Generally speaking, solar power, wind power, and electric vehicles have so many benefits and are so much better than currently dominant technologies that I think it’s inevitable they will take over their respective markets. But that’s not to say that they haven’t faced big barriers and don’t continue to face big barriers. With thanks to The Climate Reality Project for the idea, I’m running down seven of the ideas and developments that 1) have already helped these clean-tech solutions break through big barriers, and/or 2) will help them get to the next stage.
The humble (or not so humble) feed-in tariff is connected to the majority of the solar and wind power capacity installed in the world. If this policy is new to you, it’s actually quite simple, so take a second to prepare for your next dinner chat.
Basically, solar or wind power plant owners sell all of the electricity they produce to the grid for a set, financially lucrative price. The rate is guaranteed for a specified period of time (15 years, 20 years, etc.). The point of the policy is that it can offer customers a good return on their investment, and thus spur growth of these clean energy markets.
As technology costs fall, the tariff rates paid to owners of new installations can systematically and logically be lowered over time in order to reduce the overall costs of the program. Additionally, different rates can be offered to different types of technology (solar versus wind, for example) or projects of different sizes (e.g., a higher rate can be offered to small, rooftop solar than to utility-scale solar).
In the charts below regarding the global solar photovoltaic (PV) market, you can see how dominant feed-in tariffs are (or how dominantly effective they are) compared to other solar incentives. It’s a very similar story for wind power.
Feed-in tariffs are still the premier market enabler for solar PV power. Note, also, that self-consumption and “pure competitive PV” is already making up 5% of the pie. Courtesy © IEA Photovoltaic Power Systems Programme.
While not widely used outside of the US, net metering has been a critical tool stimulating US solar growth and fairly compensating solar homeowners and small businesses for the extra electricity they generate from their solar systems (beyond what they use). Generally, the way it works is that the solar-generated electricity is compensated at the retail rate of electricity, but it is sometimes more nuanced than that.
Solar Leasing and PPAs
Like ’em or hate ’em, solar leasing and power purchase agreements (PPAs) have been a huge part of solar power growth in the United States and some other markets. In the residential segment of the US solar market, it’s the method through which a huge majority of current solar users have gone solar.
Why? Well, I think the reason is pretty simple. Even once the lifetime cost of solar panel systems is far lower than retail electricity over the same period of time, the upfront cost is very high — in the tens of thousands of dollars. Several companies came along and broke that barrier down by offering $0-down solar loans, with the price of the systems paid back over time but in monthly payments that are lower than the price of electricity from the grid.
Zero-down solar loans have finally become quite common and competitive as well, cutting into the usefulness of solar leasing/PPAs, and even offering a better deal in many cases, but solar leasing/PPAs have been a very important step in the solar revolution.
Community Solar Gardens
Community solar gardens haven’t put a lot of solar on the grid yet, but just wait.
For various reasons, most of the population can’t go solar. Whether it’s because they rent, live in condos or apartments, have unsuitable roofs, or something else, solar simply isn’t an option (or a logical option) for the majority of people. However, community solar gardens offer such people a way to go solar. They offer a group of people the opportunity to jointly invest in a medium-sized solar project built somewhere other than on their roofs (on a vacant lot in the community, for example). The small group of investors together reap the financial rewards from the electricity sent into the grid.
Yieldcos offer a similar opportunity on a larger scale to mainstream investors. Basically, large solar and wind farm owners offer investors the opportunity to put their money into low-risk solar and wind farms that offer good, stable returns. On a regular basis, a portion of the profits from the projects within the yieldco are paid to the investors. Yieldcos are just beginning to take off, but they seem to offer the next big step in solar and wind power growth.
Electric Vehicles of Desire
Moving away from clean electricity production to clean transportation that runs on electricity, let’s talk electric cars. Electric cars have long been better than gasoline-powered cars in many ways — they’re a few times more efficient; they offer instant torque (excellent initial acceleration that’s a lot of fun and very useful); they’re much more convenient (plug in when you get home and never have to go to the gas station!); they keep our air and water clean, and our climate livable; they cut our dependence on foreign oil (resulting in a better economy and improved national security); they are super quiet; and they require much less maintenance (saving money and time). However, one major barrier to adoption for years was that many electric cars were slow, small, and had generally poor performance.
Then came Tesla. Its founders realized that in order for a new technology to gain a foothold in the mass market, it had to be seen as a much better choice than the incumbent technology. Tesla produced a couple of “vehicles of desire” — the Tesla Roadster (a super-quick sports car) and the Tesla Model S (a beautiful sedan with the performance of a top-end sports car or even supercar) — and is on its way to producing an affordable, awesome, mass-market electric car. Wowing the auto press and consumers alike, Tesla is now one of the hottest companies in the world, and the electric car market is booming. Furthermore, several other car companies are now producing these electric vehicles of desire.
Courtesy of © Tesla Motors. Global electric car sales by year.
There’s no denying it: cheaper batteries are like winning lottery tickets. They make electric cars much cheaper, and they make energy storage for solar and wind power more competitive, which make solar and wind power more competitive. Luckily, there are dozens of good companies as well as dozens of research institutes working to improve battery chemistries. Furthermore, economies of scale from the growing battery market are bringing down costs as well. Cheaper batteries are going to be a big part of the low-carbon economy, and they’re arriving!
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