Every year some of us feel compelled to sum up the year and highlight what we believe are the major stories. Guilty here as well. 2016 might have been a year many of us want to forget – especially with the ugliest semblance of what was supposed to pass for public discourse in our election. Yet a lot of very auspicious events occurred on the electric energy front. Let’s take a quick look at these developments by sector, with two caveats in mind:
- I am going to overlook some important milestones, and
- I will be somewhat biased towards the most recent events. They tend to stick more firmly in the mind (but they are also closer to the future, so perhaps have more relevance)
Solar: The recent U.S. solar installation numbers are astonishing. Greentech Media and the Solar Energy Industries association reported a record third quarter, at over 4,100 megawatts (MW) installed, with expected annual numbers exceeding 14,000 MW. Put another way, that is nearly one megawatt installed every half hour. For the first three quarters, new solar capacity ranked second only to natural gas-fired generating capacity.
Utility scale solar crushed all other sub-sectors, representing 77% of the solar capacity installed in the third quarter. Most astonishing of all: GTM/SEIA indicate a total of 54,000 MW of utility-scale solar either contracted or announced to be built in the future. Not all of this is likely to be realized. Nonetheless, the number is staggering.
Continued falling costs in panels and elsewhere don’t hurt either (unless you happen to manufacture panels). Given a significant increase in module production – chiefly out of China – combined with markedly declining Chinese demand, the market saw a significant supply overhang develop this year (yes, oversupply again, for a third time in recent years). As a consequence, panel prices fell from the 50 cents/watt into the mid 30 cents/watt range.
This helped feed a power global pricing dynamic, so that a project in Chile’s near rainless Atacama Desert was priced at 2.91 cents per kilowatt-hour (kWh), or roughly half the price of coal. That was in August. A month later a jaw-dropping price of 2.42 cents was tendered for 350 MW in sunny Abu Dhabi. To put those prices in perspective, the levelized costs (all-in, capital, fuel, operating and maintenance) for a new gas-fired plant in the U.S. is approximately 5.6 cents per kWh.
Meanwhile rooftop solar has shown its first sign of weakness, with small year-over-year declines. However, community (shared) solar shows signs of being able to pick up that slack in the long-term. Massachusetts, Minnesota, and New York began to accelerate their community solar programs and developers are popping up all over the place.
Community solar addresses a problem that currently limits distributed solar sales: not every individual has access to a south-facing rooftop. Apartment dwellers and others can solve that problem by taking a fractional stake in larger arrays that are more cost-effective to install (as an example, I have panels offsetting my bill that are located 35 miles away, but the net effect is the same as having them on my roof).
The National Renewable Energy Labs sees this shared solar potential skyrocketing to as much as 32-49% of the distributed solar market, ranging from 3,100 to 6,300 MW of cumulative installed projects by 2020. Lots of room to grow here…
Storage: It seemed energy storage became everybody’s favorite energy topic in 2016, as the industry started coming of age. The biggest coming-of-age storage story featured utility-scale storage as an emergency response to the massive leak in southern California’s Aliso Canyon gas storage facility. Faced with a need to rapidly make up for lost gas-fired capacity, San Diego Gas & Electric (SDG&E) and Southern California Edison received permission from the Public Utilities Commission to push for expedited storage projects.