Even cheaper solar energy will help fight climate change

While Google has successfully made the shift from R&D to deployment, it arguably has always focused on scaling bad technology. In the early 2010s, the solar race looked like a close competition between Solar panel (PV) and large-scale concentrated solar energy (CSP), which uses fluids heated by the sun to drive power turbines. Google quickly invested over $ 1 billion in a host of renewable energy companies and utilities, including large investments in CSP BrightSource Energy and eSolar. A decade later, such choices do not look promising, as CSP has also lost ground in the face of the continued and rapid decline in PV costs.

Google isn’t alone in repeatedly misjudging the decline in solar cell prices over the past few decades and its impact on the way we think about clean energy. Solar PV costs have increased about 10-fold over the past decade, on top of the already impressive cost reductions so far, for a total drop of about a hundredfold since US President Jimmy Carter unveiled solar panels at the White House. in 1979. (Ronald Reagan overthrew them in 1986, during his second term as president.)

To put it in perspective, if the price of gasoline had similarly declined from 1979 levels, today it would cost pennies a gallon. Gasoline, of course, is a commodity whose prices fluctuate for a number of technological, economic and political reasons. Prices for solar PV are also determined by all of these factors, but over the years technology has clearly dominated. (This year, prices for solar PV modules have increased by about 18% due to a temporary tightening in the silicon supply chain.)

In its latest edition Global energy outlook, the International Energy Agency declared solar photovoltaics to be “the cheapest source of electricity in history” for sunny places with a low cost of financing. These two qualities are important. The sun is evident – solar power will always be cheaper in Phoenix, Arizona than in New York – but the report concluded that solar power is now cheaper than coal and natural gas in many places. .

Solar power has to be so cheap that it makes financial sense to build new solar capacity and shut down working coal and gas power plants that still make money for their owners.

Funding is the key to why this is true. Solar PV and other renewables such as wind have low or near zero operating expenses – up-front costs have always been the biggest hurdle, and funding is one of the biggest reasons. Thanks in part to various government policies, solar investing has become much less risky over the past decade, freeing up cheap money.

As a result, the deployment of solar photovoltaic energy has increased rapidly; it is now the fastest growing source of electricity in the world, and it should be for some time. It starts from a low installed capacity base, however, far behind coal, gas, hydropower, nuclear, and even wind, which has been cheap for longer. And this is where one of the biggest problems for solar photovoltaic energy lies. It may be the cheapest form of electricity for many, but that alone doesn’t make the transition to clean energy fast enough.

We need more and more technological advances. Why stop at grid parity, the point where it is as inexpensive to build and operate solar PV as it is to provide electricity from fossil fuels? Why not 10% cheaper? Why not strive to cut costs by another factor of 10 in a decade? Such cuts are necessary because the sacred goal of grid parity is misleading – the real question is when utilities will actually abandon existing coal-fired power plants and switch to solar, rather than simply avoiding adding more. new coal capacities. Solar power has to be so cheap that it makes financial sense to build new solar capacity and shut down working coal and gas power plants that still make money for their owners.

All of this calls for a policy aimed both at promoting existing solar technology and at supporting R&D in new technologies. The package includes technological research, development, demonstration, deployment and dissemination. Each step in this chain deserves direct government support, bearing in mind that it also becomes more and more expensive the further down the chain is.

How to be cheaper

In order to better optimize the investments to arrive at an even cheaper solar, it is useful to understand what factors have lowered the cost of renewable energy in recent decades.

MIT Energy Systems Scientist Jessika trancik and his group find that the dramatic declines in solar cell costs over the three decades can be largely attributed to three factors: R&D leading directly to improvements in module efficiency (how much sunlight is converted into electricity) and other fundamental technological advances; economies of scale attributed to the size of solar cell manufacturing plants and the increasing volume of inputs such as silicon; and the improvements achieved through learning by doing.

None of this is too surprising, but what is less obvious is that the relative contribution of each varies considerably over time. From 1980 to 2000, R&D accounted for around 60% of cost reductions, with economies of scale reaching 20%, and learning making a third distant at around 5%; other largely unattributable factors account for the balance. It makes sense; it was a time of impressive progress in solar cell efficiency, but not a time of major manufacturing and deployment. Since then, the pendulum has shifted from R&D and fundamental technological improvements to economies of scale in manufacturing, now accounting for over 40% of cost reductions. It should be noted, however, that research advances still account for around 40% of the declines.

The lesson for future investments that aim to make solar even cheaper: there should be direct support for all three, skewed towards factors of economies of scale. Trancik’s conclusions only take into account the solar PV module itself. This still leaves installation, network connection and other factors that make up the total system costs. These are areas that are likely to be improved as technicians and companies become more experienced. While the results of subsidies for increasing solar PV installations appear mixed at best, policies such as feed-in tariffs, which offer long-term contracts favorable to solar PV producers, and renewable energy portfolio standards. or clean energy, which set quantity targets for renewables, show clear results in driving global deployment.

No free meal

Despite the fall in the price of solar, the transition to renewable energies will remain costly. The big question, of course, is how much it costs compared to what – climate change, too, has costs. Cheap solar power becomes even more financially attractive to developers if the social and environmental costs of carbon emissions from fossil fuels are taken into account.

Much here depends on the social cost of carbon (CCS), a tally of the financial damage that every metric ton of carbon dioxide emitted today causes to the economy, society and the environment – and, by extension, how much every tonne of CO2 emitted should cost. This is a number that speaks volumes about the true cost of coal and other fossil fuels, and the proper support for solar PV and other renewables.

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