Here are parts 1 and 2 of a presentation I gave to a class of renewable energy graduate students yesterday (reposted from CleanTechnica):
Renewable Energy Big Pic: Part 1 (Including 34 Charts & Graphs)
As I mentioned in my article covering the latest US Solar Market Insight report (which I just published a few hours ago), I was “out of the office” today giving a presentation on solar power growth. But the presentation was actually on much, much more than that, as you’ll see in the article below and in the one to follow tomorrow.
It’s a Small World
Unbeknownst to me until a few months ago, there’s a renewable energy graduate program at a university here in Wrocław (the city where I live). Turns out that at least one of the students currently in the program is a CleanTechnica reader. He noticed that I was living in Wrocław, and decided to reach out to me. We met up at a coffee shop one day to talk solar energy (for several hours), and not long after that I was invited to give a guest lecture to his class.
Knowing that the students were more focused on the science and engineering side of things, I decided to focus my presentation on the solar and wind energy markets and key policy topics. I gave the presentation earlier today, and figured it would also be worth sharing it with you all (with plenty of text added in place of my vocal commentary, and with some chart switcharoos and additions, including a few from the new US Solar Market Insight report, which was released less than an hour after my presentation ended).
So, anyway, that’s the story; let’s get rolling….
Notably, the info below doesn’t even take into account the tremendous health costs of coal and natural gas, which would make them much more expensive “at the register” if actually included in the price.
Solar Power Price Drops
1.5 years ago, GE projected that solar power would be cheaper than fossil fuels (on average) within 5 years. With 3.5 years left, GE’s prediction definitely seems within reach. In fact, GE was putting big money into a solar cell manufacturing plant in Colorado, but in January it pulled the plug on that due to the fast-falling prices of competing solar cells. In other words, solar prices are falling even faster than GE had thought they would (and faster than most analysts and renewable energy followers thought they would).
I’ve shared the following two graphics a few times in the past couple years. They make a rather important point that doesn’t seem to get enough attention: solar power projects go up relatively fast, while nuclear and coal power plants require many more years to get designed, planned, permitted, and built. With nuclear and coal costs rising while solar costs are quickly falling, by the time a new nuclear or coal power plant would be built, its electricity would already be more expensive than electricity from solar (or wind, for that matter):
In fact, one report from 2010 found that the solar–nuclear crossover occurred a few years ago.
Now, an assumption in all of these projections mentioned above is that solar prices will consistently drop at a good rate. And that’s exactly what’s been happening. As I just shared a couple weeks ago, here are a few nice graphs of solar PV price drops in Germany:
Lest you think it’s only Germany seeing such price drops, below are similar graphs from the US.
This first one shows that the installed price of residential and commercial solar dropped from an average of about $12/W in 1998 to about $6/W in 2011 (~50%).
Similarly, this next one shows the drop in the price of solar modules from 1985 to 2011 (from over $6.5/Wp to about $1/Wp):
Here’s a look at the drop simply from 2009 to 2011:
And here’s one graph published just a few hours ago for the drop from Q4 2011 to Q3 2012 (for solar modules and specific module components):
Wind Power Price Drops
So far, of course, we’ve just been looking at solar, but the other big renewable energy player these days is wind energy. It has followed a very similar path, just a bit earlier than solar energy. It actually hit a big grid parity point last decade… before natural gas prices fell off a cliff:
Without taking too long of a side tour here, it is worth noting that natural gas prices fell off cliff as certain fracking practices became commonplace, and those only became commonplace once Dick Cheney got a ridiculous policy enacted for the fracking industry on his way out of office (and yep, Cheney was previously CEO of Halliburton, the company probably benefiting the most from this policy). What is the policy? Known as “The Halliburton Loophole,” it’s essentially that fracking fluids are exempt from the Clean Water Act (for no clear reason) and companies engaged in the process don’t even have to disclose what chemicals they are using. Needless to say, countless health externalities from the fracking process are not being accounted for in the price of natural gas, and can’t even be calculated by anyone outside the industry. (And, of course, no one inside the industry is going to do that.)
