First, LCOE is a scam. It doesn’t take into account either connection costs or backup costs. Second, solar has incredibly low energy density and has a supply chain dominated by China. Panels are rarely recycled so waste is an issue.
Batteries are still clocking in at around 150 dollars per MWh. They barely got down to 100 a couple years ago when there was very little demand for them and hydrocarbon inputs to mining were cheap.
Not to mention that borrowing money was essentially free. Projects that take 5 years or more to pay off aren’t so attractive at current rates.
Also, silver costs would be driven through the roof if solar continued it’s growth of the past decade.
It took trillions of dollars to get solar to 4.5 percent, and early growth is easy growth.
Overall, 5 trillion dollars have been spent on wind and solar in the last 20 years or so, and oil’s total share of primary energy went down like 2 percent while electricity costs skyrocketed.
Building enough batteries to store just a day or so of grid capacity nationwide would cost trillions as well. You can always expand the grid to need less storage, but that is also incredibly expensive. Plus permitting takes years.
The IEA is absolutely awful at their job, constantly underestimating third world demand, and largely being a propaganda machine.
I’d bet almost any amount of money solar doesn’t come close to gas in four years.
Don’t forget that the problem you’re try to solve is a small piece of the pie. Electricity is only 20 percent of the total energy produced worldwide.
We still need energy for aviation, shipping, steel, plastics, cement, etc.
The smart move is more nuclear, but we’re largely scared of the waste, which has never caused a single death.
Not trying to be a bummer, but I’ve been in energy for almost 30 years, and the picture is a lot more complicated than it’s being portrayed in the media.
There’s no energy transition, it’s an energy addition.
All that said, I wouldn’t be reading your stuff if it wasn’t good:)
Nice article. However, I work in the PV industry, and I find that some key things are often omitted from discussions about the energy transition and its costs.
1) Costs are derived in a highly dynamic and non-linear fashion. The rate for kWHs and kWs that rate-payers pay in any fifteen minute interval are a function of many decisions made about investments and operations over monthly, yearly and multi-decade time spans. These decisions are mostly made by utilities, investors and regulators in the furtherance of their own interests -- not consumers. While metrics like LCOE are helpful, the economics are far harder to model than is allowed, I think, in the popular imagination. This doesn't mean that reactionary opinions about renewables are correct -- usually these voices are WAY too certain that such mere complexity proves their point to be trusted (contra several respondents here: there's no scenario in which new nuclear plants are going to produce "cheap" energy in the next decade-plus).
2) The solution to the intermittency problem with captured energy sources has a few prongs: more transmission, more storage, excess capacity buildout and better signaling. That last prong, signaling, may actually be the most important new capability of the four, and it's the one that gets the least attention yet will require the most innovation. Load and generation assets at the grid edge need to be able to respond reliably to signals that help balance electricity supply & demand; and these instructions must be calculated and determined to deploy resources efficiently close to real time. The trick is that we're going from a centralized systems with relatively few devices requiring direct control, to a decentralized system with millions of devices requiring direct control. Very few people commenting publicly on the energy transition fully appreciate the difficulties and opportunities of this change.
3. Noah talks a lot about environmental laws like NEPA and CEQA posing permitting problems. But just pulling a building permit or dealing with standard conservation or zoning requirements can be far more complicated than is usually discussed. Design standards imposed by the NEC, fire codes, building codes and listing processes also have an impact on how quickly/cheaply systems can be installed. I'm a proponent, generally, of higher construction standards, but the industry has created roadblocks for itself on a number of issues. For example, in my view, the rollout, in 2019, of required rapid shutdown devices for PV systems on rooftops has been a costly and unsafe policy pushed by the NEC. I don't think people in the media talk enough to the engineers and construction workers building these systems about their most difficult challenges.
I agree that nuclear, wind, solar, etc. make the economy vs climate debate a mute point. There is even still a great deal of coal generation that could be economically be replaced with gas with some climate benefit (depending on how bad you think methane leakage is). I also agree that our clean energy potential means we should oppose degrowth, which never seemed politically possible anyway.
But I would be careful about getting caught up in solar and battery hype. While technological factors have played a role in bringing down the price, they are still incredibly materially intensive from a minerals and metals perspective. China has majority market share in nearly all of the raw materials mining and processing for batteries and solar panels. Silicon PV especially is cheap thanks to China’s coal fired electricity, lack of water and air pollution regulation, and lack of labor regulation which comes close to forced labor. Making this type of clean energy equipment is dirty.
