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Fred Morse began his reign as king of the solar thermal industry four decades ago, when President Nixon asked him to figure out whether solar energy made sense for America. His conclusion: most definitely. He managed solar energy in the Department of Energy for Presidents Carter and Reagan until 1989.

Two years later, the federal government slashed renewable energy subsidies in the face of plummeting natural gas prices and solar went out of vogue. In the late 1990s, as co-chair of the Western Governors' Association Solar Task Force, he helped bring it back. Today he heads up Spanish energy company Abengoa's solar efforts in the U.S.

Forbes: Why did solar thermal energy disappear for so long?

Morse: The policies got out ahead of the technology. Because of the two oil crises, Congress started to pass legislation that we were very excited about at the time. Policies make markets. But the technology couldn't respond. Then the policies changed and the investment tax credit that was available at the federal and state levels went away and the projects were no longer financeable. That's unfortunate, because now the technology is ready and the policies aren't.

Then why is solar thermal making a comeback?

We have policies today, but they're not quite enough. Some states have portfolio standards--X percent of a utility's new energy must be from a renewable source. These require the utilities to do something. But if you don't have a solar set-aside within that mandate, then it's hard for solar thermal to compete with other renewables.

And there's a 30% investment tax credit, but it's only available for two years, and it takes four or five years to site, permit and build a plant. It's like saying to somebody who's starving, "The good news is that your meal is ready, but the bad news is you have to eat it in three minutes." If the tax credit isn't extended, solar will die again. Immediately.

What kind of policy would you prefer to see?

Look at Germany. Germany has the annual solar radiation of Seattle. Why on Earth are they building solar power plants? Because the German people care so much about the environment that they're willing to allow the government to tax them--to put a surcharge on their rates of a euro a month, not even a can of beer--and with that, they pay solar developers a goldmine.

People in Germany rent other people's roofs to put this on. It's their retirement. Policies make markets. It's absolutely ridiculous that the U.S., a country with a solar resource that is the best in the world, has not found a way to incentivize it.

The U.S. really has that much of a solar resource?

If I say Texas, you say oil and gas. If I say Arizona, you don't say solar energy. But Arizona's solar resources dwarf Texas' oil and gas.

And you're optimistic that the U.S. is going to start taking advantage of this resource?

I think that in the next few years you'll see 3,000 megawatts of solar energy in the U.S. Now we have 419.

So what's changed, besides state energy mandates and the federal tax credit?

We woke up to energy security and climate issues. And the technology has continuously improved. For power tower technology, the heliostats have gotten larger, more accurate and cheaper. For trough technology, the receiver tubes have become more efficient. These things allow you to lower the price of a plant.

Will there be more technological improvements in the near future?

I'll give you some crazy ideas. Over the next five years, I predict solar thermal will be competitive with fossil fuels because there will be a carbon cap or tax.

Right now solar thermal plants don't operate after the sun goes down, because it's not economical to store the energy. But I predict that in five years, thermal storage will be advanced enough and cheap enough that it will allow solar to be used at night and become a competitor for base load power, which it isn't now.

The third part of my vision is that we'll build transmission lines from the Southwest to big load centers on the East Coast, so you can generate solar electricity in the Southwest, cost-effectively, run it well in to the night and ship that power across the country. And I'm not smoking anything.

Those are pretty big predictions. So could solar eventually power the whole country?

That's not feasible. I believe the country, which now has a blend of hydropower, coal, gas, nuclear, wind, biomass, geothermal and solar, will always have that. But the ratios will change as the economics change. At some point, 500 years from now, we might run out of fossil fuels. Then we could be 100% solar. But I think it will be a gradual shifting of the balance.

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