Solar energy and the rise of the energy internet: Future of Energy P4

We’ve spoken about the fall of dirty energy. We’ve spoken about the end of oil. And we just spoke about the rise of electric vehicles. Next, we’re going to talk about the driving force behind all these trends—and it’s set to change the world as we know it in just two to three decades time.

Nearly free, limitless, clean, renewable energy.

It’s kind of a big deal. And that’s why the rest of this series will cover those trends and technologies that will transition humanity from an energy-vulnerable to an energy-abundant world while covering the effects this will have on our economy, world politics, and on your everyday life. This is some pretty heady stuff, I know, but don’t worry, I won’t walk too fast as I guide you through it.

Let’s start off with the most obvious form of nearly free, limitless, clean, renewable energy: solar power.

Solar: why it rocks and why it’s inevitable

By now, we’re all familiar with what solar power’s all about: we basically take big energy absorbing panels and point them toward our solar system’s largest fusion reactor (the sun) with the goal of converting sunlight into usable electricity. Free, limitless, and clean energy. Sounds amazing! So why didn’t solar take off decades ago after the technology was invented?

Well, politics and our love affair with cheap oil aside, the main stumbling block has been the cost. It used to be stupidly expensive to generate large amounts of electricity using solar, especially compared to burning coal or oil. But as they always do, things change, and in this case, for the better.

You see, the key difference between solar and carbon-based energy sources (like coal and oil) is that one is a technology, while the other is a fossil fuel. A technology improves, it becomes cheaper and provides a greater return over time; whereas with fossil fuels, in most cases, their value rises, stagnates, becomes volatile, and finally declines over time.

This relationship has played out all too clearly since the start of the 2000s. Solar technology has seen the amount of power it efficiently generates skyrocket, all while its costs have come crashing down (75 percent in the last five years alone). By 2020, solar energy will become price-competitive with fossil fuels, even without subsidies. By 2030, solar energy will cost a tiny fraction of what fossil fuels do and work more efficiently. Meanwhile, oil has exploded in cost through much of the 2000s, alongside the costs (financial and environmental) of building and maintaining fossil fuel power plants (like coal).

If we follow the solar trendlines, futurist Ray Kurzweil has predicted that solar could meet 100 percent of today’s energy needs in just under two decades. Already solar power generation has doubled every two years for the past 30 years. Likewise, the International Energy Agency predicted that the sun (solar) will become the world’s largest source of electricity by 2050, far ahead of all other forms of fossil and renewable fuels combined.

We’re entering an age where no matter how much fossil fuel energy is available, renewable energy will still be cheaper. So what does this mean in the real world?

Solar investment and adoption reaching the boiling point

The change will come slowly at first, then all of a sudden, everything will be different.

When some people think of solar power generation, they still think of standalone solar power plants where hundreds, maybe thousands, of solar panels carpet a massive swath of desert in some remote part of the country. To be fair, such installations will absolutely play a big part in our future energy mix, especially with the kind of innovations coming down the pipeline.

Two quick examples: Over the next decade, we’re going to see solar cell technology increase its ability to convert sunlight to energy from 25 percent to nearly 50 percent. Meanwhile, larger players like IBM will enter the market with solar collectors that could magnify the power of 2,000 suns.

While these innovations are promising, they only represent a fraction of what our energy system will evolve into. The future of energy is about decentralization, about democratization, it’s about power to the people. (Yes, I realize how lame that sounded. Deal with it.)

What this means is that instead of electricity generation being centralized among the utilities, more and more electricity will begin to be generated where it’s used: at home. In the future, solar will allow people to generate their own electricity at a lower cost than getting that electricity from their local utility. In fact, this is already happening.

In Queensland, Australia, electricity prices fell to nearly zero in July of 2014. Normally, prices range around $40-$50 per megawatt hour, so what happened?

Solar happened. Rooftop solar, to be exact. 350,000 buildings in Queensland have rooftop solar panels, together generating 1,100 Megawatts of electricity.