Further there are some intricacies with the energy grid that, when ignored, make it easy to make solar look cheap.
The most obvious, which you’ve addressed, is intermittency. With natural gas as the majority fuel source for the US grid, adding more solar displaces the amount of fuel burned at these power plants when solar is producing. Apart from some short term (hours) peaking capabilities, natural gas will remain the predominant source of firming. Lazard recently did a report on “firming costs,” which gets into this.
You presented a classic graph for hyping solar. Electricity demand is not growing as rapidly as it once did, so new capacity additions are small making solar proportionally look bigger. Additionally, listing capacity artificially inflated solar’s contribution. The capacity factor must be taken into account. This is the amount of time the source is generating at full capacity, typically 15-30% in the US depending on location. Other sources are higher meaning less capacity can produce the same amount of generation (kw vs kwh).
Finally, grid costs and time value of electricity do not favor solar. As solar is added to a region, it decreases the price of electricity during sunny hours of the day. At these times selling electricity becomes less valuable for any other producer. When more solar is added, it produces the most electricity at the times when existing solar has already decrease the time specific value of electricity. Basically, adding solar gets less and less useful as more is added. Besides storage (which adds great cost), the problem can be somewhat alleviated by having more capacity and coverage of continental scale grid interconnections. When the sun sets on the east coast it’s still sunny in the west. Building such power lines are expensive, land intensive, and of course opposed by NIMBYs.
Land use, especially, is one reason why I think nuclear is much better than solar. It requires over 60x less land through the entire supply chain. This means far less environmental impact and local opposition.
I expect that electrolytic Hydrogen will become a likely output from solar. If you expand solar electic production beyond local market needs, you can make Hydrogen. Now while Hydrogen can be stored and shipped, doing so is not efficient. I rather expect that for long distance or long term storage Hydrogen will be converted to Ammonia (easy to store and ship - and easy to regenerate Hydrogen) and as some form of syn fuel by reacting with CO2 (either via engineered cells or standard chemical engineering processes). The syn fuels can be used for aircraft due to their high specific energy.
I see a couple of problems. First I don't agree with the environmental impact of mining for lithium being less than mining for carbohydrates. Just DuckDuckGo lithium mines and look at the pictures. If you like NIMBY, you are going to love lithium mining. Second problem is technology. If we get the same progress as the one we enjoyed with computers, this could really hinder the spread of solar + battery. If you can change your laptop or iPhone every other year without big damage, upgrading a solar power station will cost much more. So, a wait and see attitude may develop. Living in SoCal, I'd like to install solar panels and batteries, plus an e-car. I'd be off the grid and that's nice. My wife is not ok to bear the costs for the moment and it effectively would be a luxury. I drive 2.5K a year and my car is fully paid. Our electricity bill is $ 200/month. But I really like the concept. By the way, I asked an electrical engineer neighbor about solar panel ca 6 years ago and he told me; it's not worth it. Last year he installed them on his roof. I'm long a lithium miner (ALB) and several oil stocks because oil is here to stay ; the US is only 4.5% of the world population. Many in the world have other problems than global warming. In short, "they" will let the market rule. A dogmatic approach, this is bad, this is good, will not work.
My concern, which grows smaller as the learning curve cost of PV drop, is this. There is dust, dirt, and electrical degradation over time. The PV output per solar input falls. Maybe 50% at year 10. I'm going from a bit older thinking.
What does it matter if at all, that output drops are significant?
My answer is, cost of new overcomes and replacement is the answer. Except labor to install never drops.
You are a big proponent of the idea that “decoupling with China is just going to happen.” How do you square that position with embracing inexpensive solar panels and batteries? Costs for these technologies have been driven down by massive state subsidies and investment from China. As a result, Chinese solar panels are now very cheap, but the PRC controls at least 80% of each stage of solar panel production. Even panels “made” in other countries are frequently just Chinese inputs assembled in another place.
Before someone mentions the IRA — the made in America mandates in the IRA will increase costs for end users, or will increase the debt burden for the state (due to subsidies to make all-American batteries and solar panels cost competitive w Chinese products), or increase the tax burden for American citizens and businesses.
This is an area where I think some level of cooperation with China, especially in the short term, makes a lot of sense if people are serious about substantially increasing the scale of renewable energy in America to address concerns about climate change.
