2020 is going down as one crazy year, and the plot twists just keep coming. But if you look underneath the madness of the headlines, there are some truly remarkable, positive things that are happening.
One big shift that is playing out by increments is that our society is moving towards a consensus that we will quit fossil fuels and decarbonize our electricity system by mid-century. The most obvious place that this can be seen is in the wave of utility commitments to go carbon-neutral by 2050.
September saw Entergy make such a net-zero carbon emissions pledge, adding to commitments by Xcel, Duke, Dominion and Southern Company. When you add these to the six states that have mandates to fully decarbonize their power sectors, there’s a significant and growing portion of the United States that has a plan to entirely get out of fossil fuels for electricity.
Of course, this means a lot of solar. Particularly for Entergy. The natural solar potential of the power company’s service area in the Deep South and the Gulf Coast of Texas is pretty good and the utility doesn’t have a lot of other good options for zero-carbon generation. Entergy has a sizable nuclear fleet, but given the dismal economics of new nuclear compared to solar, we don’t expect new nuclear plants to get built any time soon. Nor is land-based wind a particularly strong option for Entergy, as wind speeds are generally low where it operates.
Entergy is planning to build more gas plants, including some which will run a mix of gas and hydrogen, eventually moving to pure hydrogen. But it’s going to need power for the electrolyzers to make that hydrogen, which brings us back to solar. Entergy hasn’t said as much about batteries, but given the increasingly strong economics of solar plus energy storage, it’s going to be hard to see how the company will avoid deploying them.
And while the Deep South has long lagged on solar deployment, lately we’re starting to see some big projects. In September, a sizeable 2.4 MW rooftop installation on a series of warehouses was completed near the Industrial Canal in New Orleans, and a deal was announced for GM to buy the output of a big solar project in Arkansas.
The long-term promise of solar to help utilities decarbonize is bolstered by an increasingly positive short-term outlook. The economics of solar continue to improve even faster than expected, and what this means is that new fossil fuel power plants are less and less able to compete.
This doesn’t just apply to coal; projects to build gas plants are also being cancelled in the interconnection queues of grid operators, to be replaced by solar and wind. And with the rush to get projects online to qualify for a higher level of ITC, the market is booming. This is a great time to be in the solar business, and to be making the future happen.
The heat of late summer brings new challenges for many Americans. Over the last month we’ve seen one of the most severe hurricanes on record hitting Louisiana, while wildfires have raged across California and the West. We hope that you and your loved ones have stayed safe.
With climate change, both hurricanes and wildfires are getting more serious. But it is not only these obvious disasters; the rolling blackouts in California were set off by a spike in power demand driven by record heat, which additionally makes conventional power plants more prone to failure.
These kinds of crises demand both short- and long-term solutions. We have to both keep the lights on during and after disasters, but also make structural changes so that we don’t make these sorts of crises worse in the future.
For both the short- and the long-term, solar plus energy storage are perhaps the most viable solution. One of the lesser-known stories from Hurricane Laura is that as many people died from carbon monoxide poisoning due to the use of portable diesel generators as died from the storm itself. These deaths are tragic and they are avoidable.
With the tools and expertise that the solar industry has developed, PV systems can now be installed to withstand hurricane-force winds. When coupled with batteries these can keep life-saving services going indefinitely.
As a response to wildfires, forward-thinking municipalities and local utilities in California and Colorado are beginning to deploy solar and battery-powered microgrids to keep critical services online in the increasingly likely event that they lose grid power.
In the longer run, climate change isn’t going away and the need is greater than ever to shift to a cleaner, more resilient power system. Solar can and will play a leading role, and already we are seeing this happen. According to Bloomberg, last year solar made up the biggest portion of new electric capacity to come online globally, at 45% of all new power.
But we still need to up the pace. This includes in California, where the blackouts have underscored the need to get more generation—including battery storage—online faster.
Solar and storage are poised to play a major role in the future of energy, and not a moment too soon. A better future is for the energy system is coming. It is just a matter of how quickly we can make it happen.
It’s truly amazing to watch. Solar in the United States continues to chart a path of historic growth and that path is accelerating. Despite dismal second quarter 2020 economic data, the first two quarters of 2020 were record breaking for solar and other forms of renewable energy—from the most solar installed during any Q1 at 3.6 GW to renewable energy generating more U.S. electricity than coal or nuclear.
And the solar industry isn’t stopping there. Last month we talked about Congress showing increasing ambition to deploy renewables, but the real action is happening at the state, local, and individual level. The U.S. electric grid is entering a phase of rapid transformation, and from consumers to politicians to developers to utilities, Americans are advancing the uptake of renewable energy at breathtaking rates.
Here are some of the headlines that have broken over the last month:
- New York State has issued a 4 GW solicitation for renewable energy. This is the largest renewable energy solicitation ever issued by a state.
- In Nevada, construction has begun on two solar plants as part of the Gigawatt Nevada Solar and Storage Project.