Long story short: natural gas fracking as it is happening today is artificially legal (i.e. should be illegal).
Furthermore, even with things as they are today, many are projecting that the price of natural gas will rise again in the coming years, making wind the cheaper option by far… yet again:
And, even today, wind energy is the cheapest option for new electricity in many, many places.
But, that’s not the end of the story — the price of wind power, like solar, is on a downward trend. Numerous technological improvements are bringing the price of wind down to an absurdly (in a good way) low number:
As we just reported about a month ago, a recent report by Bloomberg New Energy Finance has documented some important technological and other wind power cost reductions over the past four years. Two of the key findings were that:
- O&M costs have been 38% lower in 2012 than 2008.
- The price per megawatt of wind power is down to €19,200 from the €30,906 it was at in 2008.
The report also noted technological improvements and price reductions. Also worth noting is the birth and growth of Chinese wind turbine manufacturing firms, which is driving down prices and increasing competitiveness.
Solar Power Boom
A rapid price drop and an installation boom are naturally going to go hand in hand. As the price falls, more solar gets installed. And as more solar gets installed, the price falls. This is the kind of feedback loop we like. 😀
Here’s a similar chart for US solar power growth:
Here’s a look at installation data from 2010 & 2011 and installation projections through 2016 (chart just released earlier today):
And here’s a broader look:
Here’s solar PV, wind, and biomass growth in Germany through 2011 (and I know 2012 has added a ton onto that):
Wind Power Boom
Of course, it’s a similar story for wind, with projections that the growth will continue at a fast clip for decades to come:
Some key stats regarding global wind power are that 1) it had a compound annual growth rate (CAGR) of 25% from 2005 through 2010; 2) by the end of 2011, 200,000 MW were installed; and 3) by 2030, 1,750,000 MW are projected to be installed.
Europe Leading The Way
As a sign of things to come in Europe and many other places, the EU’s new power installation split in 2011 was quite uplifting — as I reported in February, 70% of new EU power was from renewable energy sources in 2011:
Why have I just been focusing on solar and wind energy in this article/presentation? Because solar and wind energy are the dominant renewable energy options these days. You can see in this chart that 96% of 2011 renewable capacity additions were from solar and wind:
And here’s a look at all net capacity changes in the EU in 2011:
You can see in the next chart that wind and solar have come to dominate new power installations in the EU in just the past 5 or so years (note that solar PV is green not yellow in this chart):
Despite all of the above, there are big misconceptions about energy. Perhaps it’s because people heard things 10 years ago that they still keep in their heads and think are true today. Perhaps it’s because people hear things that are simply false (from pseudoscience fossil fuel think tanks, utility companies, and misguided media). But the bottom line is that many (or the large majority of) people don’t realize how cheap solar and wind have gotten.
Here’s one look at the difference between perceptions of the levelized costs of wind and perceptions of the levelized cost of coal:
We also have a post coming soon showing that UK residents don’t realize how cheap solar has become, and how much money they can save by going solar. I’m sure the same is true for the US and other countries/markets.
Rooftop Solar PV Competes With Retail Electricity
Something that doesn’t get emphasized nearly enough is that rooftop solar PV essentially competes with the retail price of electricity, not the wholesale price.
If you’re an average Joe considering whether or not to go solar, you don’t compare the price of solar with the wholesale price of a coal or natural gas power plant — you compare it with what you would pay for electricity from your utility. In many places, solar is already cheaper. And in many, many more places, that will soon be the case. (In other words, utilities have something to be worried about).
With the increasing use of “time of use” (TOU) pricing, and the fact that peak power demand (when prices are highest) often coincides with peak solar PV output, this clean technology gets even that much more attractive (i.e. cheap relative to electricity from the grid).
You can’t give a big picture summary of clean energy without noting which countries are leading the way.
