IRENA Predicts Solar PV costs may fall another 59% by 2025 and installed base to grow 10X by 2030

The International Renewable Energy Agency is out with a study (click on this link to download it) predicting a FURTHER 59% reduction in solar PV globally weighted levelized cost of electricity (LCOE) between 2015 and 2025.  Onshore wind LCOE is predicted to fall by as much as 26%.   In this case, the charts and tables are more powerful than words.

According to the conclusions (summarized in the above table), potential global weighted LCOE for solar PV of US$0.06 per kWh by 2025, and US$0.05 per kWh for onshore wind.  No wonder that most of the new generation being planned in many places globally today is solar or wind.

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UPDATE:  And just a few days later, still in June 2016, IRENA rolls out another study named "Letting in the Light" (downloadable at the link) which offers more sunny news.

IRENA predicts that, led by ongoing cost reductions, solar PV installations in Japan can reach 136GW by 2030.  This is more than double the Japanese government's politically influenced 2015 "energy mix" forecast for 2030, which predicted only 64GW, and much higher even than Bloomberg New Energy Finance (BNEF)'s reaction to the "energy mix" which suggested Japan would attain 95GW solar by 2030.  Globally, IRENA suggests that PV can go from 227GW (2015) to 1,760GW~2,500GW in 2030.

Oxford Study finds potential for Massive Stranded Coal Assets in Japan

Just looking around the world at what is happening in the energy business, and one would suspect it is a really dumb idea for Japan to be investing a massive amount in adding a lot of coal-fired electricity generation over the coming years.  But it is nice to find that a world class university research institute -- Oxford's Smith School of Enterprise and the Environment -- has done the detailed work to try and quantify just how dumb it is, and what is likely to happen to Japan's existing coal-fired generation in coming years.

The headline:  over the next 5~15 years, stranded coal assets are predicted to be 6.8 to 8.9 trillion yen, or US$61.6 billion to US$80.2 billion.

You can download a copy of the 100+ page study here.  It goes into detail looking at 5 different Japanese utilities and identifying risks at specific generating plants.  Much more granular than anything one would see in Japan on this topic!

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NOTE:  To be clear, this study does not predict exactly WHEN coal generation assets become stranded in Japan.  That will depend upon (1) implementation of wholesale competition, (2) carbon tax or equivalent to reflect the externalities of operating these plants, (3) cost of LNG, (4) success in restarting nuclear plants, and (5) speed of introduction of renewables.  Most of the utilities will do everything they can to slow down this process.  Of course, if they slow things too much, consumers will self-generate and the grid will go into a negative spiral of reduced consumption and higher per kWh costs.

PJM capacity auction for 2019-2020 prices plunge; two U.S. nuclear plants likely to shut as a result

PJM manages an electric grid in the NE, mid-Atlantic and midwestern USA, delivering power to over 60 million people.  Power is purchased based upon auctions of various types, and the system includes payments for capacity -- providers are paid in exchange for having available capacity to supply power as and when needed.  These capacity payments are significant -- perhaps 20% of total compensation -- and they reduce the risk for a generator who might be shut out of the market, say, upon a spike in the price for a particular type of fuel.  The auction last year, for capacity commitments over June 2018-May 2019 cleared with payments of $11 billion.

This year, the auction whose results were announced in late May 2016, for commitments from June 2019 to May 2020, cleared with payments of only $6.9 billion, down 39%.

Why were capacity payments lower?  For a start, the forecast demand was lower -- due to efficiency and demand response initiatives.  And there is a lot of new combined cycle gas generation which cleared the auction -- a result of the glut of natural gas now in North America.  All in all, over 10GW of "demand resources" cleared the auction, as well as 1.5GW of "energy efficiency", 5GW of added natural gas combined cycle, 969MW of wind generation capacity, and double the amount of solar in the previous year, at 335MW, according to PJM.

Two major Exelon nuclear plants failed to clear the auction, and will probably be shut down as a result.  An operator of ageing coal plants refused comment on whether its plants had cleared the auction. Wow.

