Solar Revolution – 3/25/16

Below is a summary of Solar Revolution by Travis Bradford. The book is a little less than a decade old (see: relatively ancient given how quickly the industry has changed) but it covers a lot of important issues in solar energy adoption so I’ve written up a short analysis along with some updates. I recommend buying the actual book at (Amazon) and leaving a (nice) review since Mr. Bradford deserves recognition for his work.

Electricity economics can be broken down into two parts: the costs of generation and the costs of delivery. For residential electricity costs, those costs divide pretty evenly.

Fully loaded costs are the standard expenses plus costs transferred to third parties like the government which often subsidizes the energy industry via building, financing, and various protections using tax payer dollars.

Utilities have under-invested in the electrical infrastructure since the 1980’s. As a result, the future cost of replacing decrepit or outdated elements of the grid must be considered carefully in an analysis of the energy industry. Since utilities have based new installations of capacity based on ability to generate more cheaply than the existing power base, renewables such as solar and wind have been ill-suited to compete with already well-established sources that benefit from economies of scale. This fact has only begun to change recently.

In the last 20 years, the best wind farms have managed to reach cost-effectiveness with traditional resources. Currently, wind power makes up almost 3% of global production with a 30% annual growth rate. In 2015, nearly half of newly installed generating capacity came from wind energy versus less than 40% for natural gas. Coal’s share of total generating capacity has fallen from ~30% to ~26% in just the last 5 years with more coal-fired power plants set to close due to competitive and regulatory pressures. Hydro power also saw some gains though the lack of viable sites makes large scale adoption unfeasible. Meanwhile, solar’s share has jumped 12-fold but remains around 1.2%.

Screenshot 2016-03-06 at 10.58.06 AM

A key to solar being closer to economic feasibility than is generally acknowledged lies with the benefits of on-site distributed generation. For a long time, centralized generation relying on distribution through the electrical grid has been the only cost-effective method of supplying electricity; however, as costs of Photovoltaic systems has fallen, the ability to produce electricity on-site via PV panels has become more attractive for the flexibility and scalability of their modular design. Businesses with high electricity costs and large amounts of unused roof space are already taking advantage of the cost savings and boost to public relations i.e. Walmart. Technological advances, scale of production, and experiential learning have driven solar module costs down at a rate of about 5% per year making widespread adoption much more feasible in the next few decades especially in areas of ample sun, subsidies, and expensive grid-based electricity.

Screenshot 2016-02-22 at 8.31.25 PM

Solar output naturally coincides with peak demand hours. Sunlight is brightest during the noon hours when people are most active which makes solar especially well-suited for meeting part-time immediate-load electricity needs during high demand times when electricity is most expensive, as opposed to 24hr/day base-load requirements. As long as the PV systems are connected to the grid, solar can provide power at a competitive rate while the lack of output at night is offset by conventional production.

Solar has many inherent advantages over traditional power sources. A few examples include independent generation of electricity on-site with no emissions, precise sizing of panels to fit spaces as needed, the ease of bringing panels online overtime without interrupting power flow, and low maintenance costs for long-lasting units.

Although solar energy is fast becoming more cost-competitive thanks to steady declines in module and inverter costs, as well as soft costs like financing and customer acquisition, governments are also instituting policies favorable to renewable energy. Carbon taxes and higher emission standards obviously benefit producers that put out no pollution while subsidies accelerate the adoption of clean energy sources like offshore wind farms that are not yet competitive enough to survive on their own.

The unstable nature of major fossil fuel exporting nations in the Middle East and South America gives a clear political and economic incentive for investment in domestic energy. This is especially true for countries like Japan and the UK that don’t have their own large, natural reserves to fall back on. Numerous social benefits for developed countries aside, solar may most benefit countries that are solar-rich but infrastructure poor. Sub-Saharan Africa and India could see massive increases in quality of life if distributed energy could be implemented since it wouldn’t require governments to investment in costly, complex grid and power plant building. Cheap energy would in turn push down costs associated with desalination reducing the expenses associated with treating water and farming.

Technological breakthroughs are not required for solar to reach cost-competitiveness, but those that have recently come about only add to solar’s momentum. Advances in storage technology such as supercapacitors or batteries, or in new module materials like perovskite-based cells and quantum dot technology are a few possible sources of revolutionary change in solar being pursued today.

It is important for solar to make appeals based on creation of value rather than fear of environmental repercussions. Even if renewable energy is necessary to prevent ecological disaster, a much more convincing argument for adoption is its practicality and potential profitability. One might point towards job creation associated solar’s growth or the cost savings from cheaper electricity and avoided pollution.

The economic advantage of electricity. Lower costs, cleaner, safer. Distribution via wire – the power grid – vastly reduces transport costs and increases accessibility.

Three primary energy infrastructures: the electrical grid, oil refining and distribution, and natural-gas pipelines.

Threats to fossil fuels: peaking, disparity of reserve holdings, volatility of price, infrastructural weakness due to underinvestment,

Possible solutions: increased energy efficiency and new energy sources.

Hydroelectric dams

Benefits include – creation of large quantities of energy for a reasonable cost, provision of local power with no transport costs or availability risk, and are well-established as a part of the energy mix.

Damages include – displacement of people, destruction of plant life, damage to fish populations, build ups of silt and soil, and denial of water to downstream communities.

Too many hidden economic and environmental costs discourage future investment while a limited number of viable locations makes it unsuited to replacing fossil fuels on a grand scale.