Also, it seems that pumped storage hydro is a better large-scale storage solution than batteries.
The one caveat I’d put in here is that on the macro scale this simplistic analysis is basically right, Northern Europe, parts of the USA, Canada, and parts of China have a seasonality problem.
In a nutshell, peak energy demands for heating occur precisely when solar production is at its lowest.
The upshot of that is that firmed , year-round energy will be much cheaper in places closer to the equator.
Or see the link at bottom for a $250 estimate by 2030
Cost = $250/kwH
Then ignore grid upgrade costs
Now, assume you need multiple days of storage for extended periods of cold, no sun or calm air. (I’ve seen 24-30 days referenced in separate studies based on real world weather models). All at rated capacity which has its own issue as effective capacity declines 1-2% a year. This is just to have a resilient system.
Let’s use ten days to cover us for a bad spell once every few years, somewhere. That may be too little storage but we’ll go with it.
Now figure out how much a state or country needs to spend to go net zero on electricity consumption only.
Average demand is something like 30 GW. In a disaster people buckle down and use less. But let’s say that net zero is intended to supply electricity for rather typical stretches of weather.
10 days x 24 hours x 30,000 kw x $250 kw-hr = $1.8 Trillion
To say solar is cheap based on grid scale power plants and then switch to say it’s reliable because in a hurricane rooftop household solar works when transmission lines are blown down is a contradiction.
First, LCOE is a scam. It doesn’t take into account either connection costs or backup costs. Second, solar has incredibly low energy density and has a supply chain dominated by China. Panels are rarely recycled so waste is an issue.
Batteries are still clocking in at around 150 dollars per MWh. They barely got down to 100 a couple years ago when there was very little demand for them and hydrocarbon inputs to mining were cheap.
Not to mention that borrowing money was essentially free. Projects that take 5 years or more to pay off aren’t so attractive at current rates.
Also, silver costs would be driven through the roof if solar continued it’s growth of the past decade.
It took trillions of dollars to get solar to 4.5 percent, and early growth is easy growth.
Overall, 5 trillion dollars have been spent on wind and solar in the last 20 years or so, and oil’s total share of primary energy went down like 2 percent while electricity costs skyrocketed.
Building enough batteries to store just a day or so of grid capacity nationwide would cost trillions as well. You can always expand the grid to need less storage, but that is also incredibly expensive. Plus permitting takes years.
The IEA is absolutely awful at their job, constantly underestimating third world demand, and largely being a propaganda machine.
I’d bet almost any amount of money solar doesn’t come close to gas in four years.
Don’t forget that the problem you’re try to solve is a small piece of the pie. Electricity is only 20 percent of the total energy produced worldwide.
We still need energy for aviation, shipping, steel, plastics, cement, etc.
The smart move is more nuclear, but we’re largely scared of the waste, which has never caused a single death.
Not trying to be a bummer, but I’ve been in energy for almost 30 years, and the picture is a lot more complicated than it’s being portrayed in the media.
There’s no energy transition, it’s an energy addition.
All that said, I wouldn’t be reading your stuff if it wasn’t good:)
A definition of insanity is posting the same misleading charts repeatedly and arguing that it somehow makes them less misleading.
LCOE is not the most important chart in the world (hyperbole much?). For example, a more important chart - the cost of batteries - follows it.
If you want to keep technocrats who know their stuff as subscribers, you can't be a cheerleader, you need to know more about these domains.
Otherwise, I have to start assuming that you are as glib about the other topics you discuss, about which I know less.
Nice article. However, I work in the PV industry, and I find that some key things are often omitted from discussions about the energy transition and its costs.
1) Costs are derived in a highly dynamic and non-linear fashion. The rate for kWHs and kWs that rate-payers pay in any fifteen minute interval are a function of many decisions made about investments and operations over monthly, yearly and multi-decade time spans. These decisions are mostly made by utilities, investors and regulators in the furtherance of their own interests -- not consumers. While metrics like LCOE are helpful, the economics are far harder to model than is allowed, I think, in the popular imagination. This doesn't mean that reactionary opinions about renewables are correct -- usually these voices are WAY too certain that such mere complexity proves their point to be trusted (contra several respondents here: there's no scenario in which new nuclear plants are going to produce "cheap" energy in the next decade-plus).
