by Stephen Lacey
August 24, 2017

Ever since the Energy Department's grid study came out this week, we're all competing for the hottest hot take. 

Kevin Christy, the chief operating officer of Lightsource North America, had one of the best responses I've seen yet: "This is the most boring thing happening in America right now, and I love it for that."

Amen, Kevin. Amen. But it's still the most exciting thing happening in energy policy, so onward we go.

If you haven't read all 187 pages of the DOE's grid reliability opus, we've got a summary of what's in the report and a summary of what's missing. But let us distill it down to its basic parts.

The report itself is relatively uncontroversial, an achievement in and of itself. It brings together a wide range of research on wholesale and retail market design, power plant retirements, subsidy totals, and technology cost profiles to answer a simple but significant question: What's causing traditional baseload power plants to shut down?

The answer: natural gas and slowing load growth. Environmental regulations and renewables are starting to play a role, too. Not surprising at all. (And if you believe that climate change is a problem -- something this report does not acknowledge -- then chances are good that you're celebrating the idea that solar and wind are forcing fossil plants off the grid.)

A handful of critics are still calling the analysis a political tool to prop up coal and chip away at support for renewables. But it's definitely not the political document Perry hinted at when he first ordered the study. 

So where does solar fit in?

Solar is mentioned 116 times in the report. Reading through the references, there are a few themes that emerge.

  • There's definitely an assumption that solar can't become a dispatchable, reliable resource. 
  • The report authors express concern about cost-shifting from net metering. (DOE says it will study this more, at the request of Congress.)
  • The report implicitly warns about market-distorting impacts of the federal Investment Tax Credit.
  • The report (fairly) asks how lots of cheap solar will cause more negative pricing and change the cost calculation for resource integration.
  • Solar jobs are nice, say the authors. But they won't make up for lost jobs in the energy sector as coal and nuclear struggle.

There are no specific policy recommendations for solar. Nor does the report specifically call the technology a threat. But there's a strong implication that a solar-heavy grid wouldn't be good for the health of the grid.

Please don't look directly into the sun

Many of you were out staring at the solar eclipse on Monday instead of reading our articles about the eclipse. We could see you leaving us in real time.

GTM didn't collapse. And neither did California's solar-saturated grid. 

Now that we have your attention again -- assuming you are not suffering from sun blindness -- read Julia Pyper's backgrounder on how California used behavioral demand response to offset the decline in solar generation during the event. 

As we now know, California used a combination of smart thermostats, natural gas, energy trading, and good, old-fashioned conservation in order to balance the system. Cooler temperatures also helped.

So what happened? Blake Shaffer pulled together some data from the California Independent System Operator showing a roughly 3,600-megawatt dip in solar generation. (CAISO expected the loss of 4,200 megawatts.)

And how did California fare? "All in all, no issues, no drama," explained Shaffer.

Eric Schmitt, the VP of operations at CAISO, summed it up equally succinctly: “Things went really, really well."

When the electric system is functioning properly, people don't notice it. But all eyes were on California's grid.

Although California regularly deals with large dips and increases in solar generation, CPUC Commissioner Michael Picker understood the consequences of botching the opportunity -- he made it his personal mission to prove the value of customer behavior in managing the grid during the event.

"CPUC HELPS CONSUMERS PLAN FOR THE GREAT SOLAR ECLIPSE," declared one bulletin from the utility commission encouraging conservation.

At this point, it's not completely clear how much individual behavior played a role in balancing the grid. But we do know that the state didn't use as much backup power as expected. The grid also got a little help from Nest, which leveraged over 750,000 smart thermostats to precool houses.

Months after deploying batteries in record time to make up for the Aliso Canyon gas shortfall, California proved that there are myriad techniques for managing a solar-heavy grid. California grid operators have known that for a long time -- and now the rest of the country knows it.

Maybe worth a mention in that Department of Energy grid reliability study?

Good thing solar didn't crash the grid -- utilities are about to get a lot more of it

Sometimes it seems like utility executives spend more time taking surveys about disruption than running their companies. We're guilty of peppering them with questions too -- in fact, you can dig through all our Squared coverage from last year's survey on the future of global electricity systems. (We've got another one coming in September on vendor sales cycles.)

