Solar as shale – report predicts similar impacts on US energy markets

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

The falling cost of solar energy could have as much impact on energy markets as the so-called “shale revolution”, according to a new report.

Wood Mackenzie, the analysis firm headquartered in Scotland’s capital city Edinburgh and originally launched to track the early days of North Sea Oil in the 1970s, has issued the report 'Is solar the next shale?'. While the report mainly focuses on the falling costs of solar relative to other forms of energy, with the title something of a shrewd headline-grabbing hook, Wood Mackenzie forecasts two similar future outcomes that solar and shale could share.

Firstly, both shale and solar have enjoyed rapid cost decline and are in each case leading to the displacement of incumbent energy concerns. In solar’s case, this means an increasing competitiveness with natural gas combined cycle (NGCC) plants. Initially eating away at the “midday net demand” that solar can cater for and is often provided by gas-fired facilities, with the effect of lowering prices, this will also lead to even bigger price drops for solar. In the case of shale, its competitiveness on price has resulted in a well-documented sea-change at supply-side level for the gas and its rivals.

Secondly, rapid cost drops in shale are expected by Wood Mackenzie’s analysts, leading to an expansion in demand, including for liquid natural gas (LNG) exports. Wood Mackenzie also says there will be expanding demand for solar, although aside from the increased deployment of electric vehicles, the report seems unclear on what other drivers may exist going forward. It also does not appear to reference the relative environmental impacts of either energy source.

The report, focusing on the US solar industry and with particular regards to energy markets and market regulation in California, was prepared by a Wood Mackenzie’s team in North America.

Referring to both the rising efficiency of solar modules and systems, as well as inroads made into cutting non-module costs such as permitting paperwork and regulations, Wood Mackenzie says “large scale solar economics have already reached grid parity (exluding integration costs) – the point at which the levelised cost of solar is less than a gas combined cycle or combustion turbine – across multiple regions in the US”.

The Scottish firm said it predicts some states in the US – 19 in total – to see solar at grid parity by 2020, a figure which it saw doubling by 2030. A report last year, 'The Economics of Grid Defection', from respected sustainability consultancy Rocky Mountain Institute looked at the likelihood of consumers pairing solar with batteries to go completely off-grid made similar predictions. Meanwhile, utility companies and mainstream financial institutions including Barclays have repeatedly highlighted the disruptive threat posed to the incumbent electricity industry by solar and other renewables.

Wood Mackenzie sounds a cautionary note to solar, as it does to the electric industry as a whole – the firm says that without changes to electricity rate designs, the ability to deploy solar and add it to networks cheaply will be held back.  

“Should solar market saturation rapidly increase, other forms of capacity will still be necessary to meet needs while today's energy and capacity market design and compensation mechanisms will need to evolve to maintain reliability,” the team wrote.

9 December 2021
The Smart Energy Council is hosting Australia’s second Virtual Smart Energy Conference and Exhibition on Thursday, 9 December 2021. This event will show that the industry powers on despite COVID-19 and we are standing together undeterred in spirit. Bringing our global community together using the latest technology.
13 January 2022
Intersolar North America and Energy Storage North America “Come Together” for the first time in Long Beach, CA—connecting installers, developers, utilities, technology providers, policy makers, and key stakeholders from around the world to advance the clean energy future. With best-in-class conference programming, integrated exhibits and pavilions, and the live Solar Games installer competition, #isnaesna21 will showcase the industry trends, innovative solutions, and emerging talent transforming the solar, energy storage, and e-mobility markets. Register today to redeem our exclusive offer for PV Tech readers—free expo hall or 20% off full conference pass.
1 February 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.

Read Next

December 3, 2021
Norwegian module marketplace company Otovo has launched in Germany, with the company expecting 1,000 new customers over the next year
December 3, 2021
Solar investor and asset manager NextEnergy Capital Group (NEC) has secured backing from the UK Infrastructure Bank for a new fund that aims to raise £500 million (US$663 million) to invest in subsidy-free solar power plants in the UK.
December 3, 2021
Indian independent power producer (IPP) ReNew Power has signed an agreement with Indian engineering giant Larsen & Toubro (L&T) to develop green hydrogen facilities, becoming the latest PV developer to do so after a string of recent announcements
December 3, 2021
Koch Engineered Solutions (KES) LLC has acquired US engineering, procurement and construction (EPC) firm DEPCOM, which specialises in utility-scale solar PV projects, for an undisclosed amount
December 3, 2021
Heterojunction cell and module manufacturer Meyer Burger has reduced module output at one of its production plants in Germany as COVID-19 is causing above-average workforce absences due to illness and quarantine orders.
December 3, 2021
Tianjin Zhonghuan Semiconductor (TZS) has become the latest solar wafer manufacturer to cut prices, while also launching a new 218.2mm-size wafer.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal