November 23, 2014
My friend Ray Kurzweil projects the U.S. will meet 100 percent of its electrical energy needs from solar in 20 years. Elon Musk is a bit more conservative, pegging it at 50 percent in that timeframe. While the growth of solar may seem slow to some, it’s fair to say it’s in the midst of its “deceptive phase,” on the road to disruption. For example, a 30 percent increase in solar energy production per year, means 1 percent today grows to 1.3 percent in 3 years. It also means that in 20 years (7 doublings), we’ll see a 128-fold increase. Either way, if Ray and Elon are even close, there is a trillion dollars up for grabs (as well as the future of our planet), and the future is bright. Let’s take a closer look at the converging technologies driving this future… The cost of solar panels is dropping exponentially. The first and most important technological change is the falling cost per watt of silicon photovoltaic cells over the past few decades. Check out the plummeting cost from $76 in 1977, to less than $0.36 today.
The International Energy Agency predicts that we will produce 662 GigaWatts of solar energy by 2035 following a $1.3 trillion investment in this area, but frankly this estimate is “highly conservative.” The second technology at play is satellite-Earth imaging, which enables companies like solar City to make rapid and accurate decisions on solar panel installations. These days, an installer can check out your rooftop on Google Earth and determine in minutes if you are a good candidate. Super-simple. Energy Storage Mechanisms Are Improving Rapidly The third key technology transforming our energy economy is battery storage. The ability to take solar energy captured during the day, and time-shift it into the night. Here to the change has been very significant, with a 50%+ reduction over the past four years, and an additional 50%+ reduction by 2020.
In addition to this ongoing cost reduction, we’re about to see a massive increase in battery production. Tesla’s Gigafactory alone will produce 35 Gigawatts worth of the batteries by 2020, more than 2013′s total global battery production capacity.
Electric Vehicles (EVs) Tesla’s Gigafactory also supports the production of 500,000 electric vehicles per year. The rapid rise (see below) of Electric Vehicle (EV) production will play a critical role as well.
6 D’s: Tying It All Together The convergence of solar, batteries and EVs will democratize energy production and offer billions of people access to cheap, carbon-neutral energy. Looking at solar energy thru my 6 Ds paradigm of exponential technologies may offer some added insights:
- Digitized: How we manufacture, measurem and control solar electricity has become digitized, and therefore hopped on an exponential growth path.
- Deceptive: Today we are in the deceptive phase of solar growth. Remember, a 30% increase per year means we are only 7 doublings, or 21 years, away from a 128-fold increase.
- Disruptive: With 5,000 times more solar hitting the Earth’s surface in a year than humanity uses today, solar has plenty of ‘head-room’ for growth. The UBS study said it well: “Our view is that the ‘we have done it like this for a century’ value chain in developed electricity markets will be turned upside down within the next 10-20 years, driven by solar and batteries.”
- Dematerialized: a distributed, pervasive solar grid will create a far more robust and capable energy grid. Again, from the UBS report, “(Today’s) large-scale power generation, will be the dinosaur of the future energy system: Too big, too inflexible, not even relevant for backup power in the long run”.
- Demonetized: Ultimately, energy from the Sun is free. Better yet, the poorest countries in the world are also the sunniest. Imagine a world where there is a squanderable amount of cheap and clean energy?
- Democratized: As said above, solar scales globally, available to everyone, even in the poorest countries in the world.
It’s Time to Join the Revolution UBS continues:
“By 2025, everybody will be able to produce and store power. And it will be green and cost competitive, i.e., not more expensive or even cheaper than buying power from utilities. It is also the most efficient way to produce power where it is consumed, because transmission losses will be minimized. Power will no longer be something that is consumed in a ‘dumb’ way. Homes and grids will be smart, aligning the demand profile with supply from (volatile) renewables.”
UBS predicts the payback time for unsubsidized investment in electric vehicles plus battery storage plus rooftop solar will be around 6 to 8 years by 2020 (see below).
From my perspective, solar must be considered a central driver for our future economy. How will this affect your business? Industry? Life?