Just what solar energy companies don’t need—what could be an emerging risk that the existing national electricity grid isn’t up to the task of getting solar-generated electricity to consumers.
First Solar’s (FSLR) December 22 cancellation of plans to build a 150-megawatt solar power plant in the high desert of Colorado points in that direction. In the company’s explanation for withdrawing its application to build the plant the company noted that it is reviewing all of its projects with an eye to factors like transmission capacity.
Could tranmission capacity–or the lack thereof–be emerging as the next bitg problem facing solar energy companies?
The United States has plentiful supplies of sunshine and plenty of relatively empty land in the desert West of California, Nevada, Colorado, New Mexico, and Arizona. But the consumers who need that electricity are concentrated on the east and west coasts. The existing electricity grid all too often doesn’t provide an easy—and inexpensive way—to connect remote central solar power plants with the country’s population centers.
The problem is made worse by the intermittent nature of solar power—when the sun don’t shine, solar power plants don’t generate electricity. That requires that solar power plants be connected to other power supplies that can balance loads and supplies when solar-generated electricity is in temporarily short supply. Those kinds of connections and real-time load balancing technologies are in especially short-supply in today’s grid.
Three tentative investment thoughts—they’re too tentative to call conclusions certainly—emerge from this.
First, those solar companies that are focused on big central solar power plants in remote areas such as First Solar and BrightSource Energy are more vulnerable to the higher costs and risks caused by the current clearly inadequate national electricity grid. In some proposed locations for these centralized solar power plants, transmission costs, rather than solar costs, will make or break a project.
Second, that companies that remain focused on smaller projects nearer to population centers and that are better integrated into the current grid—such as a photovoltaic array on a warehouse roof—are relatively untouched by this risk.
Third, those companies building out solar projects  such as FPL (FPL) that operate in a state such as Florida with an abundant supply of sunshine but where the consuming population is relatively close at hand and that have a ready supply of base power from technologies such as nuclear power plants may have a significant edge in building out solar capacity.
All very tentative thoughts, I remind you.
Jim lays out the facts. The conclusions follow. But alternatives also include hydro-electric (yes, Dams). As energy costs rise and the health costs of carbon fuels are not abated, green energy will once again look to taime wild rivers.
I can see solar in the year 2020 or 2030, thinking it’s shaping up like another golden 20’s again. The Government is slowing the demand on Gas and electrical always has. In the late 80’s I’d never thought I would be using a pc like I do today. There will be solar but I still think it needs time. I just changed out my hvac system 1970’s technology to 2009 I sure hope the power bill is half
A few decades ago Amory Lovins wrote the seminal SOFT ENERGY PATHS, pointing the way to a sustainable energy future. It is still valid today.
Decentralized solar is less impactful on the environment and capital costs than centralized power stations. Additionally, an aggressive move to energy saving technologies such as geothermal heat pumps can radically reduce electrical needs when they replace older power-hungry HVAC systems such as electric baseboards and furnaces and lower-quality air source heat pumps.
Jim, while it would be great if there were ready-made transmission systems to take the power from the solar grids to the cities, I think you’re missing the bigger picture. Solar will never be a decent source of electricity for just the reasons you’ve mentioned here, plus one more – scaling. It’s nowhere near big enough to make a difference.
I recommend you stop by and read Steven den Beste’s posts on the subject. They’re written for the layman, but have engineering calculations behind them. There’s a good one here and another good one here.
I wrote a post here discussing the use of solar power to run an aluminum smelter here.
Solar power seems like a good idea to the public because it’s seen as a way to run part of your house part of the time. It makes you feel green and the massive subsidies mask the real costs of the systems. Once the government deficits really start to bite and budget cuts are being made in earnest, I don’t think solar will be a viable alternative any more.
Could it be that the 150 MW power plant is not economic??
There is something I really don’t like about fslr. I’ve looked into them all of about 1 hour and maybe the company is pushing technology that’s not here yet or they are setting fslr up for failure. After reading and enjoying what Jim Jubak has to say for over 1 year I do see a trend. The trend is those rare earth mines first. My thinking is that companies are going to demand it. Solar companies maybe left holding a short stick. Now with out making this long power companies need to grow. Jim you Da man but however I want to kick myself for selling apple at 90 (bought 188) happy for me I don’t play with a ton of cash
In the future, I could see point #2 being combined with new housing construction. I could see a construction company partnering with a small solar panel company to include panels on the roofs of new constructions and the cost of the panels folded into the 30 yr mortgage. Seems like a natural segue from where we are now, into the future of solar power on a small scale.
current large wind projects are coming at an on-grid all-in price about $0.07/kWhr with their portion of the required grid expansions included – the latest large solar deals are at $0.16/kWhr without the grid expansion. if solar installed costs would fall by maybe $1000/kW, then these projects could carry their share of the grid upgrades.
