Solar power, specifically PV, has grown rapidly since the turn of the century. That growth shows little sign of slowing down on a global basis.
The initial driver of growth was subsidy, in particular the introduction of feed-in-tariffs (FiTs) in Europe, along with other policy mechanisms like tax credits in the US. Now though, continued growth is being driven by the competitiveness of solar energy: even without subsidy, solar in many markets is already the cheapest way to generate a kWh of electricity. Subsidy has largely done its job and is, quite rightly, being reduced or removed. Both at the product level and between project developers, through auctions, a combination of technological progress and market competition are and will continue to drive costs down.
Of course there are plenty of criticisms of solar, in particular the potential limits of its value to electricity systems once “full costs” are taken into account: those required to balance the supply and demand of electricity in the face of variability (which is an factor for both supply and demand).
My response to those criticisms is that we'll increasingly live in a "solar +" world. Solar will be the preferred way to produce a kWh of energy, because nothing will be able to compete on cost. The "+" will refer to a variety of integrations that add ‘dispatchability’ (flexibility and predictability - and hence value) to that energy.
We’re already seeing a range of “solar +” examples emerging - I very briefly highlight some below. In some cases they are already competitive with conventional alternatives.; in others they are early in their evolution, and costly. But then it would be ‘brave’ to bet against technological progress…
+ Storage
The most obvious “solar +” application at present is the addition of storage. In particular the addition of Li-ion battery storage, since the latter industry is experiencing growth and cost-reduction pathways that will look very familiar to those with a PV background.
Example markets like Hawaii are shifting solar energy away from the middle of the day (where it can be problematic for the system) towards the evening peak. Their latest RFP points towards ever-increasing storage durations (6 hours) and also recognises the crucial role that distributed resources, presented via aggregators, will play.
The impact on the business case for traditional sources of peaking power – gas generators – is already being felt. In the southwest US, tenders for solar + storage have come in at less than $30/MWh (and, in the long-run, costs are only going one way). That’s led analysts such as Wood Mackenzie to forecast that more than 6.4 GW of new natural gas-fired peaking capacity in the US could be at risk by 2027, with developers such as 8minutenergy Renewables claiming that they can build solar+storage “a factor of two cheaper”.
Another announcement which really caught my eye recently was that, by aggregating residential solar + storage from about 5,000 customers, Sunrun had won a bid for 20 MW in ISO-NE’s 2022-2023 Forward Capacity Market. They’ll be paid $3.80/kW/month ($912,000 for the full year contract). Although this represents a tiny part of the total capacity market in New England, the significance of this announcement is how it points to the direction of travel – with the addition of storage able to turn solar into something able to provide a predictable, contractable future capacity guarantee.
+ EV Charging
I quite often refer to electric vehicles (EVs) as “mobile batteries”. After all, to the power system, that’s exactly what they look like.
So it’s no surprise that the integration of solar with EV charging is already a focus for many companies. For example, on a product level, SolarEdge recently announced what they claim to be the “world’s first” integrated (2-in-1) EV charger and solar inverter, so removing the need to install separately a charger and a PV inverter and more easily and efficiently managing the smart interaction between solar generation and the car.
Taking things further, there will certainly be growth of systems which combine solar with both “mobile batteries” (EVs) and stationary ones. In particular, stationary batteries will provide an important buffering mechanism between constrained grid connections and fast chargers. Integrating these systems with solar canopies like this one will further reduce grid loads, as well as ensure that charging of the cars is kept as 'clean' as possible.
+ Other Low-carbon Power Generation
There are some obvious synergies and advantages to integrating solar with other power sources, particularly other clean ones.
From a practical point of view, it enables sharing of key project assets such as land and grid connections. Companies such as GE are even starting to build projects where solar panels are directly integrated with power conversion within the wind turbine, so reducing balance of plant costs too, and increasing both capacities and energy outputs.
Another factor in integrating solar and wind is that the two energy sources are often complementary in terms of when they are (and are not) available. So in the example given above, solar is expected to provide peak energy in the summer, with wind doing so in the winter.
Once again, these may seem like tiny projects in today’s market, but they provide important pointers to the future.
Some policymakers agree. India’s Ministry of New & Renewable Energy released their National Wind-Solar Hybrid Policy in May 2018, aiming to provide a framework for promoting large grid connected wind-solar PV hybrid systems. A big motivation to do so is to optimise the usage of transmission infrastructure and land, while reducing the impacts of solar and wind on energy variability and grid stability. In most cases, if not all, battery storage is likely to be an additional component of the plant design.
