If current rates of improvement hold, solar power will be incredibly cheap by the time it’s a substantial fraction of the world’s electricity supply, writes famous author and thinker Ramez Naam. According to Naam, electricity cost is from now on coupled to the ever-decreasing price of technology. That is profoundly deflationary and disruptive.
It’s now fairly common knowledge that the cost of solar modules is dropping exponentially. I helped publicize that fact in a 2011 Scientific American blog post asking “Does Moore’s Law Apply to Solar Cells?” The answer is that something like Moore’s law, an exponential learning curve (albeit slower than in computing) applies. (For those that think Moore’s Law is a terrible analogy, here’s my post on why Moore’s Law is an excellent analogy for solar.)
Solar electricity cost, not solar module cost, is key
But module prices now make up less than half of the price of complete solar deployments at the utility scale. The bulk of the price of solar is so-called “soft costs” – the DC->AC inverter, the labor to install the panels, the glass and aluminum used to cover and prop them up, the interconnection to the grid, etc. Solar module costs are now just one component in a more important question: What’s the trend in cost reduction of solar electricity? And what does that predict for the future?
Let’s look at some data. Here are cost of solar Power Purchase Agreements (PPAs) signed in the US over the last several years. PPAs are contracts to sell electricity, in this case from solar photovoltaic plants, at a pre-determined price. Most utility-scale solar installations happen with a PPA.
In the US, the price embedded in solar PPAs has dropped over the last 7-8 years from around $200 / MWh (or 20 cents / kwh) to a low of around $40 / MWh (or 4 cents per kwh).
The chart and data are from an excellent Lawrence Berkeley National Labs study, Is $50/MWh Solar for Real? Falling Project Prices and Rising Capacity Factors Drive Utility-Scale PV Toward Economic Competitiveness
This chart depicts a trend in time. The other way to look at this is by looking at the price of solar electricity vs how much has been installed. That’s a “learning rate” view, which draws on the observation that in industry after industry, each doubling of cumulative capacity tends to reduce prices by a predictable rate. In solar PV modules, the learning rate appears to be about 20%. In solar electricity generated from whole systems, we get the below:
This is a ~16% learning rate, meaning that every doubling of utility-scale solar capacity in the US leads to a roughly 16% reduction in the cost of electricity from new solar installations. If anything, the rate in recent years appears to be faster than 16%, but we’ll use 16% as an estimate of the long term rate.
Every industrial product and activity gets cheap
This phenomenon of lower prices as an industry scales is hardly unique to solar. For instance, here’s a view of the price of the Ford Model T as production scaled.
Like solar electricity (and a host of other products and activities), the Model T shows a steady decline in price (on a log scale) as manufacturing increased (also on a log scale).
The future of solar prices – if trends hold
The most important, question, for solar, is what will future prices be? Any projection here has to be seen as just that – a projection. Not reality. History is filled with trends that reached their natural limits and stalled. Learning rates are a crude way to model the complexities involved in lowering costs. Things could deviate substantially from this trendline.
That said, if the trend in solar pricing holds, here’s what it shows for future solar prices, without subsidies, as a function of scale.
Again, these are unsubsidized prices, ranging from solar in extremely sunny areas (the gold line) to solar in more typical locations in the US, China, India, and Southern Europe (the green line).
What this graph shows is that, if solar electricity continues its current learning rate, by the time solar capacity triples to 600GW (by 2020 or 2021, as a rough estimate), we should see unsubsidized solar prices of roughly 4.5 c / kwh for very sunny places (the US southwest, the Middle East, Australia, parts of India, parts of Latin America), ranging up to 6.5 c / kwh for more moderately sunny areas (almost all of India, large swaths of the US and China, southern and central Europe, almost all of Latin America).
And beyond that, by the time solar scale has doubled 4 more times, to the equivalent of 16% of today’s electricity demand (and somewhat less of future demand), we should see solar at 3 cents per kwh in the sunniest areas, and 4.5 cents per kwh in moderately sunny areas.
If this holds, solar will cost less than half what new coal or natural gas electricity cost, even without factoring in the cost of air pollution and carbon pollution emitted by fossil fuel power plants.
As crazy as this projection sounds, it’s not unique. The IEA (International Energy Agency), in one of its scenarios, projects 4 cent per kwh solar by mid century.
Fraunhofer ISE, the German research institute, goes farther, predicting solar as cheap as 2 euro cents per kwh in the sunniest parts of Europe by 2050.
Obviously, quite a bit can happen between now and then. But the meta-observation is this: Electricity cost is now coupled to the ever-decreasing price of technology. That is profoundly deflationary. It’s profoundly disruptive to other electricity-generating technologies and businesses. And it’s good news for both people and the planet.
Is it good enough news? In next few weeks I’ll look at the future prospects of wind, of energy storage, and, finally, at what parts of the decarbonization puzzle are missing.
Johannesburg – South African chicken producers will ask the government to help them guarantee electricity supply to the nation’s biggest abattoirs as almost-daily load shedding is harming the birds’ welfare and creating health risks.
The slaughterhouses, some of which can process as many as 13 000 chickens hourly, can’t rely on generators as they aren’t able to create sufficient power for their needs, South African Poultry Association chief executive officer Kevin Lovell said.
The birds are typically stunned unconscious by electrocution before they are decapitated while hanging upside down, he said.
When power cuts interrupt the process, the birds “have been stunned but they haven’t been killed; they’re hanging upside down and they’re coming back alive,” he said at Bloomberg’s offices in Johannesburg last week.
“It’s a real problem. And it’s a huge waste problem because everything that stops in the process, sometimes hundreds of tons, has to be cleared. You have to clean and sterilise everything and then you have to dump at a medical waste site.”
Eskom has cut supply almost every other day this year as it struggles to meet demand amid regular breakdowns of plants and delays starting up new units. While load shedding follows schedules, it is sometimes imposed at a few minutes’ notice.
Abattoirs belonging to producers including RCL Foods and Astral Foods slaughtered about 958 million chickens last year, Lovell said.
Request to Eskom
SAPA, as the poultry lobby is known, will approach the Department of Agriculture, Forestry and Fisheries about asking Eskom and municipalities to directly control power supply to 20 of the largest slaughterhouses, which process about 80% of the country’s production, and provide about eight hours’ notice before cuts are introduced, Lovell said.
Eskom will attempt to accommodate the needs of the poultry industry once producers have made an approach, Eskom spokesperson Khulu Phasiwe said by phone on Tuesday.
A company operating in the Western Cape has arranged that it gets forewarned about planned disruptions and switches off supply to its feed mill during the day in exchange for not having electricity to its abbatoir cut, Lovell said.
“Maybe that’s the sort of solution we can come up with,” he said.
Sufficient warning will limit losses and help processors and farmers plan transportation of the birds more efficiently, he said.
“Farms need to be no more than two hours away from abattoirs as that’s the sort of time period that the chickens can safely be contained in those crates” on trucks, he said. “If it starts to take longer than that, you start to get mortalities.”
About 58% of Eskom’s electricity sales are to direct customers such as mines and factories, with the rest is sold to municipalities who then distribute to residents and businesses, according to the company’s 2014 annual report.
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In a first for South Africa, Calgro M3 is soon to launch a subsidiary that will operate completely off the national electricity grid, by generating its own renewable energy to run all aspects of the business, including that subsidiary’s administration office.
“We believe that in this era of tight electricity supply, any move to generate one’s own power, to be independent of Eskom, is an important element of sustainability,”
explains Wikus Lategan from Calgro M3. “It has been estimated that a lack of power has cost this country 10% of GDP and businesses need to take action now to limit the negative impact on their bottom line.”This initiative will assist the Metro’s within which they operate, by alleviating pressure on an already stretched electricity supply grid.
This comes at a time when the Minister of Public Enterprises, Lynne Brown, has recently warned South Africa of Eskom’s continuing supply vulnerability and to expect load shedding for at least the next two years as it battles to deal with the power shortfall.
“We are using roof-mounted split solar farms across all roofs of the project (office buildings, gatehouses etc). The rationale for split farms is to protect against downtime. The solar panels charge batteries which are connected to a UPS internet enabled inverter, to convert the power back to 240V,” said Calgro M3 spokesperson Gillian Findlay. “All lighting is individual powered solar lighting – each light works independently, to protect against downtime.”
Calgro M3’s new venture, Calgro M3 Memorial Parks, focuses on the development of private memorial parks, with the Nasrec Private Memorial Park set to be launched in May 2015. Calgro M3 Memorial Parks will have headquarters at the Nasrec site. “The offices have been designed to operate independently of South Africa’s electricity grid, using various forms of renewable energy with generator backup,” states Lategan. “All of the memorial parks and all the facilities associated with this company will be entirely self-sufficient in power generation. We believe that this will be the first entirely off-the-grid company of size in the country.”
Source: SA the Good News
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The South Africa Department of Energy (DOE) has awarded preferred bidder status for a 100 megawatt (MW) Concentrating Solar Power (CSP) project to SolarReserve and International Company for Water and Power Projects (ACWA Power). The project was developed in response to the DOE’s Round 3 (CSP) Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The Redstone Solar Thermal Power project, with the lowest tariff bid to date from any CSP project in the country, is scheduled to achieve financial close later in 2015 and commence operations in early 2018.
The first of its kind in Africa, the Redstone Solar Thermal Power Project features SolarReserve’s molten salt energy storage technology in a tower configuration. According to SolarReserve, the 100 MW project with 12 hours of full-load energy storage will be able to reliably deliver a stable electricity supply to more than 200,000 South African homes during peak demand periods.
Fueled completely by the sun, with no back up fuel required, the project also features dry cooling of the power generation cycle as an important element to minimize water use. The project technology will be based on SolarReserve’s successful Crescent Dunes project in the U.S., which is complete with construction and currently in final commissioning.
“The Redstone project marks an important technology advancement for South Africa in solar power,” said SolarReserve’s CEO Kevin Smith. “Due to the fully integrated thermal energy storage, the plant will provide dispatchable power on-demand, just like conventional coal, oil, nuclear or natural gas-fired power plants, but without the harmful emissions or hazardous materials and without any fuel cost. In addition, the project’s delivered electricity price is the lowest of any Concentrating Solar Power project in the country to date.”
The Redstone Solar Thermal Power Project will be located in Postmasburg, near Kimberley in the Northern Cape Province, adjacent to the 75 MW Lesedi and 96 MW Jasper photovoltaic (PV) solar power projects successfully developed by SolarReserve and its investment partners. Together, the three projects comprise the world’s first combined CSP and PV solar park with a total of 271 MW of generating capacity.
“This Redstone Solar Project together with our 50 MW Bokpoort CSP project in South Africa and the Noor1, 160 MW solar thermal power plant at Ouarzzate in Morocco, extends ACWA Power’s success in solar energy on the African continent,” added Paddy Padmanathan, president and CEO of ACWA Power. “All aspects of the project, from development phase to construction and then operations, have been structured to ensure maximization of value retention in not just only the South African economy, but also within the local economy of Northern Cape Province recognizing the intrinsic value in co-developing local people along with this asset which will co-exist with the local community for decades to come.”
Source: Domestic Fuel
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