- In Texas, San Antonio’s municipal utility CPS has announced plans to procure 900 MW of solar and 50 MW of batteries.
- Indiana utility NIPSCO plans to add 300 MW of solar and storage by 2023.
These new activities are adding to already massive development pipelines, with a new analysis by Berkeley Lab showing 165 GW of solar and solar-plus-storage projects were added to the interconnection queues of grid operators last year, bringing the total to 362 GW. For context, at the end of 2019 the United States had only 76 GWdc of solar installed.
The unquestionable economics of solar provide a solid basis for further growth. According to Wood Mackenzie, 75% of the solar under development is being driven by either voluntary utility procurement or corporate procurement, not mandates.
And this development is increasingly not limited to the West Coast nor the Northeast; the three grid operators that added the most solar to their queues in 2019 were PJM Interconnection (East Coast and Midwest), MISO (Midwest and South) and ERCOT (Texas).
This clean energy boom that we are entering means jobs for Americans. It means economic development. And it means abundant, clean, cheap power.
Many opportunities full of great ambition were also born during historical times of crisis. Today is no different. While the COVID-19 pandemic continues to wear on, there are signs that the United States is starting to get serious about rebuilding it infrastructure, including massive deployment of clean energy.
Last week a far-reaching climate plan was unveiled in Congress that envisions both implementing a national clean energy standard and extending the solar Investment Tax Credit (ITC) with a “direct pay” option, among a number of other measures.
The ITC extension/direct pay has made it into actual legislation, which will be voted on in the coming weeks. And while it is a long road to get through both the House and Senate, the odds of the bill passing may miss the point. This plan is a combination of ambition and attention to detail more aggressive than anything we’ve seen yet, and as a result, the national conversation about energy is shifting.
The House’s clean energy plan follows on and cites a breakthrough report put out by UC Berkeley which modeled moving to 90% clean electricity—solar, wind, batteries and legacy zero-carbon generation—by 2035 nationwide. Unlike other plans, this one did not rely on a nationwide HVDC grid. And perhaps what is most promising is that it showed that even with a lot of batteries, electricity costs would be lower than today.
Both the plan in Congress and the Berkeley study envision a massive role for solar, with a scale of deployment unlike anything we’ve seen in this country to date. There simply aren’t any more excuses to delay a massive transition to clean energy: distributed generation is more reliable and solar is less expensive than fossil fuels in more and more parts of the country—and getting cheaper all the time.
But it isn’t just national policy and academic findings that are hopeful. The introduction of more and more 500-watt modules show that the solar industry is also continuing to evolve. Who would have thought, even a few years ago, that you could get 1 kW from just two modules?
With SEIA and WoodMac predicting that the United States will install a record 18 GWdc of solar in 2020—despite the pandemic—it’s a good year for ambition. And it is times like these that we have to ask ourselves what we are waiting for to make the promise of the future a reality on the ground.
These are challenging yet hopeful times.
Crises force change, whether they are economic crises, public health crises or political crises—or a combination of all three. And while less dramatic than the demonstrations in the streets of our cities, the energy sector in the United States is under pressure.
Since March, electricity use has fallen enough to upend market dynamics. This has accelerated the decline of the U.S. coal industry, creating opportunities for other energy sources. Natural gas has also had a rough go of it. Who would have thought six months ago that tankers would be arriving at the Sabine Pass terminal in Louisiana to offload liquefied natural gas (LNG), instead of filling up there? A superabundance of gas in Europe is overflowing everywhere, even to the United States.
Perhaps the biggest blow has come to the oil industry. From late January through the end of April, oil has decreased from more than $60 per barrel to less than the cost of a 12-pack of craft beer. The damage to market capitalizations of oil companies has been no less harsh; and while oil prices and stock prices have recovered somewhat in the last six weeks, they are nowhere near pre-crisis levels.
Among the major energy sources, solar and wind have fared the best during this pandemic. The zero marginal cost nature of solar and wind means they continue to operate in wholesale power markets even as other fossil-fuel based generators must shut down due to diminishing electricity demand and depressed prices. And for the first time in more than a century, U.S. renewable energy sources generated more primary energy than coal during the first quarter of 2020. The solar industry is competitively positioned for the future and as costs continue to fall, we will emerge from these crises stronger and more sophisticated, and ready to take a bigger share of the global energy market.
However, the solar sector has also not emerged from this without its own disruptions. The interruption of business that this pandemic brought with it has been hard to quantify, but numbers released by SEIA show that a full quarter of the solar workforce has been furloughed in recent months, in what was supposed to be a boom year.
Yet recently, solar companies from the residential sector are reporting a spike in interest in new projects with batteries as homeowners look to offset energy usage as they spend more time at home while also seeking reliability amid uncertainty. And while there has been a recent 40% drop in the commercial and industrial sector due to the Covid-19 pandemic, as the economy continues to re-open many postponed projects are making renewed progress.
The good news is solar demand is returning quickly. Because this is what solar offers: security, economic certainty and resiliency. Change is on the horizon.