It seems like only last year that Japan's 2030 "energy mix" forecast was suggesting a major role for coal and nuclear generation.  (Okay, it WAS only last year -- June 2015 -- when Japan rolled out that "energy mix" forecast!)  Meanwhile, in the smooth functioning, market-based system run by PJM, coal and nuclear are being squeezed dramatically.

Canadian Broadcasting Corp reports - Canada's "energy superpower" status threatened by renewables

The CBC on May 30 reports a draft study from Policy Horizons (Canada), a government think tank, from March 2016 that notes the energy transition from fossil fuels to renewables is going to happen faster than expected, and suggests that the "leave it in the ground" movement is, well, very realistic.

Among other big concepts in the report draft -- many components of the renewable energy ecosystem are declining in cost faster than predicted due to technological advances, accelerated economies of scale and the "learning curve".  Renewables are becoming cheaper than fossil fuels.  Inclusion of externalities in the cost of fossil fuels will only increase this differential.  Electricity storage solutions are becoming available and commercially viable faster than expected. Transportation may electrify faster than expected.  And yes, renewables enhance "national energy security, productivity and economic stability."  The report suggests caution about public-supported investment in fossil fuel-related infrastructure, since such investments could quickly prove stranded, and in such case the taxpayers should not be left to pay the bill.

Portugal Runs for 4 days straight on 100% renewable energy

This report from the Guardian online.

"As recently as 2013, renewables provided only about 23% of Portugal's electricity.  By 2015 that figure had risen to 48%."  Hydro, wind and solar.  In February 2016 they were at 95% renewables.

And no, they did not build a lot of big new hydro dams in 2014 and 2015, nor did they cut their electricity usage in half!

And even if most of the increase in renewables is wind and solar, they did add 260MW to an existing hydro/pumped storage plant in January 2013 -- and storage allows them to use renewables to get to such a high percentage.

Asia Super-Regional Grid Plan - Softbank Signs MOU with Korea, China, Russia Entities

Since the Fukushima disaster at least and the re-birth of discussion about Japan's electricity system and low penetration of renewables, there has been floating around an idea to establish a regional grid that would link Japan to other countries in Asia and, for example, allow wind energy in Mongolia or Hokkaido to provide electricity to factories in Japan or Korea.

Softbank's slide/idea -- showing retail electricity prices in the various locales.

Finally, last week, Softbank (whose CEO/founder, Masayoshi Son, is the driver of this idea in Japan through the Renewable Energy Institute (fka Japan Renewable Energy Foundation)) has signed an MOU with KEPCO of Korea, and Chinese and Russian grid operators, to conduct feasibility studies the idea.

So why are the China, Russia and Korea members of this team dominant in their respective fields -- grid operators -- but Softbank a newcomer, not directly involved with operating the grid in Japan? Perhaps the geopolitics of the idea give pause to the conservative Abe administration?  What if the Chinese turn off the interconnect, they must ask? Do they really want to be reliant on China and Korea to keep the lights on?

That said, if the idea proves economically feasible (indeed, a way to CUT electricity cost toward the Asia regional level longer term), accelerates introduction of clean energy throughout the region, reduces air pollution flowing to Japan from the continent (China), and if other parts of the world are integrating renewables onto the grid at a very high percentage of supply based on similar wide area grids, it may ultimately prove difficult for Japan to resist resist an idea that also happens to promote regional political and economic integration.

I am not holding my breath, but kudos to Son-san for not dropping his bold idea.

NY Times Editorial Board - "A Renewable Energy Boom"

When I was a regular reader of print newspapers back in the last century, I used to enjoy the pre-Murdock Wall Street Journal's editorial page.  They would propose sometimes audacious, outrageous things.  They would take crazy "conservative" positions.  Sometimes I felt as if my blood would boil.

The New York Times editorials ... not so much.

A typical NY Times editorial would expound that education is good; crime is bad; that we all should volunteer more to help our communities.  The NY Times editorial board would endorse proven, mainstream political candidates.  Yawn.

So when an April 4, 2016 New York Times editorial announces that we are entering a "renewable energy boom", citing a written-by-committee consensus UN report , you know that renewables are no longer a "fringe" source of energy.

Indeed, as the editorial notes, a majority of the generation added last year GLOBALLY was in renewables, more than half of total new renewables investment last year occurred in China, India and Brazil -- the big developing markets that will make or break efforts to control greenhouse gas emissions -- and renewables, including hydro, share of global electricity production has doubled from 2007 to 2015, while costs are dropping like a rock. By 2020, solar PV will be cheaper in India than new coal-fired generation.

(In such an environment what investor in his or her right mind would commit to a new coal-fired plant?)

These facts are now commonplace.  Governments and companies: ignore them at your peril.

P.S. If the UNEP (United Nations Environment Programme) is a bit suspect for the typical somewhat conservative U.S. senator or, say, Wall Street banker, how about Bloomberg?

A visit to World Smart Energy Week in Tokyo

Friday afternoon I visited World Smart Energy Week at the Tokyo Big Sight exhibition hall.  As in past recent years it is a huge event with hundreds (thousands?) of exhibition booths, and features solar, wind, biomass, fuel cells, battery technology, as well as an "energy market liberalization" exhibitions.  My impressions from a few hours spent greeting former business partners and walking the halls.

1.  Solar has not gone away in Japan.  In 2015, Japan continued to be the #2 market for solar PV in the world, and I recently saw a prediction for another 8GW of new installations in 2016, retaining at least the #3 position.  There is even SOME new greenfield development going on despite the difficulties of obtaining interconnection and the risk of curtailment.  And the solar exhibition remains by far the largest and most well attended, with a mood even on the last afternoon of the exhibition not at all glum.

The Kyocera exhibit had a feature on "floating solar" power plants which focused on the 1.7MW "nishi-ike" project in Takaoka that we developed for them, as well as trumpeting their 13MW project now underway. 

 2.  Solar PV technology just gets better and better, incrementally.  What would have been a 245 or 250 watt module back in 2011, is now a 300 watt module.  What would have been a 280 watt 72-cell module is now a 330 or 340 watt module, and it can be available as a bi-facial product so have actual output closer to that of a 400 watt mono-facial equivalent.  There are a wide range of approaches -- Sunpower high efficiency modules, PERC modules, 5-busbar models (instead of the old 3-busbar).  The First Solar "Tetrasun" module having 18~18.3% module efficiency is now on sale.  Solo Power Japan is actually selling its flexible, light weight CIGS modules that were barely out of the lab (and having trouble being commercialized) in 2013.

DSM, a Netherlands-based speciality chemical company, makes coatings and films for module.

All these things add up to a huge increase in output for the same project.

A Solo Power module -- rollable and this one weighs 2.1kgs - 90 watts ... can be glued onto a rooftop.

Solarworld bi-facial module. 72 cell 320 watt, but up to 400 watts production possible including reverse side, at a high albedo groundcover location.

3.  Microinverter manufacturers have been trying to get into Japan for years, without success.  But at PV Japan I met one company, NEP, that is actually selling its product in Japan. They told me that they are approved for use in the utilities, and their product is going onto a 315kWp floating solar project in Fukuoka that will be done this month.  This is a perfect solution to the issue of "where do we put the inverter" that inevitably comes up with floating solar projects in Japan -- the local authorities resist strongly any heavy equipment being located on the levy surrounding the pond.

4.  Floating offshore wind experiments continue.  The Fukushima national demonstration project is now nearing its next phase, with several different designs of floating offshore wind to be tested (including the Principle Power design as implemented by Mitsui Zosen).  It will not happen overnight, it it is great to imagine a future in 15 or 20 years when Japan could get massive electricity from a flotilla of offshore wind farms.

