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Will the World's Dominant Energy Source Be Solar? Only With Serious, Proactive Policy Support

Rapid Expansion of Solar Depends on Massive Subsidies and High Carbon Price

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The International Energy Agency updated their technology roadmaps for solar PV and solar thermal energy, suggesting that, with significant policy and technological progress, solar could colletively contribute 27 percent of global electricity by 2050. Some commentators were quick to exclaim victory, but let’s remember that the IEA has provided a “roadmap” not a set of predictions, nor projections. To achieve that 27 percent requires a high global carbon price – which doesn’t yet exist – and for average annual solar PV deployment to quadruple from 36 GW installed in 2013 to 200 GW/yr between 2025 and 2040. Such deployment will require massive incentives, of which, in their current form, IEA says are “largely unsustainable.”

This week the International Energy Agency updated their technology roadmaps for solar photovoltaics (PV) and solar thermal energy (STE). The bottom line is that significant policy and technological progress are required for solar to play a major role in electricity in the future. With that progress, IEA finds, solar PV could provide as much as 16 percent of global electricity by 2050, with STE providing another 11 percent –– making solar’s collective 27 percent the largest single contributor to global electricity in this IEA scenario. 

But that’s not the bottom line that many commentators drew:

First things first: the IEA “Technology Roadmap” is just that: a roadmap. It is not a prediction. It is not a projection. It is, as the IEA describes, “the expected technology improvement targets and policy actions required to achieve [this] vision by 2050.” To be fair, most observers at least briefly acknowledged this, noting as Grist’s David Roberts did that “with the right policies in place, solar could be the largest provider of global electricity by 2050(emphasis in original).

So what are those necessary policies and technology targets?

Start with climate policy. The IEA report states, “The vision in this roadmap is consistent with global CO2 prices of USD 46/tCO2 in 2020, USD 115/tCO2 in 2030, and USD 152/tCO2 in 2040.” Currently, there is no global carbon price. National and regional carbon prices consistently measure well below these levels. California’s carbon price is around $12/tCO2. Europe’s is around $9/tCO2. China’s municipal carbon pricing pilot schemes vary between $3 and 13/tCO2. This summer Australia repealed its national carbon tax. As MIT’s Jesse Jenkins has noted, there are convincing political economy reasons to suspect that nations will find it hard to raise carbon prices well above these current levels.

So the climate policy assumptions in the roadmap are a stretch, to say the least. In contrast, the technology targets in the reports are simultaneously a terrific set of recommendations to improve PV’s fortunes and a signal of the significant remaining obstacles to solar’s growth.

As the report notes, average annual solar PV deployment needs to quadruple from current levels to reach the scenario’s capacity targets –– from 36 GW installed in 2013 to 124 GW/yr, peaking at 200 GW/yr between 2025 and 2040. At that point, the IEA expects that solar PV deployment would stabilize and STE would take over, noting that “when reaching shares between 5 percent and 15 percent of annual electricity generation, PV starts to lose value in wholesale markets.” 

The report includes considerable discussion of the technological, policy, and business model innovations required to accelerate deployment while overcoming major technical and integration hurdles. Among the technical recommendations, IEA emphasizes that cell wafer size, performance ratios, degradation rates, silicon consumption, and cell efficiency all need to improve to reduce the capital costs of solar PV. Increasing quantities and quality of storage are required as PV deployment increases, with voltage control and added pumped-hydro storage adequate in the medium term and “new storage capabilities” required in the 2030 to 2050 period.

The report dwells on the need to maintain deployment incentives, especially for distributed rooftop PV. While lauding subsidies like feed-in tariffs (FITs) and net energy metering (NEM), the authors acknowledge that these subsidy programs are largely unsustainable in their current forms. “NEM, effective for jump-starting local PV markets,” the authors note, “raises concerns when large penetration levels are reached.” The report recommends “[facilitating] distributed PV generation while ensuring T&D grid cost recovery,” but notes also that it is “not straightforward to determine what is acceptable and what is not” in balancing these two imperatives.

Finally, the report emphasizes that the world is not on track to achieve all these technology and policy targets. The roadmap is “based on the hi-Ren Scenario” of IEA Energy Technology Perspectives 2014, in which renewables reach 79 percent, and solar 27 percent, of global electricity generation in 2050. This compares to IEA’s business-as-usual “6DS” scenario (AKA the path we’re currently following), in which all renewables provide 27 percent, and solar around 5 percent, of global electricity in 2050. 

IEA’s baseline assumptions may be too pessimistic or their roadmaps too optimistic. Either way, the policy and innovation recommendations of the solar roadmaps are welcome, and a reminder of the significant progress still required for solar technologies. And, in perhaps the most important point made in the roadmap reports, the IEA’s executive director Maria van der Hoeven emphasizes that “energy efficiency, many types of renewable energy, carbon capture and storage (CCS), nuclear power, and new transport technologies will all require widespread deployment” to meet future climate and energy goals. 

Alex Trembath's picture

Thank Alex for the Post!

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Jeffrey Miller's picture
Jeffrey Miller on Oct 3, 2014 3:44 pm GMT

Good summary. 

Two questions:

Is the IEA roadmap talking about all energy sources, or just sources of electrical generation? If the extraordinarily ambitious target of 27% electrical generation from solar by 2050 were met, what fraction of total energy supply do you think this would be? 

One quibble: 

27% is certainly a significant fraction, but I would hesitate to call it ‘dominant’, even if it is the largest share. 

Bob Meinetz's picture
Bob Meinetz on Oct 3, 2014 3:50 pm GMT

Alex, Maria van der Hoeven of the IEA is being politically but not technically correct when she states

energy efficiency, many types of renewable energy, carbon capture and storage (CCS), nuclear power, and new transport technologies will all require widespread deployment to meet future climate and energy goals.

In truth, renewable energy and CCS are not only unnecessary but create dependencies – solar and wind on fossil fuel backup, and CCS on petroleum extraction (EOR) – which may exacerbate carbon emissions.

Even if marginally helpful, they are expensive and wasteful diversions from more promising technologies.

Peter Lang's picture
Peter Lang on Oct 10, 2014 6:02 am GMT

Am I correct that the IEA scenarios assume little change in public paranoia about nuclear power and opposition to it?

Can I tease out a thought for consideration by the experts here?  I’d like to ask what rate of capacity doubling could be achieved for Small Modular Reactors (SMR) if they achieved a 10% rate of cost reduction per capacity doubling?

At a 10% rate of LCOE reduction per capacity doubling, a 2-year capacity doubling period, and beginning with the projected LCOE of the mPower SMR in 2022 (at projected LCOE in Australia), the LCOE of SMR’s could be half that of new coal fired electricity in Australia by about 2045.  [Coal is the lowest cost electricity generation in Australia.]

I suspect if the IAEA could be persuaded to change the allowable radiation exposure limits from ALARA to AHARS (as low as reasonably achievable to as high as relatively safe) this could be the catalyst to get people to start rethinking and re-evaluating their fears about nuclear power.  This could open the floodgates to a re-evaluation.  The next US President could lead the way for the world to get low cost, safe, electricity from, mostly, small modular nuclear power plants.  The next US President could begin by revamping the approach taken by the NRC to nuclear regulation.  This could unleash competition and with it innovation, cost reduction and continually improving, fit-for-purpose technologies. 

I suspect under these conditions 10% cost reduction per capacity doubling is a reasonable estimate (based on 100 years of historical data for other electricity generation technologies).  However, I have no idea what rate of doubling is reasonable?  I suspect SMR’s would replace fossil fuel generation worldwide (both existing and new capacity) once the LCOE drops below that of fossil fuels, and the rate would accelerate as the difference between LCOE of fossil fuel and nuclear power increases.

What rate of capacity doubling could be achieved at a 10% LCOE reduction per capacity doubling and starting at 10% higher cost than fossil fuels in 2022?

 

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