While voluminous, all of these surveys are valuable. Every year, they show a steady shift in attitudes about planning for distributed resources. Black and Veatch's latest Strategic Directions report took a turn this year, when executives identified utility-scale solar as the resource they're most likely to add to their grids.

Take a moment to reflect on that. Utilities expect solar -- over any resource -- to be the dominant new source of generation over the next five years.

"This marks the first time that solar PV has appeared No. 1; although not entirely unexpected, it is a big change for the industry. Utilities are also looking to renewables to fulfill environmental requirements, with 61 percent of utilities identifying renewable energy as their biggest investment over the next five years," reads the report.

Solar's dominance in the ranking isn't the only shift. The authors noticed a distinct change in the way utility executives view distributed renewables. 

"Rather than view these resources as intermittent sources of energy that cannot be depended upon for reliable output, they believe that -- armed with the help of energy storage and advanced distribution platforms -- they can harness this distributed supply and improve system flexibility and resilience."

Events like this week's solar eclipse only help strengthen this case.

The Black & Veatch survey doesn't reflect aspirations. It reflects what is actually happening in utility territories across the country. The tide is changing, pulled by the sun.

Our Senior VP Shayle Kann recently dug into integrated resource plans across the country. He found a dozen utilities with more than 500 megawatts of solar planned, based on economics alone.

For example, between Dominion Power's 2016 and 2017 resource plans, the cost of solar fell by one-quarter. As a result, the utility's projections for solar deployment quadrupled. And that's without the Clean Power Plan.

"This is what happens when you get these drastic cost reductions for solar," said Kann at our recent Solar Summit. "Just these 12 utilities could nearly double the size of the cumulative utility-scale solar market. This is 12 utilities out of 3,000 in the U.S. -- so, this is a very real transformation."

Global snapshot: Solar is catching up to wind and nukes; China outpaces the rest of the world

It's happening. Solar is starting to eat the world. Well, at least nibble away at it.

GTM is out with its latest round-the-world survey of deployment and market trends. It shows the solar industry set to install 81 gigawatts of solar in 2017. That will bring total capacity to 390 gigawatts, rivaling nuclear in global capacity. (Yes, we are well aware of the difference between capacity and generation -- but this is still an incredible milestone.)

That puts the world on pace to install 871 cumulative gigawatts by 2022 -- surpassing wind and doubling nuclear. It's also well in line with IEA's 2014 prediction that solar would become the world's dominant source of electricity by the middle of the century.

China may be installing cute panda-shaped PV projects, but it's still living up to its dragon-like reputation in solar. It installed 13.5 gigawatts in July, according to the country's PV trade association. And it'll likely put up 31.5 gigawatts by year-end. (Already our analysts are sharpening their pencils and refining their spreadsheets, anticipating higher-than-expected growth in China.)

This is what Chinese dominance looks like.


Let's take a quick trip around the world and tour some top markets:

  • There are now 48 countries with solar auction mechanisms in place. We've said it before: The era of the feed-in tariff is coming to an end.
  • Thanks to those auctions, India's solar market is set to grow 90 percent, from 4.9 gigawatts to 9.4 gigawatts.
  • Europe is shifting. France, the Netherlands and Ireland are set to rival Spain, Germany and Italy as top markets through 2022.
  • The Middle East and North Africa will account for 51 cumulative gigawatts between now and 2022, making it one the fastest-growing regions.

And damn, would you look at those PPA prices?

Deals and developments to watch

Sungevity is back: Will this brand resurrection be successful on a national scale? Or did Horizon make a risky expansion move with a damaged brand? 

SolarReserve wins a 6-cent power tower bid in South Australia: Molten salt storage is making CSP competitive in key markets. It's more competitive than batteries and PV -- will it make a comeback in America?

Cypress Creek secures a $450 million debt facility: The leader in utility-scale project development has now raised over $2 billion. Will its pipeline stay stable under the threat of tariffs?

Wunder Capital offers a 10-year loan: The product expands the company's reach to more borrowers. It already supported 15.2 megawatts of commercial projects this year. Can Wunder fix the capital problem in C&I solar?

27 solar equipment manufacturers with 5,200 employees unite against tariffs: Will it have any influence on the trade commission? Probably not. But the entire solar industry is now pretty much lined up against Suniva and SolarWorld's trade case.