The “Solar Singularity” Approaches
January 8, 2016
Tam Hunt in GreenTechMedia:
My key assertion is that under current cost trends for solar and wind power, and (less certainly) for other renewables and electric vehicles, we are well on our way down a path to dramatically reduced emissions.
Whether such emissions reductions will actually mitigate the worst impacts of climate change remains a very big question. But my hope is that observers and commentators alike will understand that cost declines for many technologies in the last decade have brought us to the point where renewables and EVs are poised to achieve ubiquity relatively quickly.
I made the solar singularity concept the centerpiece of my 2015 book, Solar: Why Our Energy Future Is So Bright. I offer here an update on the topics covered in my book, showing that we are perhaps even closer to the solar singularity than I previously dared to suggest.
This cost of solar power is highly competitive with fossil fuel and nuclear electricity. The Energy Information Administration calculates in its 2015 analysis that the average U.S. levelized cost for new natural-gas advanced combined cycle plants is 7.3 cents per kilowatt-hour — the same as solar.
However, to compare accurately, we have to add about 10 percent to the cost of solar to firm up this variable resource. So we’re close to cost parity, but not quite there.
At $1 per watt, the levelized cost falls to just 5.7 cents per kilowatt-hour, well below cost parity with new natural-gas plants. With two-axis trackers and the best solar resources, which increase the capacity factor to 32 percent, that cost falls to just 4.5 cents per kilowatt-hour. We’re headed to $1 per watt as an all-in cost in the next five to 10 years.
These are world-changing developments. Imagine 10 years ago that by 2015 we’d see solar — solar! — account for fully half of all new global generation. When we add wind and other renewables into the mix, it’s clear that fossil fuels and nuclear are rapidly becoming endangered species.
Renewables provided almost half of all new power generation globally in 2014, according to the International Energy Agency. The agency’s executive director, Fatih Birol, summed up the trend: “[Renewables are] no longer a niche. Renewable energy has become a mainstream fuel, as of now.”
Bloomberg New Energy Finance reported last summer that wind power was the cheapest source of power in the U.K. and Germany in 2015, even without subsidies. The article’s tagline reads: “It has never made less sense to build fossil fuel power plants.” The same article highlights the feedback loop that solar and wind power have in terms of reducing the cost-effectiveness of fossil fuel power plants due to the dispatch order of renewables versus fossil fuel plants.
The solar singularity is indeed near (here?) in the U.S. and increasingly around the world. I described previously that 1 percent of the market is halfway to solar ubiquity because 1 percent is halfway between nothing and 100 percent in terms of doublings (seven doublings from .01 percent to 1 percent and seven more from 1 percent to reach 100 percent). The U.S. will reach the 1 percent solar milestone in 2016. We’re halfway there. Buckle your seatbelts.
A new report from Lazard found that battery storage is currently economically viable for some applications (frequency regulation, for example) even without subsidies. More importantly, the storage industry is set for rapid cost declines in the next five years as various technologies ramp up around the world. The report’s lead author stated that “the energy storage industry appears to be at an inflection point, much like that experienced by the renewable energy industry” a few years ago.
This new report comes on the heels of Southern California Edison’s first energy storage procurement in the Los Angeles area in 2014, which included accepted bids for 240 megawatts of projects that were selected based on economics alone (the utility was required to accept only 50 megawatts). We don’t know yet if these projects have been built at the costs bid (that data is not yet public), so we’ll need a bit more time to establish the cost viability of these technologies.
Another new report from Goldman Sachs projects a drop in price for storage technologies by almost two-thirds by 2020.
Energy storage is still a very new market, so my crystal ball is a bit murky when it comes to the future. Most analyses, like Lazard’s, use industry-supplied data that hasn’t yet been checked by the market or third parties, largely because there isn’t enough publicly available data for such fact-checking.
I agree, however, with Lazard’s conclusion that the storage market is set for rapid cost declines and rapid installation growth in the coming five to 10 years in both the stationary and vehicle domains. The above discussion establishes how rapidly solar is likely to grow around the world in the coming decades, giving some confidence in a steadily rising storage market.