Back in February, a posted on Ray Kurzweil’s belief that solar power would soon be cheaper than coal-fired electricity, and that this would represent an enormous boon to our efforts to reduce carbon emissions. We can go even further. If solar power is cheap enough, it can make all kinds of sequestration and air-capture efforts more practical.
Now Morgan Clendanial of Fast Company brings to my attention new projections from Bloomberg New Energy Finance:
But now, according to new predictions from Bloomberg New Energy Finance, solar power is going to be the wallet-friendly option as soon as 2013. This is faster than was originally thought. For instance, the Bush administration set a goal for this to occur by 2015, and others predicted that as well. Two years ahead of schedule on creating an entirely new cost-efficient and clean power source is really not too shabby.
Grid parity is the technical term for when an alternative energy’s cost equals that of the traditional electricity supply–which, in the U.S., is mostly coal. It simply means that solar panels are becoming so cheap to produce and so efficient that they can now battle with the giant coal-fired power-generating structure we’ve developed. Currently, coal costs about 7 cents a watt, versus 22 cents for solar. But the solar industry is moving so fast that those costs will be equal–at least for utilities–by 2013. In sunny places like California, it’s already much closer during peak hours, when the sun is shining and coal power becomes more expensive.
There is, however, a pretty significant problem: we still need power sources that can provide baseload power. I tend to think that nuclear is the ideal partner to solar, high-altitude wind, and other solutions that are getting cheaper but staying intermittent. Storing energy is the really hard part.
Of course, Peter Huber of the Manhattan Institute has a pretty great idea for handling the storage problem …
Most of the cost of grid electricity is tied to capital investment in the hardware that turns cheap, raw fuel at the power plant into high-grade power at the plug. The economics of electric miles is even more capital-intensive. The amortized cost of the batteries in the electric car currently dwarfs the cost of the grid power that could be used to charge them. And as soon as they arrive in any significant numbers, plug-in electric cars will also require new investment in the grid—without it, the cars will soon start blowing network fuses and blacking out homes and neighborhoods.
But this also points to the opportunity for lowering costs and raising revenues. The grid is engineered to deal with the very highest loads it will face only once every few years—in mid-afternoon on the very hottest day in summer. On average, day and night over the course of an entire year, about half of the total generating capacity and an even larger fraction of the capacity in the wires are just waiting for a customer. The capital invested inside electric cars themselves will typically stand idle about 90 percent of the time, and—unlike capital invested in the grid—it can’t be shared with others.
Batteries can, however, cheerfully tolerate interruptions in the flow of power to their charging systems. From the perspective of the private investors who might invest in grid infrastructure, car batteries are therefore extremely attractive customers. Batteries are the customers that are eager to buy the power that nobody else currently wants to buy. They offer the existing owners of an enormously valuable capital asset an opportunity to use it profitably when it would otherwise be standing idle.
From the outset, these facts tilt the economics of electric miles away from more battery and toward more investment in high-speed recharging stations in garages, parking lots, compact parking-meter-like units, and other shared spaces. By reducing the size of the battery required in the car, fast charging stations, widely deployed, further boost the car’s efficiency and range by reducing its weight. However cheap it may be, the first thing a car’s battery has to move is itself. Investing less in the car and more in the last mile of grid also leads naturally to schemes that embed more of the capital cost in pay-by-the-mile charges, which will surely suit many car buyers much better than paying thousands of dollars more up front.
But how do you get the big power companies to invest in this expensive infrastructure?
The free-market path to getting grid electricity to our wheels hinges on giving every company that already owns, or cares to invest in, any part of the electron pipeline—electric utilities certainly included—the freedom and flexibility to invest new capital, set prices, recover costs, and earn profits commensurate with the risks, while working closely with car companies, car owners, municipalities, employers, mall owners, parking garages, individual homeowners, and others.
That is, you allow utilities to charge what the market will bear. Added bonus? This power supply is a hell of a lot cheaper than gasoline. I’ve been hoping to write at greater length about Huber’s concept, and hopefully I’ll get a chance soon.
Notice something strange? If everything comes together, we could see carbon emissions plummet without the federal government asserting more control over the economy. Hmmm … (Hey, I’ll still take subsidies for nukes.)