Solar Power Could Be A Total Gamechanger - But They Still Need To Figure Out One Thing

It's very easy to hype solar, which we've been doing for much of the year.

Capacity is irrefutably going up, and prices are collapsing.

However, the absolute capacity figures remain relatively low compared with conventional generation. And in most cases, even large-scale solar is still not cost competitive with traditional sources of electricity.

There's basically one thing holding solar back: storage.

Here's the problem: to run a commercially viable power plant, you need a continuous source of fuel. For run-of-the-mill power plants, this is basically not a problem: you just keep ordering up more coal, or natural gas, or uranium isotopes.

But in a cruel paradox of nature, you actually can't control the supply of solar - or wind, for that matter - despite their infinite abundance: sometimes it's cloudy, or the wind is not blowing, or it's night time.

And electric grids cannot function unless they are able to balance supply and demand. An imbalance results in voltage fluctuations, or worse.

Germany is already running into problems with this, as its solar capacity has skyrocketed. Soon, solar will be capable of meeting most of the country's electricity demand between 12 and 2 pm. As Citi's Jason Channell writes, "any further installations beyond this point could push structural solar power supply above demand and cause permanent mid-day grid instability."

Here's what he's talking about ("double penetration" refers to Germany having doubled its solar capacity): without batteries, that bulge is literally disruptive because it eats into conventional baseload generation, the backbone of current supply needs.

Citi

There are two ways to address this problem. One way is to address the electricity grid itself. That is indeed happening - whenever you hear about "smart grids," it refers to folks trying to find better ways of eliminating gaps in electricity supply and demand.

The other avenue is batteries. With storage, "any excess generation above the natural run rate of conventional baseload is [captured] (Figure 20) and spread across the day (Figure 21)," Channel says. Check it out:

So why don't we have large-scale batteries yet? Mainly, solar hasn't been widespread enough to justify what remain very expensive technologies. That's obviously on the verge of changing, but the most promising type of large-scale renewable storage system, lithium-ion battery packs, still costs $1000 per kilowatt hour, according to Channell. The average fridge uses about 5 kilowatt hours a day.

However, thanks to investment from the electric vehicle industry, lithium ion costs continuously come down. We also just told you about a pilot project in Maryland that uses lithium ion batteries to modulate the solar generation from panels installed on a nondescript office building's rooftop.

Lots of businesses are working on this problem, and other potential solutions include liquid metal batteries, which use relatively cheap components and manufacturing processes; and compressed air storage, where kinetic energy gets turned into pressurized air that's pushed underground.

We're still in the earliest stages of widespread storage deployment, and we'll likely to see some kind of convergence between smart grid and battery solutions as more renewable capacity emerges.

That latter bit is not in doubt.