In absolute terms, you can see the world’s current solar and wind power leaders here:
Without finding good rankings based on relative solar and wind leadership on the interwebs, I decided to create such rankings myself.
You can find a lot more rankings and info at the links below, but for a quick snapshot, here are a few key “relative leadership” rankings:
So, what are the leading countries doing to lead in the energy sector? What about energy subsidies and incentives? What about technology improvements? What about merit order pricing? What about energy storage?
These are all topics I got into in the second half of my presentation (update December 12: Renewable Energy Big Pic: Part 2 is now published).
Renewable Energy Big Pic: Part 2 (Including 19 Charts & Graphs)
Continuing on from yesterday’s “Renewable Energy Big Pic” post, here’s Renewable Energy Big Pic: Part 2. As noted yesterday, this two-post series is basically a presentation I gave to a class of renewable energy graduate students this week. Enjoy this second part, and chime in below if anything interesting or useful comes to mind.
German Solar vs US Solar
As noted yesterday, German solar and US solar have both been growing at a fast pace for several years now, and the price of solar in both countries has been dropping steadily. However, looking at the solar power capacity of each country in a relative manner, Germany has over 21 times more solar installed per capita than the US (301.47 MW per million people compared to 13.973 MW per million people).
That’s not the only big difference between US and German solar, though. The price of solar power in the US is also a lot different than the price of solar power in Germany. We had an article back in June noting that installed solar power in Germany was at about $2.44/watt, while it was $4.44/watt in the US. The price of solar in both countries has dropped a bit since then, but the general difference remains.
And the difference exists across all solar power project sizes, as this Lawrence Berkeley National Laboratory (Berkeley Lab) chart from November’s Tracking the Sun report shows:
So, why is solar so much cheaper in Germany?
A number of people have looked into the matter in a bit of depth. For example, CleanTechnica contributor John Farrell has produced a chart showing by how much the various costs of solar vary in the two countries, as part of his report on the matter, “Cut The Price Of Solar In Half By Cutting Red Tape.” Here’s that chart:
Here’s another chart on the split, this one from Berkeley Lab:
Some comments from Berkeley Lab: “ German installers reported average soft costs of $0.62/W in 2011, which is roughly $2.70/W lower than the average soft costs reported by U.S. installers…  Customer acquisition costs averaged just $0.07/W in Germany, or roughly $0.60/W lower than in the U.S.”
Soft costs, red tape, acquisition costs — this is where the party’s happening (or not). But now that we’ve nailed down where the price difference is occurring, how about a bit of reflection on why it’s occurring?
One noticeable cause, I think, is simply that Germany has a much more mature market. (Again, it has over 20 times more solar power installed per capita than the US.) As a market matures, competition increases, there are more economies of scale, and costs come down.
And… if we’re going to talk about creating greater market penetration, we have to look at what policies actually do so. For solar (and other clean energy technologies), nothing has worked better than the rather simple feed-in tariff. As John noted about a year ago, the large majority of the world’s solar power and wind power has come through feed-in tariffs:
Another very interesting factor worth noting is the negative effect subsidies can have on mature or maturing technologies. This is something one of the premier solar policy and finance experts in the world, Jigar Shah, focused on in an exclusive guest article for CleanTechnica a couple months ago. His article, “Are Subsidies Holding Back U.S. Solar Deployment?,” noted that solar subsidies in the US are manipulated by investors in order to get a higher return on investment. In other words, by claiming that solar systems cost more than they do, investors are able to gain more in tax credits.
Jigar noted that “solar is now cost-effective without subsidies for ideal customers in 300 utilities in 30 US states.” Thus, he advises that we cut the subsidies and watch the price of solar fall.
Another thing worth noting is that many people (including schools, government buildings, and nonprofit organizations) can’t take advantage of solar power subsidies in the US. So, it’s imperative that we not inflate the cost of solar for those potential customers with unnecessary subsidies.
I’m sure this is a controversial topic, and there’s a lot more detail to get into on that matter, but we’ll leave this summary at that for now.
