Solar Value Eclipse
Do you know what it feels like to work with someone who arrives late, does work that others could easily do, harms others productivity, and then skips out when they’re most needed? It’s frustrating isn’t it? Welcome to the Solar Value Eclipse. Instead of adding value and efficiency to the electric grid, having too much solar harms the grid’s reliability, it’s fundamental economics, and it costs you more money.
Are you in favor of adding more solar power to the electric grid? If your answer is yes, you probably haven’t heard about the Solar Value Cliff. In many regions today, adding solar harms the grid’s reliability, it’s fundamental economics, and it costs you more money.
Surprised? Well, this sort of energy reality isn’t the kind of thing the mainstream media talk about.
Because electricity can’t be affordably stored on a large scale it has to be used when it’s generated. That means solar facilities only provide value to the grid during daylight hours.
This is a big problem because in the colder months peak demand for electricity happens after the sun has gone down as people get home from work, turn on lights and TVs, cook dinner and adjust their thermostats. In the summer, the peak comes earlier and lasts longer, but demand is still high as solar’s output is on the wane. While solar’s electricity contribution is going or gone, traditional energy sources have to carry the entire load.
Think of it this way. Natural gas, coal, nuclear, and hydro generate electricity twenty-four-seven. Solar, on the other hand, is like a privileged part-timer who arrives late, does work others could easily do, and then leaves while everyone else is working full tilt. Because all full-time workers are needed for the peak workload, they all have to be kept on staff and there is an expensive duplication of labor.
This is bad enough, but a new report by the Institute for Energy Research, IER, explains why this problem is even worse than it appears.
When solar installations are generating electricity during the daytime hours, other sources have to scale back what they produce. Selling less electricity costs them money and if there’s too much solar power in the system they can’t produce enough revenue to make a reliable profit.
Who cares about the financial health of big, faceless power companies? We all should. If there aren’t enough traditional power plants to meet peak demand, the lights go out.
IER’s research shows that when solar generates one percent of all electric power, it does provide a nice addition to the grid, but that value drops quickly and falls to zero once the solar market share reaches six percent. Anything beyond that creates a destabilizing negative value as other electricity providers lose revenue even though they are still called upon to provide power at the most critical hours when solar isn’t helping much or not at all.
If some genius invents an affordable way to store solar power on a large scale so it’s useful when the sun isn’t shining, THAT will be a breakthrough moment that will greatly impact the way we produce and use electricity. But until that day comes, if it ever does, adding too much solar will just drive up electricity costs while making the grid less stable.
Power on America.
The Solar Value Cliff: The Diminishing Value of Solar Power: The Institute for Energy Research examines the negative economic impacts of having too much solar power in a grid system where peak demand for electricity regularly comes after solar’s contribution to the system has declined or even fallen to near zero. In our video we did not get into the “Duck Curve” analysis of the misalignment of power generation and demand that comes with solar power because it was too complex of an issue to properly address in a short video, but it is interesting and enlightening.
Additional sources provided by the Solar Value Cliff report from the Institute for Energy Research:
Mike Munsell, Solar PV Prices Will Fall Below $1.00 per Watt by 2020, GreenTech 1 Media, June 1, 2016, https://www.greentechmedia.com/articles/read/solar-pv-prices-tofall-below-1.00-per-watt-by-2020
David Roberts, The Falling Costs of US Solar Power, in 7 Charts, Vox, August 24, 2 2016, http://www.vox.com/2016/8/24/12620920/us-solar-power-costs-falling
Travis Hoium, The Solar Energy Paradox: Why Solar Is Booming and Companies Are Going Out of Business, The Motley Fool, October 7, 2016 https://www.fool.com/investing/2016/10/07/the-solar-energy-paradox-why-solar-is-booming-and.aspx
Tim Buckley, Cost Competitive Solar Is Coming Soon to a Grid Near You, Clean Technica, October 13, 2016, https://cleantechnica.com/2016/10/13/cost-competitivesolar-coming-soon-grid-near/competitive-solar-coming-soon-grid-near/
Stephen Lacey, Are Utilities Ready for the Coming Death Spiral?, GreenTech Media, 5 August 18, 2013, https://www.greentechmedia.com/articles/read/are-utilities-ready-forthe-coming-death-spiral
Craig Morris, Happy with 25 Percent Wind and Solar? The Case of Italy and Spain, 6 Energy Transition, September 9, 2015, https://energytransition.org/2015/09/happywith-25-percent-wind-and-solar-the-case-of-italy-and-spain/
California Independent System Operator, Daily Renewables Watch, September 3, 7 2016, http://content.caiso.com/green/renewrpt/20160903_DailyRenewablesWatch.txt
California Independent System Operator, Fast Facts, https://www.caiso.com/Documents/FlexibleResourcesHelpRenewables_FastFacts.pdf
National Renewable Energy Laboratory, Solar Energy and Capacity Value, http://www.nrel.gov/docs/fy13osti/57582.pdf
PJM, Markets and Operation, http://www.pjm.com/markets-and-operations.aspx
Seyed Hossein Madaeni, Ramteen Sioshansi, and Paul Denholm, Comparison for Capacity Value Methods for Photovoltaics in the Western United States, National Renewable Energy Laboratory, July 2012, http://www.nrel.gov/docs/fy12osti/54704.pdf
M.M. Adibi and Nelson Mar ns, Impact of Power System Blackouts, Institute of Electrical and Electronics Engineers, July 2015, http://www.ieee-pes.org/presenta ons/ gm2015/PESGM2015P-001079.pdf
Gideon Weissman and Bret Fanshaw, Shining Reward: The Value of Rooftop Solar Power for Consumers and Society, Environment America, October 2016, http://environmentamerica.org/sites/environment/files/reports/AME ShiningRewards Rpt Oct16 1.1.pdf
Richard Schmalensee and Vladimir Bulovic, The Future of Solar Energy, Massachusetts Institute of Technology Energy Initiative, 2015, http://energy.mit.edu/wpcontent/uploads/2015/05/MITEI-The-Future-of-Solar-Energy.pdf
Thomas F. Stacy and George S. Taylor, The Levelized Cost of Electricity from Existing Generation Resources, Institute for Energy Research, July 2016, http://instituteforenergyresearch.org/wp-content/uploads/2016/07/IER_LCOE_2016-2.pdf
Institute for Energy Research, Solar Energy’s Duck Curve, October 27, 2014, http://instituteforenergyresearch.org/solar-energys-duck-curve/
Richard Nemec, Historic California Gas-Fired Merchant Plant Files Chapter11, NGI’s Daily Gas Price Index, December 8, 2016, http://www.naturalgasintel.com/articles/108667-historic-california-gas-fired-merchant-plant-files-chapter-11
Ivan Penn, A Central Valley Power Plant May Close as the State Pushes New Building at Customers’ Expense, Los Angeles Times, June 10, 2017, http:// www.latimes.com/business/la-fi-la-paloma-capacity-20170609-story.html
Institute for Energy Research, Diablo Canyon Nuclear Units to Shutter: What Are the Consequences?, July 12, 2016, http://instituteforenergyresearch.org/analysis/diablocanyon-nuclear-units-shutter/
Jeff St. John, In California, Solar and Wind Boost the Price of Frequency Regulation, GreenTech Media, July 5, 2016, https://www.greentechmedia.com/articles/read/InCalifornia-Solar-and-Wind-Boosts-the-Price-for-Frequency-Regulation
Rupert Darwall, Hillary Clinton’s Blackout America, National Review, October 21, 25 2016, http://www.nationalreview.com/article/441302/hillary-clinton-clean-energydangerously-unrealistic
R Street, Electricity Glossary, http://www.rstreet.org/r-street-electricity-glossary/ -reactivepower
Jeff St. John, PG&E to Replace Diablo Canyon Nuclear Plant with 100% Carbon-Free Resources, GreenTech Media, June 21, 2016, https://www.greentechmedia.com/articles/read/pge-to-replace-diablo-canyon-nuclear-plant-with-100-carbon-freeresources
Arduin, Laffer, and Moore Econometrics, The High Cost of Rooftop Solar Subsidies: How Net Metering Programs Burden the American People, Institute for Energy Research, October 2016, http://instituteforenergyresearch.org/wp-content/uploads/2016/10/The-High-Cost-of-Rooftop-Solar-Subsidies-Oct-16.pdf
Sean Whaley, Rooftop Solar Shifts $36M a Year to Nonsolar Ratepayers in Nevada, 29 Study Says, Las Vegas Review-Journal, August 18, 2016, https:// www.reviewjournal.com/business/energy/rooftop-solar-shifts-36m-a-year-to-nonsolarratepayers-in-nevada-study-says/
Dsire USA, Net Metering, http://programs.dsireusa.org/system/program/detail/372
Krysti Shallenberger, Massachusetts Gov. Baker Signs Bill Lifting Solar Cap, Lowering Net Metering Rates, Utility Dive, April 11, 2016, http://www.utilitydive.com/news/massachusetts-gov-baker-signs-bill-lifting-solar-cap-lowering-netmeterin-1/417201/
Dsire USA, Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions, August 2016, http://ncsolarcen-prod.s3.amazonaws.com/wpcontent/uploads/2014/11/RPS_carveout_3.pdf
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