Rethinking Energy 2020-2030: 100% Solar, Wind, and Batteries is Just the Beginning

I'm Dr Adam Dorr, a research fellow 
at RethinkX. We are on the cusp   of the most profound disruption of the energy 
sector in over a century. In our new report,   we analyzed the feasibility of 
building electricity systems   comprised exclusively of solar photovoltaics, 
onshore wind, and lithium-ion batteries. Our   findings show that it is both physically possible 
and economically affordable to meet 100 percent of   our electricity needs all day all night all 
year round, with these three technologies.   We discussed the extraordinary implications 
that the shift to a 100 percent solar, wind,   and battery system would entail, and we highlight 
some of the choices that regions will need to make   in order to capture the enormous benefits 
that this disruption stands to offer.   Our research utilizes the Seba Technology 
Disruption Framework to identify imminent   disruptions and to understand the dynamics that 
drive them. Like others throughout history,   this disruption is the result of a convergence 
of several key technologies. The costs of solar,   wind, and batteries, have been improving 
relentlessly for several decades,   and now incumbent coal, gas, and nuclear power 
technologies can no longer compete.

This makes   the disruption inevitable because of economic 
forces alone. The disruption won't happen   everywhere at exactly the same time, but for 
those regions that choose to lead the disruption,   a 100 percent solar, wind, and battery system 
is possible as soon as 2030. Conventional coal,   gas, nuclear, and other power generation assets 
will be stranded by the disruption and so no   new investments in these technologies 
is rational from this point forward.   In all technology disruptions cost is the 
fundamental driving force. Just since 2010   the cost of solar pv has fallen 82 percent or an 
average of nearly 16 percent per year. We project   that it will continue to improve at 12 percent per 
year during the 2020s, and so by 2030 solar will   be more than 70 percent cheaper than it is today. 
The consistency is easier to see when the same   data are viewed on a logarithmic chart and it's 
precisely this consistency that makes these trends   so predictable.

In just two decades the cost 
of solar will have improved by a factor of 20.   Wind cost improvements are also 
substantial, 46 percent since 2010.   That's an average of almost 6 percent per year, 
and we project 5.5 percent per year during the   2020s for another 43 percent by the end of the 
decade, a 3x improvement in 20 years. Lithium-ion   batteries are even more impressive 87 percent 
since 2010 averaging nearly 20 percent per year,   and we project 15 percent improvement during the 
2020s totaling another 80 percent by 2030 for   an astounding 45x improvement in two decades.

conventional analyses almost always underestimate   cost improvements during disruption. Costs 
improve as market supply and demand expand   and the industry learns from experience, and 
conventional analyses often make linear forecasts   for market growth. In reality, disruption always 
follows an s-curve, the first phase of which is   exponential and this is what we're seeing now the 
global market for each of these three technologies   shows a beautifully consistent exponential 
curve. So why do disruptions follow an s-curve.   The answer is that it's because they're driven 
by causal feedback loops. For any new technology   falling costs increase demand which attracts 
more investment in production that in turn   expands supply and expanding supply lowers costs 
even further. At the same time, growing demand   also triggers more infrastructure investment and 
government support which also increase supply.   As supply expands the technology itself improves. 
The public becomes more accepting of it and   network effects emerge around leading brands and 
platforms all of which drive demand growth even   further.

So the entire process is characterized 
by acceleration with each feedback loop amplifying   the others in a virtuous cycle and at the same 
time, growing demand for the new reduces demand   for the old. Revenues for the old technology 
decline which causes supply to shrink. A smaller   supply means loss of economies of scale and so 
costs increase. At higher costs, which translate   into higher prices, demand falls.

