2013: The Year Solar Will Flare
March 26, 2013
Yesterday’s I posted about urgent warnings to traditional electrical generators. Disruptive change is here.
Your biggest customers will begin to self generate and store power in this decade. Change or die.
More evidence keeps showing up.
NRG Energy Inc. (NRG), the biggest power provider to U.S. utilities, has become a renegade in the $370 billion energy-distribution industry by providing electricity directly to consumers.
Bypassing its utility clients, NRG is installing solar panels on rooftops of homes and businesses and in the future will offer natural gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.
NRG is the first operator of traditional, large-scale power plants to branch into running mini-generation systems that run a single building. The endeavor strikes at the core business of utilities that have earned money from making and delivering electricity ever since Thomas Edison flipped the switch on the first investor-owned power plant in Manhattan in 1882.
Consumers are realizing “they don’t need the power industry at all,” Crane, 54, said in an interview at this year’s MIT Energy Conference in Cambridge, Massachusetts. “That is ultimately where big parts of the country go.”
–It is obviously a potential threat to us over the long term,” said Jim Rogers, chairman and chief executive officer of Duke Energy Corp. (DUK), the largest U.S. utility owner.
Recent technological and economic changes are expected to challenge and transform the electric utility industry. These changes (or “disruptive challenges”) arise due to a convergence of factors, including: falling costs of distributed generation and other distributed energy resources (DER); an enhanced focus on development of new DER technologies; increasing customer, regulatory, and political interest in demand- side management technologies (DSM); government programs to incentivize selected technologies; the declining price of natural gas; slowing economic growth trends; and rising electricity prices in certain areas of the country. Taken together, these factors are potential “game changers” to the U.S. electric utility industry, and are likely to dramatically impact customers, employees, investors, and the availability of capital to fund future investment. The timing of such transformative changes is unclear, but with the potential for technological innovation (e.g., solar photovoltaic or PV) becoming economically viable due to this confluence of forces, the industry and its stakeholders must proactively assess the impacts and alternatives available to address disruptive challenges in a timely manner.
–While the pace of disruption cannot be predicted, the mere fact that we are seeing the beginning of customer disruption and that there is a large universe of companies pursuing this opportunity highlight the importance of proactive and timely planning to address these challenges early on so that uneconomic disruption does not proceed further. Ultimately, all stakeholders must embrace change in technology and business models in order to maintain a viable utility industry.
The revolution in energy markets caused by the growing impact of rooftop solar PV is about to take a dramatic leap in scale.
According to analysts from the global investment banking giant UBS, the arrival of socket parity – where the cost of installing solar is cheaper than grid-sourced supplies – is about to cause a boom in un-subsidised solar installation in Europe, and the energy market may never be quite the same again.
Such forecasts have long been the province of environmentalists, climate activists, university researchers, and the occasional industry leader, such as David Crane, the head of NRG, the largest generator of electricity in the US.
Now, the team of energy analysts from UBS, writing in response to plunging power prices in Europe, has issued a stunning report entitled “The unsubsidised solar revolution” – suggesting that investing in solar will become a “no brainer” for households in several European countries, and will have profound implications for the incumbent energy industry.
“Solar has turned from a heavily-subsidised marginal technology into a mainstream source of power generation,” the UBS analysts write. ” “Thanks to significant cost reductions and rising retail tariffs, households and commercial users are set to install solar systems to reduce electricity bills – without any subsidies.”
Climate Denial Crock of the Week 
March 26, 2013 at 4:49 am
One of the world’s largest producers of PV panels just declared bankruptcy:
http://tinyurl.com/cgtzf5o
This industry appears to be in a bit of disarray at the moment.
March 26, 2013 at 4:58 am
Well. Growth is an exponential function and therefore unsustainable. When supply outstrips demand then some companies just go bust.
But it was good to see prices plummet 🙂
March 26, 2013 at 5:01 am
between 1896 and 1930, there were 1800 auto manufacturers incorporated in the US.