Hi Jim,
Very good points!
Couple notes … “Night” electricity is not a problem – this is precisely how Swiss people making money out of French people: buying electricity when it is cheap, pumping water high (i.e. storing energy), and generating and selling electricity when it is expensive. Nuclear power is a great idea, but it takes at least 12 years just to build such a power station (design, approval etc. take another several years).
It brings the only short-term solution, which is natural gas. Building infrastructure, which includes delivery and distribution systems, will take decades. Energy sector is by the most conservative sector in the whole economy. Things are changing very slow here. However, there are nice alternatives, for which infrastructure is ready. You produce electricity, use it to get hydrogen (from water), deliver hydrogen through pipe lines, burn it – get energy and … may be, even more precious – water, which is needed for many regions of the country.
Everything is doable, but it is not something even fairly large corporation can afford. This is the area, where big government has to step up. All the jobs will remain in the US. However, big government decided that there are other priorities and things to be done (and money to be wasted) for their friends to be re-elected next fall.
Happy Holidays to all of you!
In the area I live (Chicago) Schneider Electric has contructed a field of solar panels to offset the cost of electricity to their corporate offices. The cost of this project was reported to be $750,000 and the life expectancy of the panels is about 40 years. The company anticipates that they will save $9000 per year on their electric bill !! I hope that their is a future for alternate energy sources, but with this type of non-return on investment, it does not appear to be in the Midwest in the foreseeable future.
How about American Superconductor AMSC as a grid enabler Jim?
Jim,
I Want to wish you and yours a great holiday season, and heartfelt thanks for all that you do for us throughout the year.
Thanks,
DJB
I notice ORA is wheezing a little. I wonder if they have thought about coupling with a hot water solar system that stores heated water for Ormat equipment to generate electric. Acts as a battery.
Jim- according to most experts our electric power demand in this country will double by 2030- and that does NOT count all those electric plug-n-go cars people are all excited about. We need every milliwatt of power we can generate from any source [or- save! novel idea] between now and then. Unfortuanately, wind and solar just won’t be able to supply that power, for the reasons you mention (when the sun don’t shine, also). Long-distance electrical transmission has always been very inefficient (line losses), and you folks in the East will constantly be stymied by the NIMBY attitiude that has already rared its ugly haid off Olde Cape Cod if I remember correctly [but don’t feel abused, it has also stopped alternative energy projects in Flagstaff AZ and almost every Western state, too.] No one wants anything in their backyard.
Sure, a solar array could easily- and should- be required for every new roof built from now on in this country. But just who has the political guts for that? I can already hear the builders and their lobbyists screaming. And we wouldn’t want to communize the whole country by pandering to the alternative energy crowd, heavens.
A lot of people still don’t much like the idea of nuclear power, but it is the only “clean” [no carbon] baseload source for electrical power we have available to us- now. Baseload means ability to provide all the power that is needed at any time, nght, day, clouds, whatever. And nearly everyone in the east already lives within just a few hundred miles [at most] of one of these plants. FPL is also building out its nuclear capability as well as alternatives.
The transmission problem is daunting, and possibly insurmountable. I don’t say that nuclear energy is a long-term solution to our problems, but it could certainly give us many years of wiggle room while we develop all the technologies necessary to implement a power supply based on non-carbon technologies and upgrade our inadequate distribution system.
However, I personally believe that the place to invest now is in those electrical, industrial, technology and infrastucture companies that will solve the distribution dilemma.
The same transmission issues plague wind energy as you described for solar. A unique take on renewables is below, which argues that: “At least three-fifths of the fifty states could meet all their internal electricity needs from renewable energy generated inside their borders. Every state with a renewable energy mandate can meet it with in-state renewable fuels.”
http://www.newrules.org/energy/publications/energy-selfreliant-states-second-and-expanded-edition
Jim, great points.
As you have written about previously, our electricity grid isn’t up to the task of getting power to consumers regardless of source.
Moreover as a large scale source of ‘clean’ power, solar would seem to be one part of a solution (albeit a valuable one). Wind would be another.
Perhaps solar’s most valuable role is that it can be built (or retrofitted) into homes and other structures, to complement the energy they draw from the grid. Even better yet: some electric utilities offer energy buyback programs. If your home generates surplus electricity, the power company pays you for feeding it back into the grid!