Meanwhile, the same is happening across large regions of Europe (Germany, Spain, and Portugal, especially), where residential-scale solar has reached “grid parity” (costs the same) with average residential electricity prices powered by traditional utilities. France even legislated that all new buildings in commercial zones be built with plant or solar rooftops. Who knows, maybe similar legislation will one day see the windows of entire buildings and skyscrapers replaced with transparent solar panels—yes, solar panel windows!

But even after all of this, solar power is still only one-third of this revolution.

Batteries, not just for your toy car anymore

Just as solar panels have experienced a renaissance in development and wide-scale investment, so have batteries. A variety of innovations (ex. one, two, three) are coming online to make them cheaper, smaller, more environmentally friendly, and most important, allow them to store vast amounts of power for much longer. The reason behind these R&D investments is obvious: batteries help store the energy solar collects for use when the sun doesn’t shine.

In fact, you may have heard about Tesla making a big splash recently when they debuted the Tesla Powerwall, an affordable household battery that can store up to 10-kilowatt hours of energy. Batteries like these allow households the option of going entirely off the grid (should they also invest in rooftop solar) or simply provide them with backup power during grid outages.

Other battery advantages for the everyday household include a much lower energy bill for those households that opt to stay connected to the local power grid, particularly those with dynamic electricity pricing. That’s because you can adjust your energy usage to collect and store energy during the day when electricity prices are low, then go off the grid by drawing household power from your battery at night when electricity prices go up. Doing this also makes your home that much greener because reducing your energy footprint during the night displaces energy normally generated by dirty fuels, like coal.

But batteries won’t just be a game changer for the average homeowner; large businesses and utilities are also beginning to install industrial sized batteries of their own. In fact, they represent 90 percent of all battery installations. Their reason for using batteries are largely the same as the average homeowner: it allows them to collect energy from renewable sources like solar, wind, and tidal, then release that energy during the evening, improving energy grid reliability in the process.

That’s where we come to the third piece of our energy revolution.

The rise of the Energy Internet

There’s this argument that keeps getting pushed by opponents of renewable energy who say that since renewables (especially solar) can’t produce energy 24/7, they can’t be trusted with large-scale investment. That’s why we need traditional “baseload” energy sources like coal, gas, or nuclear for when the sun doesn’t shine.

What those same experts and politicians fail to mention, however, is that coal, gas, or nuclear plants shut down all the time due to faulty parts or planned maintenance. But when they do, they don’t necessarily shut off the lights for the cities they serve. We have something called a national energy grid. If one plant shuts down, energy from a neighboring plant picks up the slack instantly, backing up the city’s power needs.

With some minor upgrades, that same grid is what renewables will use so that when the sun doesn’t shine or the wind doesn’t blow in one region, the loss of power can be compensated for from other regions where renewables are generating electricity. And by using the industrial sized batteries mentioned above, we could cheaply store vast amounts of renewable energy during the day for release during the evening. These two points mean that wind and solar can provide reliable amounts of power on par with traditional baseload energy sources.

This new network of domestic and industrial scale trading of renewable energy will make up a future “energy internet”—a dynamic and self-regulating system that (like the Internet itself) is immune to most natural disasters and terrorist attacks, while also not controlled by anyone monopoly.

At the end of the day, renewable power is going to happen, but that doesn’t mean vested interests won’t go down without a fight.

Solar eats utilities’ lunch

Funny enough, even if burning coal for electricity was free (which is largely the case in Australia, one of the world’s largest coal exporters), it still costs money to maintain and operate the power plant, then transport its electricity over hundreds of miles of power lines to reach your home. All that infrastructure makes up a large chunk of your electricity bill. And that’s why so many of the Queenslanders you read about above opted to sidestep those costs by generating their own electricity at home—it’s just the cheaper option.

As this solar cost advantage accelerates to suburban and urban areas around the world, more people will opt out of their local energy grids in part or in full. That means the costs of maintaining the existing utility infrastructure will be borne by fewer and fewer people, potentially raising monthly electricity bills and creating an even larger financial incentive for “late solar adopters” to finally invest in solar. This is the coming death spiral that keeps the utility companies up at night.

Watching this freight train charge their way, some of the more backward utility companies have opted to fight this trend to the bloody end. They have lobbied to change or end the “net metering” policies that allow homeowners to sell excess solar energy back into the grid. Others are working to get lawmakers to approve surcharges on solar installations, while yet others are working to freeze or reduce the renewable and efficiency energy requirements they’ve been legislated to meet.

Basically, the utility companies are trying to get governments to subsidize their operations and, in some cases, legislate their monopolies over local energy networks. That’s definitely not capitalism. And governments should not be in the business of protecting industries from disruptive and superior new technologies (i.e. solar and other renewables) that have the potential to replace them (and benefit the public to boot).

But while huge sums of lobbying money are spent trying to slow the advance of solar and other renewables, the long term trendlines are fixed: solar and renewables are set to eat utilities’ lunch. That’s why forward-thinking utility companies are taking a different approach.

Old world utilities help lead the new world energy order

While it’s unlikely that most people will completely unplug from the grid—who knows, what happens when your future son drunkenly drives your Tesla into the house battery in your garage—most people WILL begin using their local energy grids less and less with each passing decade.

With the writing on the wall, a few utilities have decided to become leaders in the future renewable and distributed energy network. For example, a number of European utilities are investing a portion of their current profits into new renewable energy infrastructure, such as solar, wind, and tidal. These utilities have already benefitted from their investment. Distributed renewables helped to lower the strain on electric grids during hot summer days when demand was high. Renewables also reduce utilities’ need to invest in new and expensive centralized power plants and transmission lines.

Other utility companies are looking even further down the line to transition from being purely energy providers to becoming energy service providers. SolarCity, a startup that designs, finances, and installs solar energy systems, has begun to shift towards a service-based model where they own, maintain, and operate people’s home batteries.

In this system, customers pay a monthly fee to have solar panels and a house battery installed in their home—potentially connected to a hyper-local community energy grid (microgrids)—and then have their home energy managed by the utility. Customers would only pay for the energy they use, and modest energy users will see their energy bills slashed. They may even make a profit by using the surplus energy their homes generate to power their more power-hungry neighbors.

What nearly free, limitless, clean energy really means

By 2050, much of the world will have to entirely replace its aging energy grid and power plants. Replacing this infrastructure with cheaper, cleaner, and energy maximizing renewables just makes financial sense. Even if replacing this infrastructure with renewables cost the same as replacing it with traditional power sources, renewables still win. Think about it: unlike traditional, centralized power sources, distributed renewables don’t carry the same negative baggage like national security threats from terrorist attacks, use of dirty fuels, high financial costs, adverse climate and health effects, and vulnerability to wide-scale blackouts

Investments in energy efficiency and renewables can wean the industrial world off coal and oil, save governments trillions of dollars, grow the economy through new jobs in renewable and smart grid installation, and reduce our carbon emissions by around 80 percent.

As we head into this new energy era, the question we need to ask is: What does a world with unlimited energy really look like? How will it impact our economy? Our culture? Our way of life? The answer is: more than you think.

We’ll explore what this new world will look like at the end of our Future of Energy series, but first, we need to mention the other forms of renewable and nonrenewable energy that may power our future. Next up: Renewables vs the Thorium and Fusion Energy Wildcards: Future of Energy P5.

FUTURE OF ENERGY SERIES LINKS

The slow death of the carbon energy era: Future of Energy P1

Oil! The trigger for the renewable era: Future of Energy P2

Rise of the electric car: Future of Energy P3

Renewables vs the Thorium and Fusion energy wildcards: Future of Energy P5

Our future in an energy abundant world: Future of Energy P6