cheap fossil fuels are dirty to extract and dirty to burn. If the government chooses to increase the extraction costs by prohibiting or limiting oil, gas and coal development in certain areas, or requiring expensive mitigation measures, that raises the price and makes alternatives more competitive.

Similarly, if the government chooses to deal seriously with the costs of burning fossil fuels – namely global-warming-causing carbon emissions – then that will also increase the price of traditional fuels and create more space for alternatives.

The Bush Administration, with its tight ties to the oil industry, has done everything it can to roll back restrictions on fossil fuel development and block any kind of carbon emissions policy. (A "cap-and-trade" system for carbon, which is pretty much a no-brainer from a public policy standpoint, is still not in place in the US.)

While Bush touts his policies as a means of increasing domestic energy production and reducing dependence on foreign oil, they also have the effect of dampening the development of solar and other alternatives – which are in turn the only real avenue for reducing oil imports and assuring energy security.

America, of course, is the land of the technological solution to all problems, so it's a little odd to see the federal government actively undermining technological approaches to one of the country's biggest problems. A Democratic victory in the presidential election would certainly change that, but it won't change the simple reality that what's most needed to spur the development of alternative energy is for the conventional sources to be more expensive.

Indeed, the Achilles heel of solar energy is coal, or rather the cheapness of coal. Here in Montana, we have all kinds of coal, and it remains the predominant source of electricity nationwide. Even all the wizardry of Silicon Valley is very unlikely to produce a method for producing power that's as cheap as coal-fired plants.

The venture capitalists are ultimately betting that government policies and thus the competitive environment will change, thus making solar a viable contender. But in the meantime, it will remain what it's always been: a breakthrough technology that's just around the corner.

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Jonathan Weber is the founder and editor in chief of NewWest.Net, a regional news service focused on the Rocky Mountain West in the United States. He was previously the co-founder and editor in chief of the Industry Standard