Such plants are being built, for example this 41 MW solar photovoltaic, wind, and battery storage hybrid plant in Andhra Pradesh. It consists of 25 MW solar PV and 16 MW of wind, coupled to an energy storage system.
Another way to address variability issues with solar and share vital resources such as grid connections is to integrate not with wind but with a dispatchable, low-carbon source instead: such as hydropower. Here’s an example from Thailand, where it’s planned to build a 45-MW solar array next to an existing hydro dam – indeed floating in the reservoir behind that dam. If the project is a success then the intention is to follow it with 15 more similar projects: up to 2.7 GW total generation.
+ Conventional fuelled generators
Particularly in systems such as microgrid or off-grid (captive power), where there are limited sources of supply which can be used for balancing, it may prove for some time to be impossible to totally avoid the use of conventional fuels. Nevertheless, given how much money solar generation can save compared to transporting and burning fuels like diesel, integrating clean with ‘dirty’ generation – in many cases with battery storage too – will become the norm.
Less fuel doesn’t just mean lower cost, it means more predictable cost too (less exposure to fluctuating commodity prices). It also means lower emissions. Even if this doesn’t create direct value (through renewable energy certificates or similar), it will increasingly create indirect value through the preference of shareholders and lenders to put their money into cleaner projects and avoid the risk of stranded, carbon-heavy assets.
There are already plenty of examples; such as this one, where Resolute Mining has signed an agreement for the development of a 40 MW independent solar hybrid power plant at a gold mine in Mali, West Africa. The plant will combine solar, battery, and heavy fuel oil (HFO) technologies. When constructed, it hopes to be the world’s largest off-grid, fully integrated hybrid power plant for a stand-alone mining operation. It will replace an existing 28MW diesel plant and should generate savings of up to 40% on the current operating costs.
+ Clean fuel: Hydrogen
Of course a natural evolution of that last example is to combine solar with a dispatchable fuel which is itself low-carbon. And it shouldn’t have escaped your notice how much talk there is nowadays about hydrogen as a candidate to do just that – so long as the hydrogen is produced by splitting water using clean electricity (and solar would be the cheapest), rather than from fossil fuels (which most hydrogen is today).
There are already some interesting examples emerging where solar is integrated with hydrogen production, such as this energy self-sufficient housing complex in Vårgårda, Sweden. A block of thirty flats runs entirely on solar energy and stored hydrogen. When fully completed and operational, one hundred and seventy-two flats in six housing blocks will be able to operate free from external energy sources, because rooftop solar PV will produce enough energy to meet residents’ power needs year-round. When the sun is shining, surplus energy is collected in a battery and can be used to produce hydrogen, which is compressed and stored. When needed, a fuel cell converts hydrogen back to electricity. Summer overproduction can be stored as hydrogen for use in the winter.
This is a small-scale example and it’s important to note that electrolysis is very much still at an early (and small) scale. However expect it grow rapidly and look out for a number of innovations to expand its scope – for example this (currently R&D) approach to using seawater as the water source.
A key point to note in any solar + hydrogen discussion is that conversion back to electricity in a fuel cell is only one possible pathway for the hydrogen. Alternatively, hydrogen very much provides an opportunity for “solar +” to provide a crossover into solving decarbonisation conundrums within the heating and transport sectors too.
Solar technology is not standing still
Finally, it’s important in our “solar +” discussion not to concentrate solely on the added integrations (the “+” part). Solar PV is still a technology with huge scope for both evolutionary and disruptive improvements.
Already technologies such as bifacial have gone from nothing to over 10% of the new-build market in a very short space of time. They may capture 40% of the global market within a decade, particularly as ‘bankability’ factors become better understood.
In the longer term (don't expect to see these on a solar farm near you anytime soon) research such as this, achieving 28% conversion efficiency for perovskite silicon tandem solar cells, will one day feed through to better performing commercial solar panels.
We’ll also see entirely new materials for solar PV, particularly in thin-film. Some are just at the start of their commercialisation and growth curves, but will ultimately drive solar into applications currently out of reach. As the linked article says, just because solar has reached ‘grid parity’ with competing conventional sources, it doesn’t mean that’s the end of the solar innovation story: “people didn’t stop making cars when they reached horse parity”.
Regardless of the direction of future solar technology, expect the advantages of a “solar +” approach to our energy system to continue to expand, both in terms of hybridisation diversity and its market impact.