US: solar could disrupt shale revolution, study finds

Share

A report by international energy research company Wood Mackenzie has posited that solar PV has the capacity to disrupt the U.S. energy landscape with similar speed and tumult as the shale industry managed – and may even directly impact natural gas markets in the near future.

In asking if solar is the next shale, Wood Mackenzie research director for Americas power and renewable research Prajit Ghosh writes: "The role of solar in the North American power market has snowballed from a science experiment and a niche technology at best, to a key renewable competitor to wind, a regional threat for non-renewable technologies, and a potential disruptor of utility business models and the power industry at large."

Ghosh compares solar’s rapid rise to prominence to the upheaval caused by shale extraction technologies over the past decade, suggesting that the trend for cheaper solar modules will only continue as balance of systems (BoS) costs fall and efficiencies improve.

"While more efficient solar technology may command a higher module price, the capacity gains per square meter usually make high-efficiency modules more economic on a $/W basis," said Ghosh.

The researcher warned, however, that solar’s soft costs will also be highly dependent upon regulatory redesign, market structuring and heightened downstream competition, and while the potential of new PV materials and techniques such as perovskite and organic PV was not dismissed, Wood Mackenzie argues that – conceptually at least – such new technologies will play their part in the disruption.

"While these technologies are nowhere near commercial availability at the moment, they have a promising potential as an immensely versatile source of power generation," added the group’s senior analyst, Chad Singleton.

Solar's leading role

Wood Mackenzie forecasts that solar PV costs will be at grid parity in 19 U.S. states by 2020, and expects that figure to double again by 2030. The parallels here to the shale energy revolution are noteworthy, the report’s authors claim, adding that solar is likely to enjoy similarly rapid increases in GW installed, reaching 71 GW of cumulative PV capacity nationwide by 2035. Ghosh issues a note of caution regarding potential snags that could slow solar’s wider penetration, including "reliability concerns, legal statutes, and other factors… including the indirect impact of lower oil prices on drilling activity and consequent gas prices", adding that they could "hurt solar economics".

The report concludes by imploring the solar industry to develop compensation mechanisms that will improve the technology’s reliability, stating that current wholesale market structures are not designed to accommodate large amounts of solar energy. "Solar rooftops reduce the need for grid-connected power but do not eliminate it," said Ghosh. "Thus, issues around assigning fixed cost charges to maintain the grid have and will continue to rise."

However, as solar continues to represent a sound investment, it will not only gain greater penetration on the wholesale market but will also eat into the revenues of the natural gas sector. "The more solar you build, the less attractive natural gas becomes. This is not a forecast," says Ghosh. "It is already happening in California."

In response to the report, Forbes analyzed what solar’s disruption could in fact mean for the U.S. energy market. In its analysis, it warned that once gas plants become uneconomic they cease to exist as a backstop to the grid, which strips away backup capacity that is often needed for the hours in which solar and wind are not producing energy. This so-called ‘Duck Curve’ has already been noted in California, and skeptics warn that a nationwide Duck Curve will not be tolerated nationwide for very long.

However, pro-solar commentators would argue that battery storage technology will be sufficiently evolved and installed by that point, rendering the argument moot.

Popular content

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.

Share

Related content

Elsewhere on pv magazine...

Leave a Reply

Please be mindful of our community standards.

Your email address will not be published. Required fields are marked *

By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.

Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.

You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.

Further information on data privacy can be found in our Data Protection Policy.