DoE Solar Energy Report On Market Penetration Outlook for Solar PV

A laundromat in California with solar collecto...
A laundromat in California with rooftop solar collectors (Image via Wikipedia)

As we contemplate the future of energy, and the combination of utility-level and distributed energy, and of different types – solar PV, solar thermal (heat your own hot water for showers), wind, etc., one question I have asked myself is how much energy can realistically be produced by the solar collectors on the roofs of our houses and office buildings in the U.S.?

It turns out the United States government has done some research on this! There’s a very interesting set of Department Of Energy reports, including one (PDF) on the market opportunities for grid-tied distributed solar PV. It figures out, state by state, how much roof surface is available, how attractive the incentives and infrastructure are (e.g., is there net metering?) and uses some simple algorithms to come up with an expected market penetration for solar PV on commercial and residential roofs. The resulting amount of electricity generated in this distributed fashion is amazingly high. Their best case scenario has installed MWs of rooftop solar PVs rising from about 2,000 in 2008 to almost 25,000 in 2015, more than a factor of ten increase over seven years.

Influence of system pricing, net metering policy, federal tax credits, and  interconnection policy on cumulative installations
Influence of system pricing, net metering policy, federal tax credits, and interconnection policy on cumulative installations

The report uses conservative numbers for solar PV cost improvements – breakthoughs and innovations like the ones mentioned in Technology Review every week (like this one), will make the market penetration even faster (and higher) as they come to market.

I was pleased to see that our government has done this kind of research. Think what could be done if funding for renewable energy research and development was an order of magnitude higher!

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Is this solar energy analysis is too simplistic?

According to this analysis from Clean Edge, (which I saw originally in the San Jose Mercury News, Solar energy cost may rival other forms soon, study says – SiliconValley.com):

Solar energy will cost the same as power produced by coal, natural gas and nuclear plants in about a decade, a report released Tuesday suggests. By then, the price parity could propel solar adoption so that it accounts for 10 percent of U.S. electricity generation by 2025

If you listen to this kind of thinking, solar energy (which is defined as what, by the way?) is still far more expensive than other kinds. But solar energy, even today, has a finite payback time – if I put solar collectors on my roof, for example, eventually they will pay for themselves.

So that’s one way it’s wrong.

Secondly, the study assumes that conventional energy prices will go up by 3% per year. That could be a slight underestimate. Didn’t we just experience a three month period where gas prices nearly doubled? (That’s 100%, folks!).

I can’t make any argument about the assumption that solar energy prices will come down 18% per year. That’s a lot, by one metric, but we’ve certainly seen large and faster price drops in high tech in the past. Even the iPhone last month, which dropped in price by almost 50% in less than a year. Sure, that was partly through some magic AT&T financial pixie dust, but to the user, it’s a clear 50% price cut. There’s no reason similar magic pixie dust, whether from the government or from the utilities themselves, won’t contribute to market price declines.

The claim that solar currently accounts for less than 1/10th of a percent of the U.S. energy supply today is fine. But the assumption that it will still be less than 1 percent in 2015 (seven years from now) is curious. If we start at .1 percent, and double our solar usage every year, we end up at 128 times as much – 12.8% of today’s total. This is the amazing power of Ray Kurzweil’s “Law of Accelerating Returns.” Even if it takes two years for each doubling, we’re still up a factor of 32x in seven years. That means 3.2% today’s usage. Our total energy usage may also go up (although there are very good reasons to think it may not go up much and and will be starting a downward trajectory), but for a 32x increase in solar supply to translate to 1% of our total energy use, total energy use would have to double. Not too likely in the U.S., where population growth has stopped, and SUVs are starting their long decline.

Finally, there’s good reason to believe that solar energy will actually have a much larger share of U.S. energy usage, due to the power of “negawatts” (as explained brilliantly by Amory Lovins in this series of talks at Stanford in 2007), in which efficiency turns out to be the most cost effective way to power industry and create profits. Oh, and by the way, it significantly reduces our energy usage, by as much as a factor of five to seven!

The article combines a couple of types of fallacious thinking – that technological progress is linear, for example, rather than geometric, and that other factors, such as the desire to reduce greenhouse gases or realizing the benefits of negawatts throughout the economy, don’t have an additional accelerating effect on technology changes.