Less demand also 
means less profit, less investment in production   and infrastructure, less government support, 
all of which cause supply to contract further,   and that in turn reduces public acceptance and 
weakens network effects. And so for incumbents,   the process is also an accelerating one where 
each factor catalyzes the others but in this case,   it's a vicious cycle of decline, and less demand 
for the old drives all the more demand for the   new. Now we've seen this pattern again and again 
for technologies of all different kinds throughout   history and in each case, the outcome is not a 
slow incremental transition but rather a rapid   and total transformation of the market that takes 
place over the course of just a decade or so.   Now because the rate of change is slow in the 
early years it almost always takes conventional   analysts and observers by surprise when disruption 
gets going.

We have every reason to expect that   this disruption of energy by solar, wind, and 
batteries, will follow exactly the same historical   pattern. The history of technology shows us that 
the exponential growth phase tends to continue   until the new technology comprises about 75 
percent of its global market ultimate size.   Now because most disruptions make their markets 
expand this means that the new technologies often   grow well beyond the size of the old system. 
So the reason we can be so confident that the   costs of solar, and wind, and batteries, will keep 
falling through the 2020s, is because the global   markets for these technologies will continue 
to grow exponentially in the decade ahead.   Conventional forecasts get disruption wrong. 
Major industry forecasts have made simple   linear projections for the growth of solar, 
for example, year after year for 20 years.   Now at the same time that disruption creates 
a new system it also wipes out the old system   and this isn't theoretical it has already 
begun with coal in the United States.   Year after year these same industry forecasts have 
been desperately trying to save coal from collapse   with wishful thinking.

But coal in the United 
States has been disrupted first by fracking,   and now by solar and wind. Solar and wind by 
themselves are now the cheapest way to generate   electricity and these are just global averages. In 
sunny places like California, it's already cheaper   to build a new solar plant today than to keep 
operating an old coal, gas, or nuclear plant,   and by 2030 it's no contest at all. So again 
we are not facing a slow energy transition,   we are facing a rapid and total energy 
transformation and it has already begun.   For our latest report, we analyzed California, 
Texas, and New England as case studies. We took   real-world data from systems operators for 
solar and wind power generation hour by hour   and normalized it from 0 to 100 percent correcting 
for capacity additions over time. This gives us a   direct indicator of the actual quantity of 
sunshine and wind available in each region.   We built a systems dynamics model to determine 
exactly how much battery energy storage   would need to go with any given amount of solar 
pv and onshore wind capacity in order to meet one   hundred percent of electricity demand year-round. 
We ran hundreds of thousands of iterations for   each region, and what we found is that there are 
thousands of different combinations of solar,   wind, and batteries, that could physically 
do the job, but it's a balancing act.   We can either build more solar panels, 
so that we can generate enough power   even on cloudy winter days, or we can build 
bigger batteries to charge up ahead of time.   But these combinations are not all equal.

of them are much more expensive than others.   So which combination is the least expensive? We 
discovered that the key to answering this question   and to understanding how 100 percent solar, wind, 
and batteries, is both achievable and affordable,   is what we call the Clean Energy U-curve. When 
we plot each viable 100 percent solar, wind,   and battery system according to its cost and its 
generating capacity, a clear u-shaped pattern   emerges, or more technically a cost function 
that is convex shaped. Systems with lots of   battery capacity but relatively little generating 
capacity will work but they'll be expensive. And   the same is true for systems with lots of solar, 
and wind but relatively little battery capacity.   So the overall relationship looks like this and 
there's a cost-optimal combination of solar,   wind, and batteries, a sweet spot, at the 
bottom of the u-curve, and for each region   it varies with climate and geography. But what 
is so counter-intuitive is where this sweet spot   is located.

