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Some lonely academics have been warned years solar energy faces a fundamental challenge that can halt the tremendous growth of the industry. Simply put: you add more sun to the network, the less it costs.
The problem is that solar panels generate a lot of electricity on sunny days, more often than not, as prices drop, sometimes even to negative territories.
Unlike a natural gas plant, solar plant operators cannot move electricity up or down properly, or create space in day, night, and dark winters. It is available when it is available, that is, when the sun shines. Then all the other solar plants get electricity at maximum levels as well.
A new report found that California, which generates one of the largest amounts of solar energy in the world, is experiencing this phenomenon, known as solar value deflation.
The state’s average solar wholesale prices have fallen 37% since 2014 compared to average electricity prices from other sources, according to a Breakthrough Institute analysis to be released on July 14th. In other words, public services are increasingly paid less by solar plants than others. general sources due to the changing patterns of their generation.
Wholesale prices are mainly the amount that power plants pay for the electricity they provide to homes and businesses. They vary during the day and throughout the year, protecting them for solar operators in the morning, afternoon, and other times when there is no oversupply. But as more solar plants are introduced, periods of oversupply that reduce these costs will become more frequent and noticeable.
Lower prices may be good for consumers. But it presents worrying consequences for hopes of rapidly expanding solar capacity and meeting climate targets.
It can be difficult to convince developers and investors to continue building more and more solar plants, even if they make or lose less money. In fact, California construction has been flat since 2018, the study says. But the state will need industry to significantly increase development if it is to achieve high clean energy goals.
It could soon become a wider problem.
“California is a small peak of what is stored around the world as we increase the sun dramatically,” says Zeke Hausfather, director of climate and energy at the Breakthrough Institute and author of the report.
While the sun accounts for about 19% of California’s electricity generation, other regions also install photovoltaic panels quickly. In Nevada and Hawaii, for example, the share of solar generation was about 13% in 2019, the study found. The levels in Italy, Greece and Germany were 8.6%, 7.9% and 7.8%, respectively.
The race
So far, large solar subsidies and rapid declines in solar energy have offset the decline in the value of the sun in California. While the construction and operation of solar power plants is becoming cheaper and cheaper, deflation of value is no less of a problem.
But it is likely to be increasingly difficult to pull off this trick as the state’s share of solar generation continues to rise. If the cost of building and installing solar panels is reduced, California’s solar deflation could move forward in the race against cost reductions as early as 2022 and increase from there, the report says. At that point, wholesale prices in California would be below the subsidized costs of the sun, which undermines the purely economic rationale for building more plants, Hausfather says.
Of the state SB 100 law, Passed in 2018, Requires all of California’s electricity to come by “renewable and zero carbon resources” by 2045. Until then, 60% of the state’s electricity could come from the solar community, California Energy Commission model.
According to the forecast, the value of the sun – or the average wholesale price compared to other sources – will fall by 85% at this point, reducing the economy of solar farms, as California’s networks currently have.
How do we fix it?
There are many ways to alleviate this effect, but no one will be a panacea.
The solar sector can try to find ways to reduce solar costs some researchers have argued may resort to new materials and technologies to reach the levels of dirt necessary to overcome the deflation of value.
Grid operators can add more energy storage options, although this approach is very expensive when renewables supply most of the electricity on the grid, examination then examination finds them. States or nations can also promote subsidies for solar energy; add more long-distance transmission lines so that regions can exchange clean electricity as needed; or turn on customers to move energy consumption to times of day that are better suited to times of high generation.
The good news is that each of these will help ease the transition to cleaning up electricity sources in other ways, but they will all need time and money to get started.
The California solar market is reminiscent of the launch of the climate clock.
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