Renewable energy has started off the year strong in spite of low fossil fuel prices. Paris Climate Talks and renewed Investment Tax Credits in the US were the most recent indicators of a bright future for green energy. Falling module, financing, and regulatory costs have brought renewables closer to competing with fossil fuels on a cost basis while investors find green tech an increasingly attractive option in a time when popular opinion moving to favor environmentally friendly laws and products.
Solar advocacy groups have scored major victories in US legislatures lately. Both the ITC and California’s Net Metering program have seen the extensions needed to steady nerves for an industry fearing the end of vital incentive programs. Strangely, solar power lobbying efforts have managed to find more and more champions within the Republican party. The traditionally conservative party, which has denied climate change and cheered the solar bankruptcies of 2011-2013, is seeing the rise of libertarian-minded GOP groups that see attempts by utilities to stifle individual power generation through law as constricting individual choice. Now that solar costs have fallen, the business base of the GOP is treating solar power as a means of independence, or at least a sound investment, instead of an environmentalist pipe dream. Even Tea Party activists have made a strange union with Sierra Club to fight for solar on a grass roots level. Although the national Republican Party is not likely to change its stance, state- and local-level conflicts between conservatives over solar are giving solar companies the chance to make inroads into once unfavorable areas.
Beyond legislative battles, solar faces judicial and executive conflicts as the Obama administration and traditional foes of renewables lock horns over recent executive actions. Led by coal industry reliant West Virginia and oil-and-gas giant Texas, 26 states requested that the Supreme Court delay a rule to cut carbon emissions from power plants. Previous failures to halt the EPA regulation in appeals courts set a poor precedent but the Supreme Court will act on the request in the coming days. The regulation requires a 32% cut in power-plant carbon emissions by 2030 from 2005 levels which is intended to force a shift to cleaner-burning energy sources. Initial drafts of plans must be submitted by states by Sept.6.
Many critics of renewable energy have argued that the variability of solar power and wind power would result in increased electricity costs and expensive energy storage options. This assumption is unrealistic. Storage options continue to improve beyond expectations while a recent study has shown the grid is more than capable of adapting to variable power generation on a national scale. The US energy infrastructure is out-dated and ill-equipped to handle variability to be sure, but the electrical grid is far more accommodating than utilities companies want people to believe. The combination of existing high-voltage direct current (HVDC) transmission technology and the implementation of a national style electric system instead of the current regional one would allow the economies of scale and market size needed to avoid losses from distant transmission and have supply better match demand.
Large price declines and the prospect of mass production have made the energy storage industry much more exciting in recent years with the unveiling of Tesla’s Powerwall, a rechargeable Li-ion battery suitable for residential use, and the Tesla Gigafactory being two of the more exciting recent events. Deutsche Bank has estimated that the cost of Li-ion batteries could fall in price to point of mass adoption by 2020. The estimates are based on recent cost declines which saw costs fall ~50% between the ends of 2013 and 2014. Solar/storage arbitrage systems that reduce peak-demand/peak-generation disparity and minimize electric bills, and utility-scale mandates that provide incentives to install batteries to balance the grid, are two significant forces driving demand for storage options.
To find other opportunities for growth, solar energy companies look increasingly to India as a potential hot-spot in spite of regulatory and structural hurdles. Like China, the country has hundreds of millions of citizens without adequate access to electricity who could benefit greatly from the roll-out of energy systems able to operate in areas of undeveloped infrastructure. India is also one of the few countries that could come close to replacing China as a driver of global economic growth. In order to avoid the air pollution seen by China during its “industrial revolution”, India will have to continue investment in renewables and other replacements for coal-fired power plants.