Friday, July 25, 2014

Future of Solar

At the workshop in A Toxa I attended in late June, Richard Schmalensee presented findings of a yet to be released MIT report on the "Future of Solar". This will be part of their series on the future of energy. He was skeptical of how much of a role solar can play any time soon in addressing the climate issue. It's not clear that the costs of solar can come down a lot more when most of the costs are now in the non-silicon components. There is also the issue of rare materials needed for alternatives to silicon. Then there is the intermittency / storage issue. Yes, we keep hearing about storage breakthroughs, but they aren't yet commercial products. And even when they will be they will add further huge costs to the cost of solar. There is a need for new transmission infrastructure to the renewable locations. Electricity markets may need to be reformed again to handle the intermittent new renewables effectively.  Back in April, I noted that Ottmar Edenhofer stated that there was an increasing realisation of the difficulties of integrating renewable energy on a large scale into electricity supply systems. These are some of the issues alluded to and the reason that CCS and other alternatives are getting renewed consideration.


  1. Assuming you're not considering other electricity market issues, and only an energy only vs capacity payment market model, what's behind your thinking that the NEM is not suitable for handling solar's cost profile?

  2. Yes, that's what I'm thinking about - as the market is currently constructed it seems to be a problem?

  3. David - I still don't understand your comment about the cost profile and the design of the NEM.

    Technology selection in an energy only market is a trade-off of fixed and variable costs - with the selection determined by the trading periods (with a stochastic demand) in which sufficient revenue is earned to cover both elements. The winning technology is that which covers all it's costs for the least revenue.

    Having a technology with zero operating costs but high fixed costs doesn't change that arrangement.

    There is a risk trade-off as well - but that risk is amplified (signficantly) under policy uncertainty re climate change. In an abstract consideration, I doubt the risk profile for small or utility scale solar choices is larger than the multi-year development and approval process for fossil technologies (that run between 3 & 7 years!)

    But perhaps I'm completely misunderstanding what you're suggesting?

    Can you point me to any published work (media or academic)

  4. This was based on Schmalensee's talk. Unfortunately the report it was based on hasn't been released yet. I will edit the text of the blogpost not to mention Australia as an example.

  5. Yes - a quick perusal of Richard's recent public writings is about noting the challenges of implementing various 'renewable portfolio standards' in different states and markets in the US (aka RET in Australia speak) - and the challenges that poses for both grid operation with intermittent technologies (and associated flow-on costs).

    I suspect the issue is not one of having the various electricity market designs bring forward solar technology per se, but rather how the current policies supporting renewables and the flow on effects that become large past a certain renewable share/scale (given the existing infrastructure) and implications for efficient operation of the grid - for all agents.