An Energy Expert Explains How Solar Power Could De-Carbonize the Grid at Basically No Cost
What do you think the next five years will bring in solar power?
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There’s been an extraordinary collapse in the price of solar panels in the past five years; more than an 80 percent price reduction. And the frontiers for further price reduction are significant. What does it cost to get something engineered, permitted, hooked up? Just as a benchmark, the Germans install solar panels at half the price that we do because they have made further advances on soft costs. So a 50 percent reduction awaits us by clearing up bureaucratic clutter. That is a big deal.
So solar’s big challenge now is to clear up this red tape?
Yes. With these dramatic price drops, solar becomes a contender for both electricity markets and customer loyalty. And when you become a mainstream player, you get grown-up enemies. Solar is disruptive to energy markets. It used to be that German utilities made all their money in the energy markets in the middle of the day when prices were high. Then solar comes along and the power prices become incredibly low because sunshine is free. So all the conventional generators start losing money, a lot of money. German utilities have lost 75 percent of their market value in the past five years to solar. If that’s not a wake-up call for the utility business, I don’t know what is.
What’s the solution?
The wrong answer—which some utilities are pursuing vigorously—is to charge anyone with a solar panel a lot of money every month just for the privilege of having a solar panel. That’s a very bad idea for America because it means we’re going to deprive ourselves of free energy. It’s bad for homeowners because it deprives them of choice. And it’s bad for utilities because it’s basically telling your customers, "You’re not actually customers, you’re hostages."
The right way is for utilities to say, okay, it turns out there are a lot of ways to make electricity, and there are a lot of ways to save electricity. Xcel Energy, an eight state utility, is doing that; they’ve written a 65-page paper for the Minnesota Public Utilities Commission saying they want a 40 percent reduction in emissions by 2030, and they want to be the agency that drives a reinvention of the whole business. If we do that, we can de-carbonize the grid at essentially no cost, something I could not have said five years ago. That’s crazy-good news.