In the drama of renewable energy, no power source has performed better in recent years than solar. Despite improvements in efficiency and lower costs, the future of solar power is still uncertain, and as one researcher suggests, its growth could be its own worst enemy.
Shayle Kann is a senior vice president for GTM Research. In a paper published in November, he identifies the challenges ahead for solar power.
Entitled “The Future of U.S. Solar: Getting to the Next Order of Magnitude,” the report notes that solar has been on an impressive growth streak, having gone from 2 gigawatts of cumulative capacity in the United States at the end of 2010 to a likely 26 gigawatts at the end of 2015. He said that solar has addressed one of its biggest pitfalls, high installation costs, which has ensured the industry will be a significant part of the nation’s energy mix going into the future.
Kann said that a number of factors will contribute to the continued growth of solar in the coming years, including rising electricity prices, falling solar prices, the Clean Power Plan, and electricity market innovation.
On the other hand, a number of factors could stand in its way. Perhaps the biggest, and most ironic, challenge will be posed by its own growth.
Referring to an economic scenario known as the value deflation effect, Kahn describes how, as more solar becomes available, its value goes down. This is partly due to basic principles of supply and demand, but it is also caused by solar’s inability to flip a switch on or off and trigger generation when it is most needed. Solar can only be generated during the day, when demand is not at its greatest, and as solar begins to occupy a larger space in the market during these times, it has the negative effect of driving its own price downward, providing a disincentive to developers and generators.
The future is still bright despite this scenario. Kahn notes that storage can “serve the needs of a growing solar market.” He adds that other ambitious efforts could help solar achieve “the next order of magnitude,” growing from 1 percent of all electricity in the United States to 10–15 percent, “by 2030, if not sooner.”