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Page added on September 27, 2013

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Solar Deployment: Are There Limits as Costs Come Down?

Solar Deployment: Are There Limits as Costs Come Down? thumbnail

A kWh is a different product depending on when and where it is delivered. The rapid fall in the costs of solar PV implies that building grids, storage and commercial arrangements able to match supply and demand is much more urgent. This will require strong policy drivers.

Falling costs are making solar PV increasingly competitive with other forms of electricity generation.  This post looks at what might limit solar PV’s deployment if costs continue to fall and reach levels low enough to allow for additional expenditure on grids, storage and demand-side infrastructure while remaining economically competitive.   I’m not taking a view on if or when this will happen, or how low costs might become – there is still a significant way to go to reach that point.  I’m simply looking at what the remaining barriers would be if they did.  I’ll use some rough and ready numbers to look at what it might take for solar to produce around a third of the world’s electricity consumption.  I’ll assume this illustratively to be about 17,000TWh (out of a total of around 50,000TWh) by mid-century[1], which would be around 180 times the 2012 total of around 93TWh[2] of solar PV output.

As has often been noted, the solar resource is easily large enough to provide such large amounts of electricity.  Recent data from the US National Renewable Energy Laboratories (NREL) shows average US output of 70kWh/m2 based on total site area (i.e. not only the panels)[3].   Generating 17,000TWh on this basis (likely a conservative assumption, as panel efficiency is likely to increase over time) would require an area of around 240,000km2, less than 0.2% of the world’s land surface.  This is a huge area – about the size of the United Kingdom – but far less than the land devoted to agriculture, which uses solar energy to grow food.  And solar power can often make use of spaces – such as rooftops and deserts – that have few alternative uses.   Local planning and environmental concerns seem likely to become a more prominent issue as solar deployment grows.  However these concerns seem unlikely to place a fundamental limit on the industry globally.

A solar industry meeting a third of world electricity demand would be very large, but not infeasibly so.  It would require about 300GW of capacity to be added each year on average worldwide, around 10 times the current installation rate, which has grown to its current level in just a few years.

However, matching the location and timing of supply to demand is a huge challenge.  Electricity at a different time and place is a different product and so part of a separate market.  Grids and storage help link these different markets[4] and so minimise load shedding (though some may still be required).

The first problem is geographical proximity.  In some cases (such as California and Mexico) demand is quite close to high quality solar resources.  However in densely populated countries with weak solar resources, such as the UK, the challenge is much greater[5].  Electricity may need to be brought from sunnier regions, especially in winter, requiring large scale transmission infrastructure.  There may be more local issues. For example in Japan, grid reinforcement will be needed to bring power from the north to more populous areas, crossing boundaries between regional utilities[6].  However problems in this respect may not be universal.  One recent study indicated that the German grid is already quite robust[7].

Matching the timing of output and demand is even more problematic.  Solar output is much peakier than system demand, and peak output and demand will often not coincide.  One indication is that load balancing becomes a significant problem when solar begins to account for more than around 10-15% of generation[8].

As solar penetration increases relative prices at different times of day are likely to shift, which may well cause demand to respond.  More sophisticated market arrangements and system operation are likely to become important features of most scenarios with extensive penetration of renewables.

Matching the timing of peaks by moving power from where the sun is shining to where the demand is located could imply  tens or hundreds of GW of power to be moved across continental distances.  This is because the point at which the sun is highest in the sky (around noon), when solar output tends to be at its maximum, moves quite quickly across the surface of the earth.  At the equator it travels at just over 1000miles/hour, implying that to service demand even an hour later in the day power must be moved hundreds of miles from west to east.  The chart below shows how far west you need to go to shift the time of peak one hour later at the latitudes of some of the world’s major cities.  To move the peak a quarter of the day – from a noon production peak to 6pm demand – you need to move power a quarter of the way round the world.  And the direction does not always help.  To meet later demand on the US west coast solar panels would need to be out in the Pacific Ocean rather than Arizona and Texas.  China, with its population concentrated on the east coast, is better served in the evening, but would run into problems in the morning.  This implies that load balancing using transmission will be a huge challenge from a technological, regulatory and commercial perspective.

Solar production needs to be hundreds of miles west to meet a demand peak one hour later in the day at the latitude of the world’s major cities…

Chart of distance

Even the most extensive links may not be enough on occasions when the sun is over the oceans.  The map below shows where the sun is shining at midnight GMT on 21st December.  There is an hour or so of setting winter sun still left on the US west coast, and the weak first hour or two of the day’s output from panels in east Asia, with Australia in daylight (and therefore with some intriguing export possibilities if links can be built far enough).  But the whole of Europe, Africa, the Middle East, India, and almost all of Russia and North and South America and a good deal of the rest of Asia are in darkness.

daylight map

Building storage to address this problem is challenging because of the huge scale needed, as well as because of  the cost.  The subject is too large to go into here in detail, but in northern Europe very large amounts of storage are required even to balance load within the day. Seasonal storage (because for example average intensity of sunlight in the UK is nine times higher in summer than in winter) would require enormous capacity[9].  Germany’s subsidy for storage as part of new residential PV systems, which was introduced in May, and California’s plan for 1300MW of storage by 2020 are early examples of the type of initiative that is likely to be required.  Among other effects the premium for hydro power for load balancing is likely to increase.  And reductions in load factor due to no storage being available and so surplus remaining unused at peak will be less of a problem the lower the capital costs of solar become.

Building transmission and storage infrastructure, along with the arrangements to manage them, will take decades at the scale required.  And getting the costs of storage down will also be hugely challenging.  This will be accompanied by the need to make significant changesto market mechanisms so that they can more effectively balance supply and demand.  None of this will be achieved easily, and strong policy drivers are likely to be required for this to happen as fast as now looks likely to be required if solar is to play a central role in decarbonising power systems.

Few expected solar to become quite so cost competitive quite so quickly.  This largely unanticipated increase in competitiveness leads to a similarly accelerated programme now being required to build grids and storage able to incorporate increasingly large amounts of solar into the world’s power systems.

On climate change policy



9 Comments on "Solar Deployment: Are There Limits as Costs Come Down?"

  1. J-Gav on Fri, 27th Sep 2013 5:18 pm 

    The question posed in the title of this article seems downright stupid. But the author does go on to make a fairly honest appraisal of some of the major challenges faced by a large-scale solar build-out. What he fails to mention is what several poster on this site have long recognized – ‘renewables’ are all essentially an extension of fossil fuels. Punto e basta!

  2. LT on Fri, 27th Sep 2013 10:40 pm 

    Between that “cheap” solar panel and a household appliance is a battery (or battery bank) and an electronic inverter.

    Electronic inverter varies in size and cost depending on the amount of power it is handling.

    Electronic inverter is made of many electronic components, some of which are essential and are not cheap. Examples of key components in an electronic inverter are power semiconductors (transistors, thyristors, diodes,…), ferrites cores, copper wires, etc.

    Processes that makes power semiconductors and, especially, ferrite cores are energy intensive.

    Electronic inverter is the only means to make solar energy useful to a household appliance.

    Without electronic inverters solar energy is not that all useful.

    Therefore, solar energy is useful for as long as inverters (and battery/battery banks) are still being made.

  3. Max Reid on Fri, 27th Sep 2013 11:20 pm 

    We don’t need extra land. Installing panels on top of housholds, offices, factories will send the electricity direct ly to the home and also reduce the wear and tear of shingles.

    This way the peak electricity load used for air conditioning can be reduced by great extent. For extra supply, solar has to be used from outside lands.

  4. MrEnergyCzar on Sat, 28th Sep 2013 2:51 am 

    Interesting idea, following the sun’s peak across a continent…

    MrEnergyCzar

  5. BillT on Sat, 28th Sep 2013 3:51 am 

    LT, great observation, not mentioned often. It is not just panels but the whole system that is going to get impossible to replace eventually. Typical electronics last a few years today. Even if they lasted 10 years, they would have to be replaced by a more expensive one eventually. Draw-down batteries, maybe every 5 years or so. Think about your car battery. Even if you do not use it, it declines in energy capacity.

    Also, Max seems to think that A/C is forever…lol. The joke is on him.

  6. Arthur on Sat, 28th Sep 2013 10:39 am 

    “What he fails to mention is what several poster on this site have long recognized – ‘renewables’ are all essentially an extension of fossil fuels. Punto e basta!”

    No it is not. Only initially. A solar panel factory can produce the first batch of panels with fossil. These panels produced can be installed in the garden behind the factory, powering the plant from then on. The next batch of panels can produce the energy to power electro vehicles to transport raw materials to the factory. The crucial factor here is EROEI and nothing else. For panels the EROEI range is 7-38.

    “Therefore, solar energy is useful for as long as inverters (and battery/battery banks) are still being made.”

    That’s a stupid little box you are talking about, indicating the lack of any sense of proportion. The standard strategy of your average peaker doomer is to identify 3 essential molecules of some rare earth and than feverishly claim that it is all not going to work because, you see, the converter is an extension of fossil fuel/rare earth/xxx, you name it.

  7. LT on Sat, 28th Sep 2013 4:08 pm 

    If electronic inverters are stupid, then why solar systems need them? Do solar power systems work without DC/DC & DC/AC inverters?

    If you think solar power systems don’t need inverters to work, then prove it, prove it to the world.

    Here is another thing: Solar power systems require special batteries to work. Car batteries cannot handle it because car batteries are design for shallow cycle charge, whereas solar power systems require deep-cycle charge batteries or it won’t last long. Are these deep cycle batteries cheap?

  8. LT on Sat, 28th Sep 2013 4:08 pm 

    If electronic inverters are stupid, then why solar systems need them? Do solar power systems work without DC/DC & DC/AC inverters?

    If you think solar power systems don’t need inverters to work, then prove it, prove it to the world.

    Here is another thing: Solar power systems require special batteries to work. Car batteries cannot handle it because car batteries are design for shallow cycle charge, whereas solar power systems require deep-cycle charge batteries or it won’t last long. Are these deep cycle batteries cheap?

  9. GregT on Sat, 28th Sep 2013 4:33 pm 

    As mentioned before, solar PV electric power generation will only replace a small percentatage of current electric power generation from fossil fuels. Nothing more.

    All of the gadgets that we power with electricity, and even the grid itself, also require fossil fuels. They all have useful lives, and eventually need replacement.

    Electricity will not replace fossil fuels and what they do for us in modern industrial society. Not even remotely close.

    We need to rethink how we live on this planet. Fossil fuel powered industrialism is coming to an end.

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