Sun machines

From the article (archive):

Expecting exponentials to carry on is rarely a basis for sober forecasting. At some point either demand or supply faces an unavoidable constraint; a graph which was going up exponentially starts to take on the form of an elongated S. And there is a wide variety of plausible stories about possible constraints, from manufacturers going bust, to solar farms not being able to connect to grids, to extensively solar-powered grids not being stable, to excessively solar grids no longer being attractive sites for further investment.

All real issues. But the past 20 years of solar growth have seen naive extrapolations trounce forecasting soberly informed by such concerns again and again. In 2009, when installed solar capacity worldwide was 23gw, the energy experts at the iea predicted that in the 20 years to 2030 it would increase to 244gw. It hit that milestone in 2016, when only six of the 20 years had passed. According to Nat Bullard, an energy analyst, over most of the 2010s actual solar installations typically beat the iea’s five-year forecasts by 235% (see chart). The people who have come closest to predicting what has actually happened have been environmentalists poo-pooed for zealotry and economic illiteracy, such as those at Greenpeace who, also in 2009, predicted 921gw of solar capacity by 2030. Yet even that was an underestimate. The world’s solar capacity hit 1,419gw last year.

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This performance suggests that solar is not like other energy sources. History shows the same thing. From 1800 to 2020 the amount of energy the world derived from coal increased by roughly a factor of 400. But as Dr Way and his colleagues point out, when adjusted for inflation coal’s cost in terms of its energy content stayed more or less the same. The same is true for the long-term costs of oil and, later, natural gas. Exploiting these fuels drove lots of economic growth; that made the fuels more affordable, their use more valuable and the returns on their production greater. But their costs stayed broadly stable in real terms.

Since the 1960s what analysts call the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000, and the trend is continuing.

(From an extremely expensive starting point, though.)

[Chinese manufacturers] benefit from the fact that they are key to their country’s industrial strategy. There have been some bankruptcies, but the Chinese government has extended cheap loans to many overextended firms. Gregory Nemet of the University of Wisconsin-Madison notes that the solar-cell market typically catches up with the overcapacity thus created within a couple of years. The current oversupply will see whether this remains the case. China’s two biggest producers of polysilicon, gcl-Poly and Tongwei, each had a production capacity of 370,000 tonnes in 2023, more than enough to meet demand. Tongwei has said it is investing some $3.9bn in a new facility that will eventually be able to produce 400,000 tonnes a year. Johannes Bernreuter, an analyst of the polysilicon market, says China has facilities capable of 7m tonnes a year in the pipeline, enough to produce an annual 3.5TW of solar panels.

In terms of polysilicon such amounts are seen as huge. But it is worth noting that in terms of the material requirements of other energy technologies they are tiny. Coal production runs at roughly 8bn tonnes a year; add on oil and gas and you double that.

Chinese firms have other advantages, notably a vast and protected domestic market and low-cost energy. gcl-Poly and other Chinese firms have several factories in Xinjiang near huge coal-fired power plants which themselves sit more or less on top of large coal mines. Electricity accounts for 40% of the cost of polysilicon production, and burning coal that was mined next door in a depreciated plant that delivers power to your arc furnaces directly is pretty cheap. That said, before too long solar power could be cheaper.

(You’d think that when there’s a glut, they would start using their own output more? But I guess they’re already doing that with the coal.)

Though protected and subsidised—and open, in Xinjiang, to allegations of the use of forced labour—the Chinese industry is also fiercely competitive in the sort of way that only companies manufacturing more or less the same thing can be.

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The commoditised nature of the product does not just lead to relentless competition on the supply side. It also provides incredibly diverse and deep demand. Heymi Bahar of the IEA sees this as perhaps the technology’s biggest advantage. What is revolutionary about solar, he says, is that it “is addressed to all kinds of investors”. From the teacher in South Africa who buys a $2 charger for her phone to the company developing 10GW power plants, everyone who uses solar is buying basically the same product.

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Batteries and other storage technologies allow arbitrage across time rather than space; energy generated at midday, when grid prices are low, can be sold back when the Sun sets and prices are higher. What is more, batteries, like solar cells, are mass producible and targets of Chinese industrial policy. As a result they are moving down an experience curve even steeper than solar’s. The Rocky Mountain Institute, a think-tank, calculates that the cost of a kilowatt-hour of battery storage has fallen by 99% over the past 30 years.

(Again, from a very expensive starting point.)

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It is possible that batteries might move electricity in space as well as time. Lawrence Berkeley National Laboratory estimates that there are 2.6tw of generation and storage capacity queuing up for grid connections in America—enough to double the country’s installed generating capacity. This queue contains a full terawatt of solar power. SunTrain, in which Dr Carlson’s firm, Planetary Technologies, is an investor, sees this as a market for batteries with wheels.

The company plans to use solar farms in places that have little to recommend them other than a railway line nearby as filling stations at which to charge heavy but cheap batteries built into goods wagons. A 100-car train similar to the ones that currently carry coal east from Wisconsin could deliver 3 gigawatt-hours to users. Dr Carlson describes a utility-boss’s jaw hitting the floor when he proposed that, instead of a multi-decade planning battle to build a high-voltage transmission line, SunTrain could meet the utility’s power-import needs with a couple of trains a day.

It’s a clever workaround I hadn’t thought of, though I wonder why they don’t build a data center there instead, or some other electricity consumer like that?

Adani Green Energy, one of the world’s largest solar developers, has obtained the rights to build solar farms on two vast tracts of land in India, one in Gujarat, near the border with Pakistan, the other in Rajasthan. Each of them is large enough to take some 30gw of solar panels, says Sagar Adani, the company’s boss and the nephew of the larger Adani Group’s founder, Gautam Adani. At that size they would offer a capacity more than two-thirds as large as that which Germany has installed over the past 25 years; and because India has much more sunshine, they will produce more energy in a given year than all those German cells put together. Mr Adani says the firm is installing about 5gw of solar on this land every year.

India’s solar expansion, Mr Adani says, is driven by two factors: energy security and national finances. “India imports gas for fuel, transport, fertilisers. It imports oil, too.” These are the main reasons for the current-account deficit. “So when Ukraine is invaded, Indian energy goes for a toss…You can’t have 1.4bn people rely on geopolitical factors for their energy.”

Not that Mr Adani is against using geopolitics to his advantage when the opportunity arises. His firm is both an operator of panels and a manufacturer of them. Adani Green Energy buys almost all the kit it is installing in India from China or firms in East Asia connected to the Chinese supply chain. It exports some 90% of the panels it makes in-house to America, which has concerns about Chinese PV supply, at prices 10-15% higher than those it pays for its imports. As Mr Adani’s production scales up, and his costs fall, he will find himself in the strong position of being able to install homemade panels when it suits him, and Chinese-origin PV when it does not.

Mr Adani’s first-order reasons for India’s going solar do not include decarbonisation. India wants more energy from many sources; it is building coal plants and wind farms (the Adani Group is involved in both) as well as solar farms.

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[For] the time being, solar power’s growth in sub-Saharan Africa will be more off-grid than in other regions. Off-grid, its competition is mostly diesel power, which is much more expensive. Solar with batteries should be able to replace a lot of diesel generators and reduce the market for new ones very quickly.

One factor will be the spread of electric vehicles: an important driver in much of the world, but perhaps a particularly crucial one in Africa. Electric vehicles can be cheaper than those powered by internal combustion. Their batteries provide storage as part of the purchase price. And if powered by local renewables they drastically reduce fossil-fuel imports. This is the logic which has led Ethiopia to ban the import of vehicles which use internal combustion. Though in Ethiopia the renewable energy in question is mostly hydropower, and the grid which delivers it unreliable, across much of the continent the energy will be solar and may not be delivered over a grid at all.

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Providing billions of people in developing countries with the benefits of access to energy represents a huge amount of demand. Unmet need for air conditioning alone is in the terawatts, and will only grow as the population and temperatures rise.