Nobody home at the USA Pavilion's Principle Power booth.
Maybe they are over at the Fukushima offshore wind project displays?

5.  Fuel Cells.  The hydrogen car is for real.   The Honda Clarity FCV will be available for sale from next week, joining Toyotas Mirai.  Nissan will follow soon.  Almost 75 hydrogen filling stations are in operation in Japan, with many more to follow.  The combined heat and power Enefarm home fuel cells are slowly getting better.  Lots of companies were exhibiting in this area. Kawasaki Heavy Industries had a nice pamphlet outlining all their activities related to this new business opportunity.

East Japan hydrogen fueling stations.

West Japan hydrogen fueling stations

6. Basic energy conservation gets featured at WSEW in the Eco House and Eco Buildings exhibition.  Glass wool insulation!  Better reflective/insulating paint coatings!  Some nice exhibits of companies taking the low cost way to lower CO2 output.

7. Electricity competition.  There were lots of exhibits by competitive suppliers and providers of monitoring, price comparison tools and a myriad of other things needed in a competitive retail market.  For the first time ever, I saw a TEPCO presence at one of these events, as TEPCO compares for competition in its own region and others.

New logo!  New TEPCO?  Lots of reasons to think so, actually.

Kinki Electric Power .... not to be confused with Kansai Electric Power.

Skipping Stone (consultants) were there as well.  

How to keep everyone on the grid and get to 80% renewables by 2030

It is good to be back after a long absence from this blog.

My last post was about how a combination of solar + storage is likely to lead to massive "grid defection" over the coming 15 years.

Now, a study that suggests another way things MIGHT go.

A study published in the leading scientific journal Nature (and available online at the link) indicates that, for little or no net increase in the levelized cost of electricity, it would be possible to get the U.S.A. to 80% renewables by 2030.  How? A significant investment in the transmission grid, including new very high capacity, low loss, long distance DC (direct current) transmission.  The study looks at renewable generation and potential generation using detailed weather data, and concludes that even though sun and wind resources are intermittent and variable locally, across the U.S. as a whole the amount of electricity that can be generated by renewables at any one time is remarkably steady.

So, the authors suggest, the key is a grid that has sufficient capacity and resiliency to get the electricity from where it is produced at any time to where it would be consumed.  A huge undertaking ... but one that costs no more than building and fueling the traditional generation the nation will need if this is not done.

Incredible.

Customers Will Leave the Grid Behind in Droves Over Next 10-15 Years

Rocky Mountain Institute has just published a fascinating study on the future of "grid load defection" in the U.S.A. under likely pricing scenarios.  You can download it here:

http://blog.rmi.org/blog_2015_04_07_report_release_the_economics_of_load_defection

There is now significant concern in the U.S. -- and there SHOULD be significant concern in Japan -- about the likely failure of the traditional utility business model, as revenues decline once customers can self-generate electricity on an economic basis using solar PV and, eventually solar PV + battery storage.

One response is to charge customers a fixed amount for maintaining the grid, even if they reduce their consumption significantly based upon self-generation.  RMI's study suggests that such approaches only prolong the inevitable.  Over the next 10-15 years, almost everywhere in the U.S. a combination of solar PV + battery storage will become economically optimal, causing customers to purchase much less power and pushing down utility revenues.

The RMI study posits maximum potential customer defection in the Northeast U.S. at 50% of residential and 60% of commercial customers by 2030.

They highlight the need for new utility business models and new regulatory approaches to avoid this.  Of course, the faster on-grid electricity prices rise ... the faster defection will occur.  And the faster solar PV and storage costs decline ... well, you get the picture.

According to RMI, "although they could represent significant load loss, customers’ grid-connected solar-plus-battery systems can potentially provide benefits, services, and values back to the grid, especially if those value flows are monetized with new rate structures, business models, and regulatory frameworks."

But there is a major risk of a huge new group of centralized generation "stranded assets".

