Arnold Kling  

Solar Energy Update

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McKinsey folks write,


During the next three to seven years, solar energy’s unsubsidized cost to end customers should equal the cost of conventional electricity in parts of the United States (California and the Southwest) and in Italy, Japan, and Spain.

From now until 2020, installed global solar capacity will grow by roughly 30 to 35 percent a year, from 10 gigawatts today to about 200 to 400 gigawatts...Even though this volume represents only 1.5 to 3 percent of global electricity output, the roughly 20 to 40 new gigawatts a year of installed solar capacity would provide about 10 to 20 percent of annual new power capacity over that period.

Let's extrapolate this forward. Suppose you start with 200 gigawatts of solar in 2020, and it grows at 30 percent per year beyond that. In 2030, you would be at 2757 gigawatts. In 2040, you would be at 38009 gigawatts, which is plausibly at least much as total global electricity output would look like under a modest growth scenario. (If total electric output in 2020 is 13333 gigawatts [200/.015] and it grows at 5 percent per year, it will be at 35377 gigawatts in 2040.)

Obviously, you hope that solar power can sustain those sorts of growth rates for that long. If you believe it, then you should short those long-term oil futures contracts.

Pointer from Fazeer Rahim.


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COMMENTS (17 to date)
MattY writes:

Thermo solar is still performing twice as efficient as low temp panels.

Les writes:

This McKinsey report seems to make a common error, by conflating solar capacity with solar energy produced.

Solar capacity needs to vastly exceed expected solar energy produced, because:

a)Sunshine is intermittent rather than continuous, so solar capacity always greatly exceeds solar energy produced.

b) Since electricity cannot be stored, and since sunshine is intermittent, solar energy produced is unpredictable, and cannot be relied upon to produce continuous power (like coal, gas or nuclear sources). Therefore this adds further emphasis to the fact that solar capacity always greatly exceeds solar energy produced.

John writes:

I wonder what kind of land requirement would have to be allocated to solar collection to produce that type of capacity?

Dr. T writes:

Les (above) is correct, and there are more problems.

Every projection I've seen greatly underestimates actual costs of solar energy production by underestimating the costs of equipment, vastly underestimating the costs on ongoing maintenance and repair, and overestimating the lifetime of the solar energy system. Too many vested interests want solar energy to work for me to believe any hype without access to the raw data.

Even in very sunny areas, solar energy has efficiency problems. Mornings and evenings are low-yield periods. Mid-day yields cannot be maximized unless the light collection system tracks the sun. Few solar energy systems use tracking because of the greatly increased costs and maintenance. In windy, desert areas there is continual damage from blowing sand. In areas with intermittent rain, the wetted panels acquire dirt films that lower efficiency. To avoid squandering solar energy, the system must either feed back into the grid or use a storage system. Both are inefficient. Energy storage systems add both purchase and maintenance costs and can give back less than 50% of the energy.

At present, without subsidies, only solar water heating is cost effective (in sunny places where electricity is expensive). For a typical homeowner, a windmill would be more efficient at generating electricity than a solar energy system.

Dallas writes:

Energy storage can be solved with 90% class efficiencies -- pumped hydro for example. With plug-in hybrid transportation systems, they will also work as storage devices.

In the short term, we need to note that the US gov't owns most of the best solar sites in the south west and hasn't allowed any permits for solar. The BLM says to itself "Why say yes to something that may upset some of our stakeholders"-- all of whom have veto power over any project.

Once solar hits a real cost/effective point, a growth faster than 30%/yr is possible. A change from 30%/yr to 50% growth would significantly impact the time lines.

sikantis writes:

There are still a lot of research to do such as producing a small but efficient battery or other sort of collecting energy. But the direction is great. Good post!

SheetWise writes:

Agree with Les and Dr. T --

Wind, waves, waterfalls, sun are all classified as solar energy. The abundance of solar energy that is untapped, and the many inexpensive methods of capturing it, make even inefficient conversions to fuel attractive. Efficiency is not really a part of the equation since since the supply is inexhaustable -- solar energy falls under a simple cost/return rubric.

You will notice in southern California that 1/2 of the windmill grid is frequently turned off -- because capacity currently exceeds demand. No point wearing out the bearings on a windmill to generate electricity that cannot be inventoried.

We have to look at the use of energy that requires efficient storage -- shipping, air travel, and automotive. The prospect of any significant change in energy use is governed by storage, and whatever solution is in our future -- it will be a storage solution.

The best and brightest seem to be leaning towards ulta-capacitors.

