Solar Terrorizes Old Energy

April 15, 2014



Our friends over at Business Insider have been circulating a chart called Welcome to the Terrordome, which depicts an “almost violent decline in solar pricing” globally, to the point where solar beats oil and liquid natural gas in some markets. As for how much lower solar can go, we’ve been tracking the journey of solar from an exotic space technology to a backyard standard, and BI’s arguments for a solar-dominated world dovetail with our observations.

For the record, BI sourced the chart and background information from a note by Michael Parker and Flora Chang of the investment firm AllianceBernstein via its research driven subsidiary Sandford C. Bernstein.

The BI article is provocatively titled “The Solar Industry Has Been Waiting 60 Years For This To Happen — And It Finally Just Did.” It’s well worth a read in full but for those of you on the go, here are a couple of tantalizing bits referencing the now-notorious chart.

Low Cost Solar

1. Solar is a new technology that will continue to be cheaper as the technology advances.

We’ll strongly second that, and add the observation that at least some amount of utility-scale solar, and a practically infinite amount of distributed solar, can be piggybacked on buildings, brownfields, and other sites that have already been built upon.

That includes solar windows and other building-integrated solar elements as well as rooftop and ground mounted systems.

In that context, it’s easy to see how millions of distributed solar owners will eventually blow up the now-conventional model of an energy harvesting industry dominated by large companies.

Here in the US, the Obama Administration has been aggressively pursuing the distributed solar model, both from the foundational research end and through nuts-and-bolts initiatives like the Rooftop Challenge, which is designed to reduce the overall cost of installed solar power.

High Cost Fossils

2. Fossil fuel extraction will continue to get more expensive.

We’ll strongly second that one, too. The basic idea is that as conventional reserves are tapped out, exploration moves to sites that are far more complicated and expensive to access.

When you hear that, you naturally think of deep ocean sites, but here in the US you also have two forms of land based fossil fuel extraction, mountaintop removal for coal and fracking for oil and gas, which have undergone a recent boom and are encroaching on populated areas that formerly hosted little or no such activities.

So, in addition to the direct cost to fossil fuel companies, we’ll add the cost to communities that host fossil fuel extraction, including poor public health outcomes, economic malaise, and declining property values.

Not to pile on, but distributed solar also avoids costs and impacts related to transportation, storage, and byproduct disposal including methane leakage from natural gas pipelines and storage facilities, oil rail car and pipeline disasters, petcoke production, and coal ash spills.

The Battery Angle

3. Utility pushback will weaken as battery technology develops.

The article teases out an especially good point here, which is that the explosion of research into EV batteries (that’s another huge Obama Administration initiative, btw) will spill over into the stationary battery market, to the benefit of distributed solar owners:

A failed battery technology in the auto sector (too hot, too heavy, too rigid a form factor) might well be perfect for the home energy storage market…. with an addressable end market of 2 billion backyards.

We’re all over that one, and that’s just as far as direct electrical energy storage goes. The article doesn’t specifically mention solar powered fuel cells, which are already coming into the home market.

The basic idea behind the solar powered fuel cells is simple: solar energy is used to split hydrogen from water, which goes to a hydrogen fuel cell.

The idea is so simple that researchers are adapting it as a low-cost solar solution for providing electricity to low-usage households in developing countries, as a safer, cheaper alternative to kerosene and other fossil fuels.

A Monkey Wrench, Or Not

Citing the concerns of AllianceBernstein’s Parker, the article points out that major fossil companies could unleash their reserves now to compete with falling solar prices, which could grind solar development to a temporary halt.

We’ll add another unpredictable factor, which is the use of low cost solar energy by fossil companies to offset the rising cost of unconventional fossil extraction methods. Chevron seems to be leading the pack in that area, in partnership with the solar company BrightSource.

However, given the latest IPCC report (Intergovernmental Panel on Climate Change), we’re guessing that international policymakers and a growing list of stakeholders in the investment sector will ramp up support for the solar industry against competition from an engineered, temporary drop in fossil fuel prices.

Stay tuned.

13 Responses to “Solar Terrorizes Old Energy”

  1. The battery is the big deal here.  It always has been.  If there was a sufficiently cheap, long-lived battery technology it would have eliminated both pumped storage and peaking generation within years. 

    Without the battery you’ve only got cheap power from 9 AM to 3 PM, then you’re at the mercy of the grid again.  A grid that will be charging extra for demand fees and ramp rates and will demand DSM to keep the variations down to what the hardware can manage… and the less revenue the grid has, the less flexible that hardware is going to be because it’s going to be old stuff.

    Here’s another nightmare scenario for you:  natural gas prices go back up to $8/mmBTU and pipeline constraints force rolling blackouts during extreme weather events.  In response, coal interests build large gasification plants at their mines.  They run the gasifiers 24/7 and store gas in deep un-mineable seams to burn in CCGT plants during the evening and overnight hours.  Chemical plants turn syngas into methanol during the low-demand periods of spring and fall.  All the black dirt still winds up in the atmosphere.

  2. Gingerbaker Says:

    “…nuts-and-bolts initiatives like the Rooftop Challenge, which is designed to reduce the overall cost of installed solar power….”

    Is that what that does? Or is it merely reinforcing the most expensive, labor-intensive way mankind has yet come up with to install solar power?

    What solar power costs the most per watt? => Rooftop solar!

    What solar power has no economy of scale? => Rooftop solar!

    What kind of solar maximizes needless duplication of expensive components? => Rooftop solar!

    What kind of solar is most often installed in low sunlight-intensity areas? => Rooftop solar!

    What kind of solar is installed with no community strategic planning? => Rooftop solar!

    What kind of solar benefits only the owners of property? => Rooftop solar!

    What kind of solar has all economic costs borne on the shoulders of individuals, and not shared by communities, districts, states, or centrally? => Rooftop solar!

    “The battery is the big deal here. It always has been….”

    I think the biggest deal here is the ability to send large amounts of DC power long distances very efficiently, so that the site of solar, etc energy collection does not have to be where it is used. This means large-scale projects can be sited with maximal collection efficiency and electricity can be moved intelligently and humanely in larger and larger grids:

  3. redskylite Says:

    Solar panels have always made sense in cities that get a lot of sun, at least intuitively. But in recent years, scientists have figured out ways to make them more useful for perpetually gloomy cities like London and Seattle.

    The disruptive potential of solar power (mckinsey quartely)

    • PV that works at lower sun angles and in clouds is good; it might even be preferable if it flattens the generation curve.  But it still leaves you with the daily cycle, producing nothing at night.  The only two ways to deal with this are to (a) store your production to take out again at time of need, or (b) have quite a bit of dispatchable load (e.g. ice-storage A/C) to match load more closely to the immediate supply.

      The city electric co-op a few miles from me has time-of-day rates.  The peak hours aren’t during the day, they’re in the early to late evening when the sun is usually down.  Grid-tied PV would do nothing at all to help them meet peak loads; they’d have to have something to time-shift the demand.

      • Gingerbaker Says:

        There are four time zones across the U.S. Areas to the west can supply some areas to the east during the east’s peak demand.

        And they are developing these other types of renewable energy as well. They work on wind and tide. I’m pretty sure the electricity from wind can be mixed with the electricity from the sun.

        But all of that seems to imply that renewables could well depend on inter connectivity and long-distance transmission. Which is flatly impossible. Back to the drawing board.

        • There are grades of “impossible”.  I’d just say that such a grid would require a bigger surrender to Greens than the French surrender to technocrats which allowed its conversion from oil-fired electric to nuclear in less than 20 years.

  4. With a carefully designed combination of renewables and storage systems, 90-99.9% of electricity demand can be met.
    But that’s not all. Most importantly they report that not only can 90-99.9% of the demand be met, but at 2030 renewables prices it can be done cheaper than today’s fossil fuel prices. Read that sentence again if you need to.

  5. renewable electricity in the National Electricity Market (NEM), using actual hourly data on electricity demand, wind and solar power for 2010. Our latest research, available here and reported here, finds that generating systems comprising a mix of different commercially available renewable energy technologies, located on geographically dispersed sites, do not need base-load power stations to achieve the same reliability as fossil-fuelled systems.

  6. There multiple options discussed for renewables integration. Among them,
    Demand management
    Low percentage conventional reserves
    Large area dispersed generation
    Enhanced grid interconnect
    Among the main conclusions of many papers is that there is a wide range of options providing economical solutions, including ones like high renewables, very low < 5% of the time FF scenarios. One finding is that overcapacity may be cheaper than storage.

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