2) The solution to the intermittency problem with captured energy sources has a few prongs: more transmission, more storage, excess capacity buildout and better signaling. That last prong, signaling, may actually be the most important new capability of the four, and it's the one that gets the least attention yet will require the most innovation. Load and generation assets at the grid edge need to be able to respond reliably to signals that help balance electricity supply & demand; and these instructions must be calculated and determined to deploy resources efficiently close to real time. The trick is that we're going from a centralized systems with relatively few devices requiring direct control, to a decentralized system with millions of devices requiring direct control. Very few people commenting publicly on the energy transition fully appreciate the difficulties and opportunities of this change.
3. Noah talks a lot about environmental laws like NEPA and CEQA posing permitting problems. But just pulling a building permit or dealing with standard conservation or zoning requirements can be far more complicated than is usually discussed. Design standards imposed by the NEC, fire codes, building codes and listing processes also have an impact on how quickly/cheaply systems can be installed. I'm a proponent, generally, of higher construction standards, but the industry has created roadblocks for itself on a number of issues. For example, in my view, the rollout, in 2019, of required rapid shutdown devices for PV systems on rooftops has been a costly and unsafe policy pushed by the NEC. I don't think people in the media talk enough to the engineers and construction workers building these systems about their most difficult challenges.
I agree that nuclear, wind, solar, etc. make the economy vs climate debate a mute point. There is even still a great deal of coal generation that could be economically be replaced with gas with some climate benefit (depending on how bad you think methane leakage is). I also agree that our clean energy potential means we should oppose degrowth, which never seemed politically possible anyway.
But I would be careful about getting caught up in solar and battery hype. While technological factors have played a role in bringing down the price, they are still incredibly materially intensive from a minerals and metals perspective. China has majority market share in nearly all of the raw materials mining and processing for batteries and solar panels. Silicon PV especially is cheap thanks to China’s coal fired electricity, lack of water and air pollution regulation, and lack of labor regulation which comes close to forced labor. Making this type of clean energy equipment is dirty.
Further there are some intricacies with the energy grid that, when ignored, make it easy to make solar look cheap.
The most obvious, which you’ve addressed, is intermittency. With natural gas as the majority fuel source for the US grid, adding more solar displaces the amount of fuel burned at these power plants when solar is producing. Apart from some short term (hours) peaking capabilities, natural gas will remain the predominant source of firming. Lazard recently did a report on “firming costs,” which gets into this.
You presented a classic graph for hyping solar. Electricity demand is not growing as rapidly as it once did, so new capacity additions are small making solar proportionally look bigger. Additionally, listing capacity artificially inflated solar’s contribution. The capacity factor must be taken into account. This is the amount of time the source is generating at full capacity, typically 15-30% in the US depending on location. Other sources are higher meaning less capacity can produce the same amount of generation (kw vs kwh).
Finally, grid costs and time value of electricity do not favor solar. As solar is added to a region, it decreases the price of electricity during sunny hours of the day. At these times selling electricity becomes less valuable for any other producer. When more solar is added, it produces the most electricity at the times when existing solar has already decrease the time specific value of electricity. Basically, adding solar gets less and less useful as more is added. Besides storage (which adds great cost), the problem can be somewhat alleviated by having more capacity and coverage of continental scale grid interconnections. When the sun sets on the east coast it’s still sunny in the west. Building such power lines are expensive, land intensive, and of course opposed by NIMBYs.
Land use, especially, is one reason why I think nuclear is much better than solar. It requires over 60x less land through the entire supply chain. This means far less environmental impact and local opposition.
I expect that electrolytic Hydrogen will become a likely output from solar. If you expand solar electic production beyond local market needs, you can make Hydrogen. Now while Hydrogen can be stored and shipped, doing so is not efficient. I rather expect that for long distance or long term storage Hydrogen will be converted to Ammonia (easy to store and ship - and easy to regenerate Hydrogen) and as some form of syn fuel by reacting with CO2 (either via engineered cells or standard chemical engineering processes). The syn fuels can be used for aircraft due to their high specific energy.
I see a couple of problems. First I don't agree with the environmental impact of mining for lithium being less than mining for carbohydrates. Just DuckDuckGo lithium mines and look at the pictures. If you like NIMBY, you are going to love lithium mining. Second problem is technology. If we get the same progress as the one we enjoyed with computers, this could really hinder the spread of solar + battery. If you can change your laptop or iPhone every other year without big damage, upgrading a solar power station will cost much more. So, a wait and see attitude may develop. Living in SoCal, I'd like to install solar panels and batteries, plus an e-car. I'd be off the grid and that's nice. My wife is not ok to bear the costs for the moment and it effectively would be a luxury. I drive 2.5K a year and my car is fully paid. Our electricity bill is $ 200/month. But I really like the concept. By the way, I asked an electrical engineer neighbor about solar panel ca 6 years ago and he told me; it's not worth it. Last year he installed them on his roof. I'm long a lithium miner (ALB) and several oil stocks because oil is here to stay ; the US is only 4.5% of the world population. Many in the world have other problems than global warming. In short, "they" will let the market rule. A dogmatic approach, this is bad, this is good, will not work.
Awesomeness and informative ..again!
My concern, which grows smaller as the learning curve cost of PV drop, is this. There is dust, dirt, and electrical degradation over time. The PV output per solar input falls. Maybe 50% at year 10. I'm going from a bit older thinking.
What does it matter if at all, that output drops are significant?
My answer is, cost of new overcomes and replacement is the answer. Except labor to install never drops.
You are a big proponent of the idea that “decoupling with China is just going to happen.” How do you square that position with embracing inexpensive solar panels and batteries? Costs for these technologies have been driven down by massive state subsidies and investment from China. As a result, Chinese solar panels are now very cheap, but the PRC controls at least 80% of each stage of solar panel production. Even panels “made” in other countries are frequently just Chinese inputs assembled in another place.
Before someone mentions the IRA — the made in America mandates in the IRA will increase costs for end users, or will increase the debt burden for the state (due to subsidies to make all-American batteries and solar panels cost competitive w Chinese products), or increase the tax burden for American citizens and businesses.
This is an area where I think some level of cooperation with China, especially in the short term, makes a lot of sense if people are serious about substantially increasing the scale of renewable energy in America to address concerns about climate change.
Also, it seems that pumped storage hydro is a better large-scale storage solution than batteries.
https://chinapologist.substack.com/p/the-solution-to-the-green-transition
The one caveat I’d put in here is that on the macro scale this simplistic analysis is basically right, Northern Europe, parts of the USA, Canada, and parts of China have a seasonality problem.
In a nutshell, peak energy demands for heating occur precisely when solar production is at its lowest.
The upshot of that is that firmed , year-round energy will be much cheaper in places closer to the equator.
well done.. good article
Thanks for writing this! Also - Sam Harris had a good podcast with Chris Field recently.
Generally really like your pieces, but I fear you are just cherry-picking. You cite China's solar, I raise you coal. https://www.mattball.org/2023/08/net-zero-in-practice-is-war-on-poor.html
Thanks
Waow. The energy "debate" in the U.S. has become another identity politics. Solar panels are the new masks.
Here’s some terrible napkin math. I’m tired and I’m poking at my phone but bear with me.
Choose the best case battery storage cost from here, for example: https://www.energy-storage.news/li-ion-bess-costs-could-fall-47-by-2030-nrel-says-in-long-term-forecast-update/
Or see the link at bottom for a $250 estimate by 2030
Cost = $250/kwH
Then ignore grid upgrade costs
Now, assume you need multiple days of storage for extended periods of cold, no sun or calm air. (I’ve seen 24-30 days referenced in separate studies based on real world weather models). All at rated capacity which has its own issue as effective capacity declines 1-2% a year. This is just to have a resilient system.
Let’s use ten days to cover us for a bad spell once every few years, somewhere. That may be too little storage but we’ll go with it.
Now figure out how much a state or country needs to spend to go net zero on electricity consumption only.
Take California: used 247 TW-hr in 2021, https://www.statista.com/statistics/560913/us-retail-electricity-consumption-by-major-state/).
Average demand is something like 30 GW. In a disaster people buckle down and use less. But let’s say that net zero is intended to supply electricity for rather typical stretches of weather.
10 days x 24 hours x 30,000 kw x $250 kw-hr = $1.8 Trillion
Check my math. Here is this optimistic scenario, projecting 500 GW-hr in the US by 2030, or about 16 hours of California’s usage at a cost of $125B: https://www.esource.com/white-paper/437221l3ux/250-kwh-battery-price-will-herald-terawatt-hour-age
For less than a tenth of California’s needs.
This is electricity demand only.
What did I miss?
To say solar is cheap based on grid scale power plants and then switch to say it’s reliable because in a hurricane rooftop household solar works when transmission lines are blown down is a contradiction.