It turns out that the lowest cost 
system will have between three and five times   more generating capacity than today's grid because 
with that much solar and wind you only need 35   to 90 hours worth of batteries and it's 
the batteries that are so expensive.   Now, most conventional forecasts have never 
even considered building that much solar and   wind capacity but understanding disruption means 
rethinking the boundaries of the existing system.   And when I began this research I fully 
expected that some combination of solar,   wind, and batteries, would prove feasible but 
what came as a shock to me from analyzing the   Clean Energy U-curve is that the optimal 
combination, the lowest cost combination,   of solar, and wind is also by far the 
cheapest electricity system that we can build.   Okay, so what would this actually cost? Well, our 
analysis shows that if we start now California   could build the energy generation and storage 
assets of a 100 percent solar, wind, and battery   system by 2030 for 115 billion dollars.

for 197 billion, and New England for 91 billion.   Extrapolating to the rest of the country 
the total cost would be less than 2   trillion dollars. That's less than 200 billion 
per year for 10 years or under 1 percent of GDP.   We deliberately constrained the scope of 
our analysis in order to determine what is   possible with solar, wind, and batteries in the 
limit and so we excluded a number of factors.   No electricity imports from neighboring regions 
with better weather at that time. No distributed   energy resources such as rooftop solar. No 
electric vehicles either to drive demand   or supply additional battery capacity. No energy 
arbitrage, meaning buying low to sell high later.   No demand shifting to shave the peaks down. No 
emergency reserve from legacy power plants. No   technological breakthroughs, although advances 
such as perovskite photovoltaics and solid-state   lithium-ion batteries are almost certain to 
occur between now and 2030. No subsidies.   No carbon taxes, and no changes in transmission 
or distribution infrastructure.

Now, these   factors will vary enormously from one region to 
another based on circumstances and on the choices   that we make and not just within the United States 
of course but from one country to another as well.   In reality, however, most of these factors will 
only accelerate the disruption further and that   means that 100 percent solar, wind, and battery 
systems are likely to be even more feasible than   our analysis suggests in most areas.

Now there's 
more to this story than just a surprisingly   affordable price tag. It turns out that 100 
percent solar, wind, and batteries is just   the beginning. The new system will have 
a completely different architecture than   the old one and work in very different ways. And 
perhaps the most counter-intuitive aspect of this   is that the new system will produce 
much much more electricity overall. So   when we build a system based on solar and wind 
power we have to design it to get through the   worst times of year those cloudy weeks of winter 
when the days are shortest but by doing so we   naturally end up with the capacity to generate 
much more electricity on most of the other days   of the year and because it's coming primarily from 
the sun it doesn't cost anything.

There's no fuel.   There's no additional wear and tear on 
the equipment. If the sun is shining,   solar panels just sit there and happily 
make electricity and that means that the   marginal cost is effectively zero. We call this 
additional benefit of 100 percent solar, wind,   and battery systems, super power. Its implications 
are simply stunning. To start with the sheer   scale of super power is enormous. In sunny regions 
like California and Texas, super power output   is greater than all existing electricity demand 
today, and what's more super power is not just   available once in a while, it's available all 
year round even in a region like New England   super power will be available on two-thirds of 
all days of the year.

In sunnier areas on over   90 percent of all days, and remember this is still 
the cheapest electricity system that we can build.   So once again conventional analyses get disruption 
wrong here. Today regions like California that are   early adopters of solar and wind power are already 
producing super power but the incumbents, perhaps   not surprisingly, frame super power as a problem 
not as an opportunity, it's branded overproduction   that must be curtailed. But anyone can 
see that flushing gigawatt hours of clean   nearly costless energy down the drain is 
no kind of solution at all, it's insanity.   This irrational response is exactly the sort 
of behavior that emerges when an old production   system cannot integrate a new technology and 
is therefore poised for disruption. Super power   is one of the greatest opportunities of our 
time. Just imagine what society could do with   a huge amount of clean energy that is available 
almost every day and is essentially free.

Well,   the sky's the limit. It's enough energy 
to meet all water needs with treatment   and desalination or enough energy to electrify 
all road transportation with plenty to spare.   We could use it to replace fossil fuels in most 
residential or commercial heating for example.   Or use it in recycling and waste processing or in 
heavy industry applications like smelting metals.   We can even use super power in more exotic 
applications like mining cryptocurrency,   withdrawing carbon dioxide directly from the 
atmosphere, or synthesizing carbon neutral fuels   for special niche applications and uses. With 
so many potential applications it's difficult   to predict exactly how super power will be 
utilized but what we can say with confidence   is that hundreds of new business 
models, across dozens of industries,   will emerge to take advantage of such an 
extraordinary opportunity just as they   did when the internet slashed the marginal cost 
of communication and information to near zero.