Nuclear power

Benefits include – cheap electricity, limitless possible production not dependent on location or natural resources, and low emissions.

Damages include – fear of a containment breach, toxic waste, expensive to start and stop, high initial construction and shutdown costs, long approval and construction times, and nuclear weapon proliferation risks.

Not considered economically viable as a replacement.

Wind power

Benefits include – increasing cost-competitiveness and minimal pollution

Damages include – aesthetic issues, possible risk to birds, and the intermittent nature of generation.

Facing heavy investment and increases in installations. Likely to be a large portion of the future energy mix.

Biomass

Benefits include – using existing wastes creates no additional environmental impact, rapidly renewable, and exists in some form nearly everywhere.

Damages include – deforestation, diversion of farmland and food, and limited potential for use on a large-scale.

Good stop-gap measure in some situations but required inputs of soil and water make it unlikely that biomass could reduce fossil fuel use by a significant amount.

Geothermal

Benefits include – Efficiency, renewable

Damages include – Mostly untested on large-scale, many characteristics not understood, possible expulsion of unwanted gases from sites

Limited viability outside of a few areas.

Ocean power

Benefits include – Clean, potentially unlimited capacity, reliable, probable cost-effectiveness near densely-populated coastal areas

Damages include – Lack of viable locations, high maintenance costs, untested

Needs further study and large technological improvements

Fusion power

Benefits include – no emissions, no radioactive waste, cheap, unlimited

Damages include – no successful tests ever made, long construction time

Unlikely to become viable until 2050 without major scientific breakthroughs

by state

Solar Energy – clean, limitless, and free

3 key continuums in solar harnessing: (1) passive and active, (2) thermal and photovoltaic, and (3) concentrating and nonconcentrating.

Passive solar – building structures to harness solar energy as thermal rather than electrical energy

Active solar – intentional collection and redirection of solar energy

Thermal – usage in heat driven applications like heating water to make steam

Photovoltaic – capturing photonic energy of sunlight as an electrical current

Concentrating – systems using mirrors or lenses

Non-concentrating – systems not using mirrors or lenses

A bulk of the solar market rests with the growth of grid-tied systems in which residential and commercial buildings are outfitted with PV panels and typically sell excess electricity back to utilities during sunlight hours via net metering programs while buying electricity at other times. In this way, the electrical grid acts a form of storage more effective than most battery options available today. The system can exist without a battery but will require an inverter to convert the DC power generated by the PV module to the AC power used by the grid.

Modern Electric Utility Economics

The inelastic nature of fossil fuel demand combined with the inevitable decrease in supplies makes finding additional sources of electricity generation necessary. Mr.Bradford rightfully makes the case that assuming prices of fuels will remain at the same prices in real terms through 2025 as they were in 2003 is illogical.

Although the shale-oil boom in the US threw a wench into calculations of US peak oil, recovery from damage done by the collapse of oil prices could keep investment in the industry depressed for years. In addition, the political instability of many OPEC countries and a dearth of investment in aging Russian fields, not to mention the possibility of a variety of environmental threats to infrastructure, are threats to supply lines.

Currently, many firms are relying on existing refining and transport infrastructure. This reliance gives producers relatively low levels of cost allowing them to pass some of the savings on to customers. The problem is, they will soon face is the need to increase capital spending to meet growing demand and the new infrastructure could take years to just to meet approval by governments increasingly concerned with environmental issues. Effects of the long lead time of new projects is already seen in the absence of planned coal capacity additions. OPEC and Russia are also likely to let prices increase rather than increase capacity.

Increasing fossil fuel prices will drive people towards other energy sources. While renewable energy is decreasing in price due to technological breakthroughs, increased fossil fuel prices and volatility change cost-effectiveness equations as well. And developing nations would be disproportionately harmed by higher energy prices with potentially destabilizing effects for most emerging markets.

Common metrics for comparing electricity-generating technologies include installed cost per peak watt, cost of electricity generated, and cost of generation plus external costs. Comparing costs of installing additional units of peak capacity for different technologies is one method of ranking their relative cost-effectiveness. The cost of operating the system over its life cycle can also vary significantly between technologies and consists of two main components: fuel and maintenance (labor, repairs, waste disposal, decommissioning, etc.)

By including installed peak-capacity costs, projected fuel costs, projected maintenance costs, and financing assumptions, it is possible to construct a measure of cost per kilowatt hour of electricity — the measure is what is often used to suggest that PV electricity is too expensive to compete in the global energy industry. A major limitation of the cost-of-generation method comparison is that it assumes as constant the cost of getting electricity from the point of generation to the user when the distribution costs can be up to half of the cost of electricity for the end user. As a result, the method is poorly suited for comparisons between traditional utility-level technologies and distributed generation technologies like photovoltaics. A more useful metric can be constructed by adding transport cost to create a measurement of cost per kWh as delivered to the end user.

Yet another method of comparing costs includes the external costs of generation technologies. These external costs encompass the quantifiable societal and environmental costs including: direct costs like increased health care costs due to pollution; environmental damage like the loss of land to strip mining operations; security costs for protecting fuel supplies; and costs of disruption in the electric supply for centralized generation. Inclusion of external costs disproportionately raises the costs of fossil fuel, particularly coal, relative to renewable energy for obvious reasons.

Print Friendly, PDF & Email

Comments are closed.