How many can you name?
March 26, 2013 at 5:12 am
Re: “between 1896 and 1930, there were 1800 auto manufacturers incorporated in the US.”
In 1903 there were all of four automobiles registered with the State of Ohio. Two of them were involved in a collision. 🙂
As to your question about the names of manufacturers of automobiles, I understand your point. However, you miss mine. Which is that nobody in particular is making any money in the solar PV industry right now. The industry, according to the Washington Post is in debt to the tune of $17+ Billion. There’s not a lot here to suggest to me that there’s going to be an aggressive transformation of the world to solar PV this year or next. Things will have to sort themselves out financially before the technology will advance at a brisker pace. At this time, the EU is largely cutting back on lavish subsidies due to ongoing financial woes, and in the U.S. we still have the troglodytes in charge of the House of Reps and an oil & gas promoter in the White House.
March 26, 2013 at 1:05 pm
nobody is making money in the natural gas industry right now, either, but I don’t see that going away, or slowing down, anytime soon.
my point is that the economy churns mercilessly as new technological revolutions set in – we saw it in the internet explosion. The rapid birth and death of solar companies is an indicator of robust growing pains in the industry
March 26, 2013 at 7:36 pm
Peter,
The common thread I see running through the three industries cited is that the “market” system is absurd and extremely wasteful when it comes to capital allocation. Not to mention the destruction of the capital of any foolish enough to enter into these market situations with the thought of a long-term gain. All the money is made by the shysters, the hucksters and the fast money crowd swindling the sheeple. This is no way to run a world.
***
Speaking of which, here’s a fascinating look at why America has become a failure when it comes to Internet bandwidth competitiveness:
The Short Version (2 Minutes):
http://tinyurl.com/d6m8c2o
The long version (19 Minutes):
March 26, 2013 at 5:00 pm
You know what this gives really good evidence for? That capitalism is inimical to our survival as a species.
If we are going to have a solar (and wind) future, the tech needs to be deployed. Now, whether PV panels are installed rooftop by rooftop, or erected in huge more cost-efficient arrays, they need to be manufactured on a huge scale. How huge?
If we were to go 100% solar PV and completely replace carbon fuels, we would need a minimum of 460 billion panels, just for the U.S. alone. The U.S. consumes what per percentage of world-wide energy? 20%?
That would be two trillion panels needed world-wide! The current world manufacturing capacity is probably 1/1000th to 1/100th of what is needed to supply that on a schedule that would mean we could accomplish a transition to renewables on time to avert disaster. The last thing we need is PV manufacturers shutting down plants.
Yet, here we have China, a country with centralized strategic economic planning allowing a PV manufacturer to come to this sad state. WHY? I’m thinking because China is no longer a purely communistic country, it is a Communistic-Capitalistic system now. The owner of Suntech is not the Chinese government – it is an entrepreneur.
The Chinese government should not be sitting on its hands here – they should be making mass purchases of Suntech PV panels and erecting large-scale power generation in the Gobi Desert.
Conversion to renewable infrastructure on a huge scale is not a process that should be left to the free market.
March 26, 2013 at 5:44 pm
The Chinese heavily subsidized their PV companies, far more than the U.S. (and by a long shot). That’s why you see a lot of U.S. solar companies like Solyndra folding. They simply couldn’t compete on the open market.
China’s access to rare earth minerals gives them an advantage with PV, too, although we’re already seeing resource constraints there:
http://pv.energytrend.com/research/PV_20120307.html
Suntech folding, though, is shocking. It’s going to mean a reversal in PV prices. The prices are going to start going up again, which if a company like Suntech is bankrupt, the PV industry clearly needs. But then this changes the dynamic towards wider PV adoption, too.
It also means the Chinese government will scale back subsidies for PV. They already are:
http://www.pv-magazine.com/news/details/beitrag/china–scaling-back-ambitions-and-overhauling-pv-subsidies_100010620/#axzz2OfUx2aWK
This will also lead to an increase in PV prices. Greater demand of the type Peter is mentioning will further increase prices.
As much as I would like to agree with Peter here, I don’t see it. But I’d certainly be happy if I was wrong. It’ll be interesting to see the figures at the end of 2013.
March 26, 2013 at 8:35 pm
Thanks for an exceptionally well thought out comment. I believe you’ve analyzed the situation with considerable panache! 🙂
March 27, 2013 at 10:14 am
Just guessing, feel free to prove me wrong, but I think we could find analogs for this situation in the computer industry, and I suspect they would show that the Moore’s law momentum continued unabated.
March 27, 2013 at 4:18 pm
Moore’s law applies to computational power, not computer prices. Prices for computers, while vastly increasing in power, have remained relatively stagnant for the low-, middle-, and high-ends for over two decades. This didn’t provide any obstacle to adoption, because there was no equivalent competitor (unlike solar).
At some point, the physical and monetary costs to produce solar panels will cap out the dramatic prices decreases of the past few years. Suntech folding is a big red flag. Using your auto analogy, it’d be like Ford folding in 1920. In fact, the entire industry is having problems managing profits at this price point:
http://www.renewableenergyworld.com/rea/news/article/2013/03/solar-pv-profits-last-stand
The ‘good news’ is that fossil fuel prices WILL also rise – especially natural gas, which is facing the same problems as PV right now. How it all plays out is anyone’s guess, but I generally suspect modest gains in solar over the next 5 years (not the dramatic ones either intensely needed or predicted in your blog post). But again, I’d certainly be happy if I was wrong.
Just fyi, on Moore’s law, it’s also capping out. We can all see a slowing down of the effect, and this can easily be verified. Moore himself has said he thinks it will stop altogether around 2020:
http://news.cnet.com/8301-10784_3-9780752-7.html
All things hit physical limits at some point, which is anathema to free market economic theory, but nevertheless true.
March 26, 2013 at 7:23 pm
It concerns me when i see comments like this. I’m certainly not a fan of the free market fundamentalists out there, but neither am I a fan of China’s total central planning (and central control) either. China has big human rights problems.
Humanity is facing the biggest environmental challenge in it’s history. But to say that we must lose basic human rights (many, if not most, of which are absent in China) to address it, is wrongheaded, panicky and appealing only to power hungry elites
Yes, it’s bad. Yes, IN PART, an anarchical capitalist system got us here. But look at China (and Russia – that other once centrally planned system) though a different prism, ground and water polution, and a very different picture emerges.
In any fire you walk, not run, to the nearest exit.
March 26, 2013 at 8:33 pm
OFF TOPIC
Re: “China has big human rights problems. ”
China has a much lower incarceration rate for its so-called criminals. In the U.S> we have the largest prison population on the planet. We have the highest rate of incarceration per capita on the planet.
As an American, I’m embarrassed by the U.S. human rights record. We have egregiously racially discriminatory laws, such as the false distinction made between crack cocaine versus powder cocaine with regard to sentencing guidelines.
We have “stop & frisk” patterns in New York City and Maricopa County, Arizona that are obviously human rights violations being imposed by a domineering white race against minorities.
That you are willing to rail against Chinese human rights abuses disappoints me. This has been a favored phony shibbolleth of liberal imperialists like Nancy Pelosi for decades, not to mention the completely self-serving complaint of our right wing “China hands”.
I do not know where you are located stephengn1, but most all Western nations have rather seedy records when it comes to human rights. I do not see castigating the Chinese for what amounts to a universal problem to be a useful exercise.
March 27, 2013 at 3:20 am
What disapoints me is your willingness to compare “stop and frisk” to China executing thousands – more of its own citizens than all other nations combined.
March 27, 2013 at 4:02 am
OFF TOPIC
Re: “What disapoints me is your willingness to compare “stop and frisk” to China executing thousands ”
This is a fact not in evidence. Where are you getting your data from? I’ll grant you that things were bad in the days of crazy old Mao. But since the rule of Deng where are your numbers coming from?
The massacre on Tiananmen Square occurred in 1989 and had the tacit approval of our former head of secret police and then President G.H.W. Bush. So, comparing government to government, both favored destroying human rights.
But this isn’t the execution record. Which is murky. See: http://en.wikipedia.org/wiki/Capital_punishment_in_China
I certainly wonder how the numbers compare, but I would hazard a guess that executions per capita were far higher in Texas while George W. Bush was Governor there than was the case in China at that time.
March 27, 2013 at 4:26 am
I see. The only statistics you’ll accept are “official” statistics from the one party Chinese bureaucracy itself. Amnesty International and what they think that’s just a bunch of nonsense, right? How about forced abortions? Does China do any of those? Does your “hazard a guess” include any of those? How about the harvesting of organs from prisoners? Any of that going on in China?
March 27, 2013 at 4:44 am
OFF TOPIC
OK, I see you dislike the Chinese then. Fine. I’m going back to sea ice and rescuing storm-stranded lambs.
http://ourchangingclimate.wordpress.com/2013/03/25/melting-of-the-arctic-sea-ice/
http://www.bbc.co.uk/news/uk-21945465
March 26, 2013 at 8:18 pm
Roger,
I appreciate your thoughts here.
It is clear that waiting for Mr. Market to deal with this matter will result in failure.
March 26, 2013 at 9:51 pm
Well if the current capacity is 1/100th of what is needed, capacity would have to grow at 36% per year to meet need over a 15 year period.
1/1000th you say? Well that requires a 58% capacity growth rate per year over a 15 year target period.
Now pretend that wind will cover 50% of needs so target capacities can be halved: 1/50th and 1/500th generate needed growth rates of 29% and 51% respectively, per year.
I’m just using the equation y=P(1+x)^t; where t is time in years, P is what you start with, x is annual growth rate, and y is what you end up with.
So how fast is the capacity growing per year, in reality?
March 26, 2013 at 9:55 pm
Re: “So how fast is the capacity growing per year, in reality?”
Recent Foreign Affairs Magazine article:
“With the world economy heading for its worst year since 2009, Chinese growth is slowing sharply, from double digits down to seven percent or even less. And the rest of the BRICs are tumbling, too: since 2008, Brazil’s annual growth has dropped from 4.5 percent to two …”
http://www.foreignaffairs.com/articles/138219/ruchir-sharma/broken-brics
Reality always seems to have a way of returning from time to time in our globalized pendulum swings toward madness. 🙂
March 27, 2013 at 1:52 am
Ha, ha! 7 percent growth is still a pretty hefty momentum. What they ‘need’ is a negative 7 percent growth rate. Negative 7% is easier than positive 36% to accomplish.
March 27, 2013 at 2:02 am
Re: “Ha, ha! 7 percent growth is still a pretty hefty momentum. What they ‘need’ is a negative 7 percent growth rate.”
What the Chinese desperately need to do is to stop destroying their agricultural lands for the sake of land speculators who are building the grandest real estate bubble the planet will have ever endured. This is mindlessness on steroids:
http://jessescrossroadscafe.blogspot.com/2013/03/chinas-extreme-real-estate-bubble.html
The video is truly a chin-drop omigod doozy.
It kind of reminds me of our North Carolina coastal real estate obsessive. (You reading this Dave?) Who might be wise to read up on this projection of what climate change might do to relocate his sales office….
http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=2373
March 27, 2013 at 2:11 am
That doesn’t apply. The growth we have seen so far is market-driven. The growth I argue we need would be by government edict.
I would love to see a National Renewable Energy Utility, payed for by the taxpayer. The first item on the agenda would be to break ground on 100 gigantic PV panel manufacturing plants, so capacity would shoot up by thousands of percent per year.
I don’t remember off the top of my head, but I seem to recall that one of the bigger U.S. plants was putting out ~ 300,000 panels per year. We would need 3000 of those plants to make enough in five years, 1500 if wind produces 50% of power.
Better to make each (multi)panel the size of a flatbed car, installable with a crane!
Hard to believe that a project of such scale STILL is less expensive than what we have squandered on war the past decade. A trillion dollars is a =>LOT<= of money.
March 27, 2013 at 11:29 am
“The growth I argue we need would be by government edict.”
Please tell me any method by which growth by edict might be achieved – excluding slavery.
March 27, 2013 at 3:25 pm
“Please tell me any method by which growth by edict might be achieved – excluding slavery.”
Sure. The President tells the Department of Energy to begin an ambitious project. Financial commitments are made. Projects proceed like projects proceed.
Like the Rural Electrification Authority in the 1920’s.
Like the Dwight D. Eisenhower National System of Interstate and Defense Highways.
Hoover Dam. The TVA.
The Joint Strike Fighter Program. The Big Dig. The Alaskan Pipeline.
The idea here is that so far the only encouragement renewable energy has really received has been incentives in the “free” market, as opposed to government projects, which I am arguing for.
March 27, 2013 at 3:33 pm
Ah, the New Deal. Ok. Keep in mind, however, that even the New Deal had market forces behind it, feeding it.
March 26, 2013 at 4:53 am
Decentralised power generation and a modern grid are the best guarantee for safe electricity supply.
=> Is decentralisation the future of sustainable energy? [PDF | 109 kB]
March 26, 2013 at 5:07 am
=> Decentralized electricity generation from renewable sources as a chance for local economic development: a qualitative study of two pioneer regions in Germany
March 26, 2013 at 7:06 am
It’s also the best guarantee for democracy, especially if people were to produce more of their own food.
“a boom in un-subsidised solar installation in Europe”
I’m trying to do my bit in Austria. 5 kWp installation with 5 kWh LiFeYPO4 battery system that will ensure stable energy prices for the coming 15-20 years.
March 26, 2013 at 5:07 pm
And hoping that rooftop solar is going to somehow overcome three decades of failure-to-thrive amidst the free market system, is the best way to ensure that the our grandchildren starve to death.
Somewhere in between one single PV or wind array powering all of America and having solar custom-installed on every rooftop is the answer.
I used to be an ardent promoter of decentralized energy generation. I no longer think we have the luxury of waiting for it to arrive.
March 26, 2013 at 7:43 pm
“I used to be an ardent promoter of decentralized energy generation. I no longer think we have the luxury of waiting for it to arrive.”
I’d like to see you expound on this. Do you have a blog?
Computers had three decades of failure. Then they had three decades of phenomenal, unprecedented success.
29 years ago, an Apple commercial playing on George Orwell´s “1984”‘ featured the destruction of Big Brother with the power of personal computing found in a Macintosh. Look at the ubiquity of computing now.
In my opinion, nothing can ensure our quick exit out of this mess better than our individual human desires to be free from the powers that be that currently grant us the power to power our lives.
March 26, 2013 at 11:19 pm
Computing power isn’t limited by the incoming rate of solar radiation per unit area. Electric grids will be around for a long time.
March 27, 2013 at 3:51 am
Humans need only a tiny fraction of the total amount of sunshine that falls on this earth to power everything we do
March 26, 2013 at 6:45 am
[…] Yesterday's I posted about urgent warnings to traditional electrical generators. Disruptive change is here. Your biggest customers will begin to self generate and store power in this decade. Change… […]
March 26, 2013 at 11:44 am
[…] Yesterday's I posted about urgent warnings to traditional electrical generators. Disruptive change is here. Your biggest customers will begin to self generate and store power in this decade. Change… […]
March 26, 2013 at 2:06 pm
[…] Below you will find a redraft of the blog “2013: The Year Solar Will Flare” that was published here. […]
March 27, 2013 at 12:28 am
Meanwhile, global climate weirding continues to take a toll. The Isle of Man off the UK coast suffers from a massive snow storm. Bad news for local livestock.
http://www.bbc.co.uk/news/uk-21945465