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Now think about the situation in Japan where on grid power is much more expensive, and the cost is going up much more rapidly, and the current central planning process to decide on "energy mix" is giving a major role for new coal-fired generation and nuclear -- two generation sources that are not currently "economic" and so are just not being built in the U.S. ... and in many cases being mothballed.  What is the likely result?

Renewables in ... Texas

Japanese involved in the energy business and energy policy with whom I speak often marvel at the U.S. "shale gas revolution".  They envy the U.S. access to cheap fossil fuels.  Yes, natural gas is dirt cheap and the U.S. is now, again, the #1 oil producer in the world.

But they are much less aware that the fastest growing area of electric power generation in the U.S. is not gas, but renewables -- solar and wind.  Well of course, they think, in someplace like California where liberals from Hollywood support a governor like Jerry Brown and drive aggressive renewables targets.

But wait, renewables in Texas -- the heart of the "oil patch"?

Indeed, Texas is the #1 producer of wind power in the U.S.A.

And this article in Scientific American highlights how solar PV is going to play a major role in Texas.

Austin, Texas plans almost 1GW of utility scale solar supply by 2025.  And they plan to do it while maintaining affordability -- requiring lower than average utility bills and holding annual increases below 2% (the Kuroda BOJ inflation target, coincidentally).

Well, the article focuses on liberal Austin, Texas, home to University of Texas, Austin and the State Capital.  But Austin is a city of almost one million population, and growing very rapidly.  Austin's electric utility is at 25% renewable energy supply today and plans to be at 55% renewables by 2025.

It is indeed a Brave New World when a major city in the heart of the oil patch plans to be a 55% renewable electricity supply within ten years.

Meanwhile, Japan is building lots more coal plants and hopes to get to ... maybe 25% renewables by 2030?  And they divide the world into "baseload" and "non-baseload"?  Huh?

Cheap Oil ... will not kill Solar

I just read an interesting short Bloomberg article about why solar PV will survive cheap oil prices.  Of course, it is titled "Seven Reasons ... "  I hate these list-like articles ... attempts to attract online readers who are accustomed to to bite-sized content, rather than serious analysis.

And, of course, the article has the obligatory cool chart.  The same readers who want a "seven reasons" headline and a bullet point list also want charts!

But this chart I really do enjoy.  A reprinted Bernstein research comparison of cost of solar and various fossil fuels, per mmbtu equivalent.  Yes, solar is still more than Henry Hub gas.  But look at that declining cost curve!

Electricity Storage Makes Dramatic Advances

This morning (January 18 2015) the Nikkei carries an article highlighting a Sumitomo Denko announcement of their plan to cut the cost of energy storage to "1/10" of current levels.  Sounds impressive.

Well ... not quite THAT impressive.  The article focuses on Sumitomo Denko's "Redox Flux" batteries.  Yes, these are one of several impressive battery technologies now being advanced globally.  Sumitomo Denko's target is to cut cost to 20,000 to 30,000 yen per kWh, and to have a large scale product available commercially by 2020.  The important points -- redox flow batteries do not have a limited number of cycles, so conceivably can last over a decade and be consistent with the life of a solar PV facility.  This compares with Lithium Ion and NAS, which have limited cycle lifes.  Also, Redox Flow is safer.

The article does not mention any of the other recent efforts OUTSIDE Japan involving redox flow (more specifically vanadium redox flow) that have been in the renewables trade press over the past year.  I collected a few of these in recent months.  These products are NOT in the 200,000-300,000 yen per kWh range.  Rather, prices are already sliding toward the $500 per kWh range (around 60,000 yen at current exchange rates), and are likely to go lower fast.

So if Sumitomo Denko does not roll out its product until 2020, the main question is, will the market have already passed it by?  Has the market already, today, passed it by?