Now there's one last fascinating twist to the 
story that becomes clear when we put these two   key findings, the Clean Energy U-curve, and super 
power together. Super power returns on investment   are not linear, they are disproportionately large 
near the sweet spot on the Clean Energy U-curve.   So on the one hand it makes sense to minimize 
costs by building the least expensive electricity   system possible, and that's represented by 
the sweet spot at the bottom of the curve,   but what if a region were to make a modest 
additional investment of say 20 percent.   Well depending on geographic conditions 
that could boost the system's generating   capacity by 50 to 100 percent and that in 
turn would increase its super power output   by as much as 200 percent for just 
a 20 percent increase in investment.   In California, for example, existing electricity 
demand totals 285 terawatt hours each year.   In the lowest cost scenario, the one at the 
sweet spot on California's Clean Energy U-curve,   a 100 percent solar, wind, and battery system 
would meet all 285 terawatt hours of that   existing demand plus generate an additional 309 
terawatt hours of super power.

Now here's how that   compares to energy use in the rest of California's 
economy. The transportation sector, residential   sector ,commercial sector, and industrial sector, 
but an additional 20 percent investment in solar,   wind, and batteries, would nearly double 
California's super power. So just imagine   what would your region or business do with 
all this super power. In 1995 we all paid   for long distance phone calls and dial up 
internet access by the minute. Remember that.   But a decade later bandwidth was so cheap 
that restaurants were giving it away for   free as wi-fi to get customers in the door. Why 
not do the same with electric vehicle charging.   Today regions try to attract manufacturers 
and other heavy industry with   tax breaks and other incentives, why not give them 
free energy at certain times of day instead. And   speaking of which, if energy were cheap enough 
it might make sense to repatriate manufacturing.   Even the manufacturing of solar panels, wind 
turbines, and batteries themselves right here   domestically.

That of course would lower their 
costs and accelerate the disruption even further.   100 percent solar, wind, and batteries, will 
be transformative economically, socially,   and environmentally. Energy powers our farms 
and factories, it pumps and purifies our water,   it drives our vehicles and transportation systems, 
it heats our homes and businesses, it illuminates   our lives, and so wherever energy is utilized in 
abundance prosperity has always followed.

This   disruption, therefore, offers a pathway for 
achieving many of our most important goals.   It will create millions of new jobs 
and opportunities for entrepreneurship.   It will reduce pollution and make communities 
healthier. It will help mitigate climate change.   The disruption of energy is inevitable. What we 
need now is leadership. We need communities and   policymakers and entrepreneurs and investors to 
understand the implications of this disruption   so that we can act on this information by making 
the right choices today. That means no further   investment in coal, gas, or conventional nuclear 
power knowing that those assets will be stranded.   It means removing barriers to solar, wind, and 
batteries deployment by guaranteeing everyone   the right to produce and trade electricity with 
anyone else, individuals and businesses alike.   It means recognizing that super power is not 
a problem but is in fact one of the greatest   opportunities of our time. It means realizing 
that near-zero marginal cost electricity changes   everything and then what the internet did 
to information solar, wind, and batteries,   are going to do to energy.

That what happened in 
the world of bits is now about to happen in the   world of electrons. It means understanding 
that we're not facing a slow incremental   energy transition but that this is a 
disruption and it has already begun.   Regions can either embrace solar, wind, and 
batteries, and lead the disruption achieving   100 percent clean energy as soon as 2030 with 
all of the extraordinary benefits that accrue,   or they can deny it and resist and be left in 
the dust scrambling to catch up.

Let's choose wisely..

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