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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Solar Has An Unlikely New Enemy

Wind and solar generation capacity topped new capacity additions in 2020 despite the pandemic, prompting praise from energy authorities and environmentalists, as well as urges for picking up the pace so wind and solar—especially solar—could become the dominant source of energy for the world sooner than 2030. The narrative of the cheap solar panel is so common, few question it at all, especially when it features data about the declining cost curve of panels. According to this narrative, solar farm electricity is already cheaper than the electricity produced by gas-fired plants.

What the narrative omits is that this is not universally true as of yet. The other thing the narrative omits, perhaps out of genuine lack of awareness, is that the cost curve for any product, be it a photovoltaic panel, a wind turbine, or a barrel of crude oil, depends on many factors. And some of these factors are not exactly favorable.

For all the benefits of solar power—cheap, emission-free energy from a virtually endless supply except during the night and when it’s overcast, raining, or snowing—the technology has some drawbacks. While these are a favorite topic of discussion among renewable power skeptics, they don’t normally draw any attention from the industry itself. Now, one of the big problems of solar—that is, land use—has drawn the attention of a perhaps unlikely opponent: environmentalists.

Utility-scale solar farm projects are increasingly drawing opposition from environmentalist groups, the Wall Street Journal reported earlier this month, citing the Battle Born Solar Project, which will cover—literally—14 square miles, or, as the WSJ puts it, 7,000 football fields. That’s a lot of land to cover with solar panels, which would render it useless for any other purpose.

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Opponents of the Battle Born Solar Project from the nearest community are not among renewable power skeptics that mock solar farms. They are, in fact, environmentally conscious people who are, however, concerned that the massive solar farm will spoil the land, upset ecosystems, and last but not least, make their beautiful views less beautiful.

It’s a Beautiful Problem 

It was really bound to happen. Anyone who’s had the chance of seeing a utility-scale solar farm knows they are not exactly works of art that one would enjoy seeing on a daily basis. The logic, as with so many other things, seems to be, “It’s great, but I don’t want it in my backyard.” And it’s not all about aesthetics, either. Build enough massive solar farms, and we might have a climate problem on our hands.

Solar’s En Fuego

Earlier this year, two researchers from Sweden and Australia challenged an idea that has been circulating in the public space for a while. They challenged the notion that building a few giant solar farms in the Sahara desert will solve the world’s energy problems. 

Not so, Zhengyao Lu from Sweden’s Lund University and Benjamin Smith from Western Sydney University warned. Solar farms have a heat problem, and the bigger the farm, the bigger the problem becomes.

Solar panels convert light into electricity at an average rate of 15 and 20 percent. So, 15-20 percent of the light solar panels absorb, they convert into electricity. The rest appears to be the problem, according to Lu and Smith.

The energy that solar panels cannot convert into electricity gets released back into the environment in the form of heat, the climate researchers explain. While their focus is on the Sahara, with its light-colored sand, the fact that solar panels release energy back as heat remains regardless of what the environment is.

Inconvenient Truth: Costs are Rising

Besides emerging environmentalist opposition, however, the solar industry has a much more immediate problem: costs are rising. Because of the global supply chain disruptions caused by the pandemic, the cost of virtually all raw materials are soaring, reversing the steady trend of cost declines we have witnessed in solar panels for more than a decade. Besides evidence that nothing should be taken for granted, even solar panel prices, this fact threatens what many like to call a renewable energy revolution.

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This is happening at the worst possible time for that revolution. The International Energy Agency, in its Net Zero by 2050 roadmap, said it will require adding 23,000 Twh of the total 71,000 TWh the world will need by 2050. But Norwegian Rystad Energy went further. The consultancy recently estimated that the world could add some 50,000 TWh because it is so cheap.

“The world needs to grow its power generation capacity further in order to fulfill electrification goals in buildings, transportation and industry and solar PV is the cheapest and most convenient way,” Rystad analysts said.

This no longer appears to be the case. A recent Financial Times report noted that the shares of solar power companies have shed some 18 percent since the start of the year as the prices of steel, polysilicon, and transportation have all soared. The chief executive of the U.S. Solar Fund expects these higher raw material prices to boost new solar installation costs by as much as 20 percent. And the US Solar Industries Association warned this is only the beginning: “compounding cost increases across all materials are just beginning to affect installers,” the association said.

Perhaps S&P Platts analyst Bruno Brunetti put it best, as quoted by the FT: “The narrative in the solar industry has shifted,” Brunetti said. “We have seen steep declines in costs over the past decade, but we are seeing that stabilise now and even increase in some cases.”

By Irina Slav for Oilprice.com

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