Wind power may be in a different boat, since it doesn’t lend itself to decentralized deployment as well as solar. While it is the cheapest option for new electricity in many places, pulling its subsidies or threatening to pull them has resulted in big “bust” years for US wind (and “boom” years right before those bust years). Here’s an Energy Information Administration chart on the matter:
However, I wonder what wind energy developers and investors would do if there was one day no hope of subsidies ever coming back. By bet it that they’d develop and invest a lot more than they do in non-subsidy years. If you’re missing a big tax credit one year but are hopeful it will be back the next year, why not wait it out and invest your capital in more supportive regions or countries in the meantime? (That’s probably what I’d do.)
Dirty Energy Subsidies
I don’t want to focus on this too much, since this is a post on renewable energy, not non-renewable energy (that’s catchy, isn’t it?). But the fact of the matter is, dirty energy sources have a huge bias fiscally because of the decades of massive subsidies they have been granted. This is a matter that I’ve tackled at length on a number of occasions. One key thing to note is that societal externalities (such as $500 billion a year in health costs from coal… in the US alone) are massive subsidies to the fossil fuel industries. But even beyond that, here are a couple charts from one of our Wind Power resource pages that indicate the completely imbalanced government subsidies for various energy sources:
And our German writer Thomas Gerke passed this riddle on to me just before my presentation:
“What energy related number has a similar proportion:”
“Government support for conventional and renewable energy between 1970-2012 in Germany in billion Euros:”
I’m sure the same is more or less true across the world. In my opinion, the key at this point with regards to subsides is that dirty energy subsidies need to finally be cut, for once and for all. And as part of that, pollution and other externalities need to be adequately priced. Of course, if this were done, fossil fuels would be considerably more expensive. But the fossil fuel industry is fighting such a change tooth and nail… and (so far) winning, for the most part.
Merit Order Effect
Another very interesting topic to cover when looking at the “renewable energy big picture” is the merit order effect.
For a more detailed look at this matter, check out the posts in the link above, but here’s a quick summary:
When utilities need more electricity, they buy it from competing electricity producers. Those producers make bids to offer up their electricity for purchase. To produce extra electricity, of course, coal power plants need to input more coal and natural gas power plants need to input more natural gas, which costs money. Wind and solar power producers, however, have the sun shining and the wind blowing for free. Nothing really needs to be done to take advantage of that, so the extra cost to send more electricity to the grid is essentially nil. That means that solar and wind project owners can bid down to $0 (or even lower in some instances, due to subsidies).
That has one rather huge effect: it drives down the price of electricity on the wholesale electricity market.
We’ve seen this happen in Germany:
And plenty of other places.
I think something especially worth noting here is that solar power is often most abundant during peak power demand. Providing electricity during peak demand is typically more expensive. That’s been the case for so long that it almost seems engraved in stone. However, due to this symbiosis above (and the merit order effect) solar power is chopping off high peak power prices. Here are two graphs from Germany showing this happening:
Notably, in that second graph, you can see that the price of electricity is so low in the middle of the day that it’s practically as low as electricity in the middle of the night. Typically, middle of the day electricity should be very high. But, get enough solar on the grid, and the world turns upside down.
Unfortunately, as we’ve pointed out on a couple occasions, the wholesale electricity price reductions from the merit order effect (i.e. renewable energy) aren’t always passed on to consumers via reductions in the retail price of electricity.
One would hope that’s the exception rather than the norm.
While market penetration, economies of scale, and good policies are key components of a bright, clean energy future (as well as making the price of coal and natural gas more accurately line of with the true cost of coal and natural gas), technology advancements and breakthroughs aren’t bad, either. The good news is that we’ve got news on such advancements and breakthroughs pretty much every day. Here are some recent ones regarding wind turbines:
- Gamechanging Vestas V164 Wind Turbine Continues Groundbreaking Development (8MW Wind Turbine!)
