The sun sends us more energy in an hour than we consume in a year. Now with the world demanding more and more power, we find ourselves like thirsty nomads in the desert searching for any drops of water. Yet, it is all around us.
In the past few decades, our attempts to use solar systems have been hampered a number of factors. The supply chain to produce panels in large quantities had been inefficient and so prices remained high. That all changed in the past five years with large companies entering the sector and bringing scale and efficiency to the manufacturing process. Solar panels prices have dropped 80% in the past five years. Prices will fall another 50%. This will bring solar in line with grid power with no subsidies in more than ten states.
Second, installation of solar has been an inefficient practice with variable quality of installations. Now, however, with the rise of professional companies such as SolarCity, Mercury and others, installation quality is high and consistent. The cost of installation is also coming down with new mounting systems.
Third, solar power was historically a large capital expense that a building owner had to bear until the payoff came. Now, however, with the introduction of solar leases and commercial power purchase agreements, owners no longer pay upfront for solar. Homeowners can pay a set monthly fee upon the installation of solar system which offsets a portion of their utility bill. This lease fee plus whatever remains of the grid bill is less than what they paid before the installation.
Commercial building such as malls, warehouses, schools and others can also make similar arrangements. In their case the building gets a solar system with installation for no upfront payment and the owner agrees to buy the electrical output of the panels for a set period.
These financial arrangements have enabled the number of systems installed to explode.
This year, the US will install ten times the amount of solar power than in 2009. And we can install ten times that in the next few years. That will represent a small portion of total US energy consumption, but it will begin to shave the peak of power demand. Solar produces the most power exactly when we need it – at peak times in the day. This lets utilities spend less on importing expensive electrons from other regions or building new plants for peak load. Those savings can be passed onto consumers.
Inexpensive, renewable power creates jobs – lots of jobs. When energy is cheap and predictable companies can afford to lower their prices.
The price of all goods and services comes down as energy prices fall and are no longer dependent on the price of fossil fuels.
Utilities using coal power today face a myriad of regulatory and cost uncertainties. They are forced to choose between adding expensive filters to their plants or shutting them down. The price of coal continues to fluctuate as China extracts more and more energy from the ground globally.
Along with the solar revolution, we are entering into an era of inexpensive energy storage.
As solar systems get cheaper and cheaper we will need devices to store the excess energy they produce. Battery systems will fall by 50% in price in the next few years. This will enable both grid and distributed storage.
Grid storage is the use of large systems to store energy created by today’s fossil fuel plants. Coal plants waste 40% of their nighttime output and put it right into the ground. Instead this energy can be stored for peak times.
We can also deploy storage at the building and home level.
This will enable solar systems to power more of a structure’s needs throughout the day and night. It also gives more resilience to our grid.
With the rise of cyberattacks against our infrastructure it will good to have a distributed system of energy production and storage. Storms and other natural disasters take out power for days to weeks. We can recover much faster with distributed systems. This lessens loss of productivity during these outages.
Commercial building and residences are starting to lower their electrical demand through efficiency such as LED devices. These bulbs have traditionally been too expensive to justify their cost. That has also changed with prices falling quickly for these devices. A 10 watt LED gives off the light of a 75 watt traditional bulb and lasts five times as long.
The same solar and storage system can cover more and more of a building’s needs once it has reduced its demand through efficiency.
While the headlines continue to scream about fossil fuel conflicts and problems, the solar giant is slowly rising. Generations from now people will wonder what all the fuss was about the way we wonder why it took so long for people to figure out that the world is round.
Jack Hidary is Chairman of Samba Energy and co-founder and former CEO of Dice.com (NYSE: DHX).
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