When solar gets disruptive

Despite the growth of renewable energy, coal power accounted for a third of the world’s energy last year, its biggest share since the 1970s. We’ve been using more of it in Britain too, with Russia being our most important source of imports.

But there’s good news too: while the cost of fossil fuels remains high and volatile, the price of renewable energy has been consistently falling. Solar in particular has been on a steep downwards trajectory, driven by rapid innovation, new economies of scale, and competition that borders on trade warfare.

The price of solar PV has fallen by 97% since the 1970s. For a long time, we’ve been expecting the falling price of solar to cross the rising price of fossil fuels, and that moment is now arriving. Solar is at grid parity – costing the same as mains electricity – in Spain, Germany and Italy. Australia and Brazil are there too and it’s very close in a number of others, with the exact point of parity varying according to local energy prices, incentives and taxes.

To really make a big difference though, solar power needs to be affordable everywhere, not just in industrialised countries with subsidy schemes. And there’s positive news there too. Chinese solar manufacturers expect parity with coal by 2016. Perhaps that’s optimistic, but even coal parity is only a matter of time.

solar parity

And that’s when solar power starts to get disruptive. When it’s cheaper to use solar than coal, it will begin to erode the dominance of the fossil fuel industry. The big energy companies will begin to lose customers as more and more people take charge of their own energy needs. The mining companies will find that their vast coal and gas reserves aren’t as valuable as we thought, and their net worth will dwindle away. Given the connections between energy and finance, including pensions, the loss of value in fossil fuels would be felt right through the economy.

The idea of disruptive technologies is often overhyped, but it would apply to solar here. Energy would no longer be in the hands of multinational corporations, and we’d have a dispersed and far more democratic energy landscape.

At least, that’s the possibility. The big energy won’t go quietly, and they have the lobbying power to protect themselves. Even with a best case scenario, solar doesn’t solve all our environmental issues on its own. The transition from fossil energy to renewables is not a direct swap, and there are still concerns over the availability of materials used in solar PV. Nevertheless, it’s an interesting time to be watching the energy world. There’s definitely something in the air.

17 Comments on “When solar gets disruptive”

  1. Neil June 19, 2014 at 2:33 pm #

    It already is disruptive! The problem is what to do with the excess power. The obvious answer is to store it. We need to start planning now. http://www.theoillamp.co.uk/?p=3989

    • Jeremy Williams June 19, 2014 at 2:50 pm #

      Indeed, but if it blows a hole in the value of the world’s coal reserves and leaves them as stranded assets, its current effects will look like minor turbulence.

      And yes, storage is an issue and one of the reasons why there’s no direct swap to renewables. The improving economics of solar are driving innovation in storage technologies too though, so there are reasons to be hopeful.

      • justnickoli June 19, 2014 at 4:36 pm #

        This may be one of the side effects of an increasing market for electric vehicles as well, as companies such as Tesla research improved battery technology, and Honda and Hyundai work on Hydrogen fuel cells.

  2. DevonChap June 19, 2014 at 2:59 pm #

    A very good case for free trade. We have the EU and the US trying to impose tariffs on Chinese PV in protectionist measures because they are cheaper. We want PV as cheap as possible so we can transition with the least amount of wasted resources. Go globalisation!

  3. Imarunner2012 June 19, 2014 at 6:25 pm #

    There will be new multi-nationals selling panels and equipment. Other multi-nationals will sell us batteries to store solar power for evenings and cold, cloudy days.
    I think solar will reduce our need for coal during the day, but untill we figure out an efficient storage method, we will need coal at night.

    • DevonChap June 20, 2014 at 9:36 am #

      More likely gas, you can fire up a gas power station quicker than a coal one. Let’s get fracking!

      • Jeremy Williams June 23, 2014 at 10:38 am #

        Yes, so long as the choice is between coal or gas for the bit that renewable energy can’t provide. Unfortunately the current government hasn’t seen fracking that way.

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