- GE Developing New Wind Blades Made Of Fabric To Reduce Wind Energy Costs
Some regarding solar:
- Solar-Cell Fabrics May Soon Be A Reality
- Nano-Flowers Could Help Create Next-Gen Energy Storage & Solar Cells
- Thin Film Solar Cell Degradation Prevented with New Method
- Artificial Butterfly Wing Material To Improve Solar Panels
- Rainbows From Nanotechnology To Improve Solar Cells
- Biohybrid Solar Cell Breakthrough: Spinach Protein Combined with Silicon in New Way that Greatly Boosts Performance
- New High-Efficiency Quantum Dot Solar Cells Developed
- Bandgap Engineering Aims To Double Solar Cell Power Generation Using Nanowires
- Color Vision At The Nanoscale, New Tool Developed To See In Color At The Nanoscale And Improve Solar-Energy Technology
- Organic Solar Cell Efficiency Tripled Thanks To Nanostructure Sandwich
- Ultra-Efficient Side-Illuminated Solar Cell Architecture Created By Researchers
- New Solar Module Efficiency Record Set, 33.5% Efficiency
Black silicon is a particularly interesting one to me:
- Black Silicon Solar Cell Efficiency Doubled
- Black Silicon Solar Cell Efficiency Raised to 18.2% by NREL Scientists
As are solar windows:
- Solar Cells for Windows Take Another Step Forward
- Solar Power Generation from the Windows — See-Through Solar Cells from Sharp
- Power-Generating Windows Offer New Horizons for Office Energy Efficiency
- One Step Closer to Invisible Solar Cells in Our Windows
One area where we really could use some breakthroughs is energy storage. Solar and wind’s biggest downsides are that they are not controllable… and sometimes not available.
It’s true (and quite underacknowledged) that the two energy sources is that they are very complementary:
Also, the sun is always shining somewhere and the wind is always blowing somewhere. With a well-connected and large grid, the issue of running out of electricity is minimized or even moot.
Nonetheless, based on what we have today, cheaper energy storage could be a huge boost. It is probably the topic I’m most keen to see big news on every day. And a lot of top scientists and engineers are aware of that (not the bit about me, of course, but the bit about cheap energy storage’s huge potential). Here are a handful of companies working on what might be breakthrough energy storage technologies:
- Ambri — liquid-metal batteries
- Aquion — sodium-ion batteries
- Eos — zinc-air batteries (from ground up)
- Envia — high-capacity lithium-ion batteries
- IBM — lithium-air batteries
I wouldn’t expect them all to achieve their aims, but I wouldn’t be surprised at all if one of them led us forward into a new era of energy storage… and a new era of energy, in general.
Additionally, there are already some companies looking to bring home energy storage systems to mass market. For example, Panasonic. As stated yesterday, mass market production and market penetration themselves help tremendously to bring technology costs down. If Panasonic or others start producing mass market energy storage solutions, watch out.
Another potential energy storage solution is simply using the batteries in electric vehicles to help balance energy supply and demand.
Mass market electric cars are growing fast and seem to be the future. Cars sit parked, out of use, approximately 95% of the time. Their batteries could be of some use while parked. I’ve heard utility company CEOs talking enthusiastically about this. Though, I’ve also seen some convincing arguments against this idea taking off. We’ll see. I don’t think it will be a silver bullet, but it could be part of the solution. And, of course, if you’ve got solar power and a plug-in electric vehicle, you could already start using your battery a bit for non-vehicle purposes.
The Potential Is Huge (Renewable Energy Is Tremendously Abundant)
I often start with this image in such presentations, but I’ve decided to end with it this time. This chart above shows that solar energy potential each year is several times more than the potential from finite energy reserves of any type of fossil fuel or nuclear power (and wind energy also has tremendous potential). Yes, for renewable energy sources, annual potential is represented, while it is only potential from finite energy reserves for the other energy sources.
To close, here are a couple videos on some of the things mentioned in this post and in Renewable Energy Big Pic: Part 1, as well as some things not covered in these posts: