The coronavirus pandemic has shrunk economies significantly, with two opposing impacts: a serious decline in greenhouse gas emissions, which is good for the planet in the short term, and a serious decline in new project development of all types, including green energy and public transit — which is not so good for the planet.
We’ve also seen real support for various types of Green New Deal policies. Democratic presidential candidate Joe Biden released a surprisingly ambitious climate-mitigation plan investing $2 trillion over a span of four years.
As part of the pandemic recovery, policymakers and the public are realizing that climate-change mitigation, local energy independence, self-reliance and resilience, and massive job creation make a whole lot of sense. I’m optimistic that Democrats will win both Congress and the White House this fall and quickly implement comprehensive climate-change legislation.
On the other hand, 2020 will probably be the first year that the solar energy sector will see a decline globally, down from a record year in 2019.
How will the upheaval of 2020 affect the world’s long march to a green energy economy? This piece will look at the numbers for 2019 and the first half of 2020, and offer some thoughts about the next few years in light of the pandemic and its economic impacts.
My “solar singularity” updates over the last few years have attempted to track on-the-ground progress on the transition. Here’s the summary of this annual update (my fifth): While I am still optimistic about the solar singularity and the green energy transition (as we’ll see below, there were many very promising developments in the past year), the double whammy of Trump’s election and the pandemic with its severe economic impacts may slow the transition by a few years.
This annual update will focus on solar power, battery storage, EVs and self-driving technology. These are the intertwined revolutions of the new green energy economy.
A caveat is in order: Many sources cited are forecasts published before the pandemic, and some of them will surely be downgraded in the coming year.
Global solar growth increased in 2019 but slowed in 2020
Let’s start with solar. Global solar PV installations grew by around 115 gigawatts in 2019, adding 22.5 percent to the world's total, for a cumulative installed base of 627 gigawatts, according to the annual REN21 global renewables report. That's down substantially from the industry's 10-year average global growth rate of 29 percent.
2020 is the year that solar will surpass the global wind market on a cumulative installed basis. Solar has consistently grown faster than wind in recent years so it has been apparent for some time that this crossover was coming. Solar power generated about 2.8 percent of the world's electricity last year, up from 2.4 percent the year prior, according to REN21.
As the chart above shows, China has been the global leader in solar for years, with the U.S. and Japan vying for a distant second place.
A very encouraging trend is the breakdown of total new electricity generation installations, with 75 percent of all new global electricity generation now coming from renewables — and solar is the dominant technology.
Renewables as a share of new global electric-generation additions
Less encouraging are the forecasts for 2020: IHS Markit expects the world to add 104 gigawatts of new solar capacity this year, while Wood Mackenzie is forecasting 106.4 gigawatts. Either way, that would be a decline from 2019.
Nevertheless, solar and other renewables are now firmly in the “exponential technology” category, defined by how quickly what seemed like a slow-growth deployment suddenly becomes ubiquitous or nearly ubiquitous. We will likely cross the 4 percent solar share of global electricity either this year or next (up from 2.8 percent end of 2019).
No one expects or wants solar to be our only generation source. Wind power, geothermal, hydro and biomass will provide substantial power in the coming decades. If we target 60 percent solar in the global mix, we'd need just six doublings after reaching 1 percent. We have two doublings under our belt already, or will soon, leaving just four more doublings to reach 60 percent.
At a 22 percent growth rate in the global installed base of solar, 4 percent of the electricity mix becomes 8 percent around 2024, then 16 percent around 2027, 32 percent by 2030 and more than 60 percent by around 2033.
All else being equal, global solar growth figures will inevitably slow as we move steadily toward higher penetration, or at least that's the conventional wisdom. But many markets around the world have barely begun to install solar. And the political will toward climate mitigation is growing rapidly in many places, even if the U.S. has bucked that trend under President Trump.
Moreover, all else is not equal when it comes to solar growth. Two key limitations in growth rates to date have been the fact that solar has historically cost more than traditional power sources and the fact that solar has not been dispatchable.
The central assertion of my “solar singularity” framework is that we are at or near the point where solar in many places around the world is cheaper than traditional sources. The solar singularity is defined as the point at which solar becomes so cheap that it’s the default choice for new power generation. We are now reaching that point in an increasing number of markets around the world. Importantly, solar is increasingly being combined with large-scale battery storage.
Two major factors that have been holding solar back from ubiquity — cost and dispatchability — are now for the most part gone. This should result in practically vertical solar growth as more and more jurisdictions cross over into singularity dynamics. “Vertical” in this context means that growth will max out at 100 percent of new annual global energy demand, whatever that amount may be each year.
As shown in the chart below, 75 percent of new demand is already coming from renewables. It may not be much longer before we reach 80, 90 percent or even higher as wind, solar and battery storage prices continue to plummet.
U.S. solar growth: A brighter picture
Closer to home, U.S. solar installations continued at a healthy pace for 2019, adding 13.3 gigawatts, up from 10.6 gigawatts in 2018, and bringing the cumulative total to 76 gigawatts, according to a recent report from the Solar Energy Industries Association and Wood Mackenzie.
The really good news is that fully 40 percent of all power generation installed in the U.S. last year was solar, surpassing all other power sources for just the second time.
The same report originally projected 20 gigawatts of new U.S. solar in 2020, which would be a record-setting year. But the pandemic has taken a little wind out of those sails, and Wood Mackenzie is now projecting around 18 gigawatts of new installations in the U.S. — which would still be a record-setting year for the U.S. if the forecast proves accurate.
As the figure below shows, there is a strong correlation between declining prices and increased installations. It doesn’t take much analysis to see that price declines drive increased installations, which then drive declining prices in an ongoing virtuous circle. This is Swanson’s law in a nutshell. This chart shows a price average for all market sectors.
According to the Energy Information Administration, U.S. solar energy production grew to account for 2.6 percent of U.S. electricity demand in 2019, up from 0.6 percent in 2015, just four years earlier.
Source: SEIA/Wood Mackenzie
2020 promises to see that 2.6 percent jump further as we add more solar while probably also seeing a substantial drop in total electricity demand.
The key trend for long-term projections, however, is still cost, and strong cost reductions continued in 2019 and 2020. All-in costs for utility-scale solar are as low as 70 cents per watt, according to the latest Lawrence Berkeley Lab utility-scale solar market report.
One dollar per watt for solar translates into about 2.5 to 4 cents/kilowatt-hour in reasonably sunny areas, which is cheaper than most traditional sources of power by a significant amount, even at today’s relatively low fossil fuel prices, and even with storage added in order to make solar partially dispatchable.
We are now seeing long-term solar contracts signed for less than 2 cents/kWh, which include various tax breaks and in some cases local subsidies. The figure below shows the power-purchase agreement prices over time for utility-scale solar projects, which still dominate the U.S. market (making up about 60 percent of the market in 2018).
U.S. utility-scale solar PPA prices, 2006-2019
Figure 4: U.S. utility-scale solar PPA prices over time (Lawrence Berkeley National Lab )
Due to this steadily falling cost for solar, we are finally starting to see more studies come out showing cost savings from switching over to a green energy grid. A 2020 study from UC Berkeley’s Goldman School of Public Policy calculated that solar could supply 90 percent of the U.S. power at a substantial cost savings by 2035, down 15 years from the previous timeline of 2050. And this transition would save a lot of money (13 percent compared to business as usual), the study says.
Another interesting set of studies comes from Wärtsilä, a Finnish company, which finds that in many places over-building solar or wind by a factor of 2x to 4x and backing it up with energy storage would be the cheapest set of solutions for power provision. In other words, rather than adding a lot of storage to withstand periods when the sun doesn’t shine or the wind doesn’t blow, if we simply over-build solar or wind, because solar and wind have become so cheap, it’s still cheaper in many cases than the status quo.
Battery storage growth and cost declines are very promising
2019 was a relatively bad year for stationary battery storage market growth, with about 5.3 gigawatt-hours of new capacity added, down from 6.2 gigawatt-hours in 2018, according to Wood Mackenzie. But it was a much better year in terms of a number of truly massive projects coming online or being contracted.
Just this week, GTM reported that LS Power has energized the world's largest battery, at 62.5 megawatts with the ability to charge or discharge 230 megawatt-hours for one hour. That will be followed soon by the massive 400-megawatt/1,600-megawatt-hour Moss Landing battery facility that will replace the old gas-powered plant there. 2020 is looking much better for storage than 2019, even with the pandemic.
A common criticism of stationary battery storage is that it just isn’t up to the task of backing up all of the variable/intermittent solar and wind power the world will need to replace fossil fuels. Those critiques are now being contradicted with actual performance data from real-world projects.
The 400-megawatt Moss Landing facility is at the scale where it is very easy to see battery storage replacing gas peaking plants around the country and the globe in the next decade or two, while also serving as backup for variable renewables.
Wood Mackenzie projects a thirteenfold increase in global storage by 2025, to 230 gigawatt-hours total, even as the market takes a hit in 2020 due to the virus. A thirteenfold increase is almost four doublings (sixteenfold), so WoodMac is projecting a doubling of the market every 1.25 to 1.5 years. That’s the power of exponential growth.
Stationary battery prices have continued to fall, reaching $102 to $139 per kilowatt-hour in 2019 for solar-plus-storage applications in the 50 MW/200 MWh range, according to Lazard’s 2019 cost of storage report. BloombergNEF projects the global lithium-ion battery storage market to grow by a factor of four by 2030, increasing to almost $120 billion annually.
The battery storage revolution is seeing some hiccups, but it is still looking very good for the next decade. The pandemic and slower economic growth, temporary seizing up of capital markets and other knock-on effects may slow storage growth in 2020 from what it would have been otherwise, but as the global economy recovers, it is likely that the market will recover and grow even more rapidly because of the magic that results from the Kammen curve’s declining costs.
Swanson’s law and the Kammen curve add up to a sustainable and cheap power future, which should be a significant part of the coming economic recovery. The Green New Deal movement recognizes these economic facts and the “facts on the ground” of steadily increasing solar and battery storage installations, and it correctly highlights these technologies as ripe for helping global economies recover from the pandemic.
Stay tuned for the second part of this year's Solar Singularity update, touching on electric vehicles and self-driving cars.
Tam Hunt is a lawyer and owner of Community Renewable Solutions, a renewable energy project development and policy advocacy firm. He is the author of the book Solar: Why Our Energy Future Is So Bright.