SheetWise writes:

Like I said -- ultra-capacitors ;)

Michael Kolczynski writes:

And we must remember, it only takes 1.21 gigawatts to get the Delorean to 88 mph.

Max writes:

Some thoughts from the engineering side of things:

A maintenance and storage capacities are often underestimated in those projects. Also, neither wind nor solar power are really competitive to coal or nuclear power plants, because they only can supply power at unpredictable times (sun and wind are not constant sources).
However, we need energy all the time during the day and since storing electric energy in batteries is economically inefficient (as well as using cell-modules of Ultracaps) and usage of hydraulic components greatly reduces the efficiency (Hydropumps, f.e., have an inferior conversion efficiency of 85%!!) and storing in mechanical storages is only possible at great costs in space and construction, there is really no other alternative than transmitting and using the energy at once.

So, yes, solar energy can be used to heat your home or to support conventional power plants, but it cannot replace existing power solutions.

Bob Knaus writes:

The attractiveness of photovoltaic panels is that, for very small installations, they are reasonably efficient and have no moving parts. They lose this advantage at the scale of replacing 1000MW coal plants.

Very large solar plants will likely use mirrors to focus light on collecting towers which will heat molten salt to about 1000F. At this temperature, the salt can store enough energy to deliver power overnight and through cloudy days. Molten salt is commonly used for thermal transport in industrial applications; it is non-toxic and well-behaved. Google "solar molten salt" for more info.

I did some back-of-the-napkin calculations which suggested that about 10% of the land in Arizona would be required to support the current electric usage of the US. This would be a pretty big hunk of desert to industrialize, and would doubtless raise environmental concerns.

Several years ago when I was working on a consulting job for the Metropolitan Water District of California (they operate the aqueduct from the Colorado River to LA) I did a fly-over in one of their planes. The pilot pointed out to me block after block of dead orange groves. MWD had purchased the water rights from the farmers, who found it more profitable than oranges. In the back of the plane were two lawyers that we dropped off in a desert town to negotiate some more water deals with farmers.

Seems to me that moving to a fully market-based water pricing scheme in the American Southwest just might free up enough farmland to support the solar acreage required, without paving over the desert with mirrors and pipes.

Dan Weber writes:

The Economist had a big feature on energy recently. One thing they claimed was that a "reasonable" carbon tax would make solar a better bet than coal.

So if you want solar to take off, lobby for replacing the income tax with a carbon tax.

Dezakin writes:

I dont know why people in general and economists in particular conflate electricity with fuel, when they aren't in the least bit interchangable even though they are tangentally related. Very cheap electricity would do little to ease the price of oil as much of oil demand is inelastic with electricity. Very little oil is burned to make electricity. The only long term effect that inexpensive alternative power would have on oil would be to power massive refineries that turn water into hydrogen for syngas production, and then you're paying nearly as much in capital as you were before.

Oil is going to be expensive from now on.

Chuck writes:

We need to clarify thermal solar vs. photovoltaic.

Thermal solar directs the suns heat to a storage medium, like a molten salt in a vessel, which is then used to create steam to run a turbine.

The molten salt is a storage medium, and the electrical output is continuous.

We don't have to use one technology for all applications. We can use solar in sunny places, we can use wind in windy places, we can use geothermal in volcanic places, we can use nuclear in the rest of the places.

Furthermore, we can use intermittent sources to generate fuel, like H2 from water with electrolysis and use it in H2 + 02 combustion based transportation (or fuel cell transportation). The H2 can be run through a pipeline or on trucks to points of use, etc.

Were someone 100 years ago to try to imagine using oil or electricity at the scale we do today, they would likely say it was absurd.

Bob Knaus writes:

Dezakin, you are wrong. Energy is energy. In whatever form it exists, if it is cheap enough then it will be profitable to change it from one form to another.

The best advice that economists can offer for the energy problem is simple -- "Develop technology that delivers carbon-free energy at a lower price than coal and oil." Markets will then take care the rest without any need for carbon taxes or elaborate regulations.

Chuck writes:

The absence of a cost for emitting carbon is a failure in the market as it is structured now.

At the least, companies should be required to carry liability insurance for the unpredictable outcomes of climate change.

SheetWise writes:

"So if you want solar to take off, lobby for replacing the income tax with a carbon tax."

"The best advice that economists can offer for the energy problem is simple -- 'Develop technology that delivers carbon-free energy at a lower price than coal and oil.'"

"The absence of a cost for emitting carbon is a failure in the market as it is structured now."

Why does everyone accept the idea that carbon emission is a bad thing? From my reading, it's simply a theory -- and every attempt to prove it has shown the theory to be wrong.

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