CellCube model batteries:  Gildemeister -- already available.

http://energy.gildemeister.com/en (now part of DMG Mori Seiki)

http://www.greentechmedia.com/articles/read/the-german-american-vanadium-flow-battery-connection

Unienergy -- currently $700 to $800 per kWh storage, when scale up will be around $500.

http://www.greentechmedia.com/articles/read/unienergy-brings-next-gen-vanadium-flow-battery-to-commecial-scale

Imergy -- driving costs down from $500 toward $300 per kWh storage.

http://www.greentechmedia.com/articles/read/imergys-slag-to-energy-storage-vanadium-recipe

http://www.theatlantic.com/technology/archive/2014/04/the-forever-battery/361167/

Eos Energy -- $160 per kWh storage product now taking orders for 2016 delivery!

http://cleantechnica.com/2015/01/29/eos-energy-storages-aurora-battery-system-commercially-available-2016-160kwh/

For a note on ViZn's Zinc Iron Redox Flow batteries, see Peter Detwiler's November 2014 Forbes Post:

http://www.forbes.com/sites/peterdetwiler/2014/11/21/vizns-zinc-iron-redox-flow-battery-another-storage-company-in-the-game/

And his 2014 year-end post on storage generally as one of the ten major themes of the past year:

http://www.forbes.com/sites/peterdetwiler/2015/01/07/2014-energy-story-2-storage-entered-the-game/

U.S. Nuclear -- Shrinking of Natural Causes?

In Japan, there is a fierce debate below the surface over whether to attempt restart of nuclear power plants after they finish their initial 40-year license terms.  Kansai Electric (KEPCO) is the Japanese utility most reliant on nuclear, traditionally, and it has recently announced an intention to seek a license extension for 2 plants that will soon reach the end of their initial 40 years.

What about in the U.S.?  Well, not so long ago there was talk of a nuclear revival.  New smaller, cheaper and safer plants would allow nuclear power to play a key role in helping the U.S. meet its greenhouse gas emission reduction targets.  But the nuclear industry is shrinking again.  Why?

Pure economics.  The nuclear industry has a long history of cost overruns.  The massive investments required place a huge financial lever on any hiccups or surprises, and these are very complex, complicated operations.

The New York Times reports that Vermont Yankee, a 42-year old plant, will shut down at the end of this year (next week).  Vermont Yankee recently had its license extended until 2032 -- 60 years from start.  And there is nothing "wrong" at the plant.  There are not massive earthquakes, nor tsunami, in Vermont.

It simply cannot compete with cheap natural gas-fired electricity generation.

Will we ever get to the next generation of small, cheap nuclear reactors with lots of "passive safety" features that make them, literally, accident proof?  Maybe.  But the odds do not look so good in the near future, with oil and gas prices now lower globally than at any time since the short dip after the 2008 financial crisis, and the price drops being driven by factors that seem sustainable, at least over the next few years.

E.On Spin Off -- An Important Crossroads

This month began with some exciting news for renewables in Germany.

E.On, one of the largest utilities in Europe, announced a corporate split.  The company will divide into (1) traditional generation (coal, nuclear, natural gas), and (2) the rest of the company -- including renewables and both electric and gas distribution.  E.On's announcement was lauded by investors and analysts.  No doubt the investors are focused on E.On's 5.2 billion Euro of write-downs this year, mostly for the now "risky" generating assets, and are delighted to see a separation into a "good" business of stable, low risk cash flows and a "bad" business of risky, mostly fossil fuel generation.

Interestingly, it is the traditional generation business that is seen as extremely risky.  As renewables cut into demand, who is to say whether a new coal plant will ever pay back its cost?  As nuclear is regulated out of existence in Germany, it will become a pure decommissioning operation.  E.On and other utilities say that their traditional business models no longer work.

How long before Japan gets to this point?  Will the "internal" separations of generation and distribution businesses now being mapped out for Japan get anywhere close to this? ... when the businesses remain under holding companies?  How long will these changes be held at bay?

Why are there plans being announced for massive investments into coal-fired generation in Japan?  Yes, the economics are different in Japan than Europe, but as these plans go forward it will put enormous pressure on regulators over future decades to sustain traditional business models.