How solar 'socket' parity took the world by surprise | RenewEconomy

How solar ‘socket’ parity took the world by surprise

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Socket parity has arrived so quickly it has turned the electricity industry on its head. Now solar could do the same for liquid fuels.

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One graph in the International Energy Agency’s latest Solar Roadmap report highlights how the dramatic cost reductions in rooftop solar PV has caught the world by surprise – and caused the likes of the IEA to revisit their forecasts, and for incumbent industries to review their business models.

Four years ago, when the IEA did its last major Solar Roadmap report, socket parity (where the cost of rooftop solar is competitive with electricity from the grid) was just a distant dream – or so it seemed.

As this chart below shows, in 2010 the LCOE of rooftop solar (indicated in blue) was far above the variable rates of grid-based electricity. But in just three years, the LCOE (now in green) had caught up.

iea socket parityIt is for this reason that the IEA has had to double its forecast installation of solar PV over coming decades. Most of this is due to “socket parity”, where the IEA says rooftop solar is “unbeatable” by other technologies. It says rooftop solar will account for half of all solar PV installations out to 2050.

Some analysts think that the IEA is still being conservative, and may have to raise its forecasts again. But the stationary energy industry is not the only one to feel the pinch from the plunging price of solar PV, which has fallen around 60 per cent in the last three years.

This graph, which we have published before, and which its authors, the US investment firm Alliance Bernstein, dubbed the “terror dome,” shows the comparative trajectories of solar PV and liquid fuels, previously considered untouchable by solar.

The realisation that solar PV was now in a position to displace diesel fuel in some countries, oil in others, LNG in Asia, and gas in many developed countries, raised the prospect of energy deflation some time down the track. It may come in a decade, when investors realise that the money invested in more expensive oil and gas extraction might become stranded. That will precipitate a massive shift in capital – a long time before the deflation actually occurs.

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1 Comment
  1. Andrew Want 6 years ago

    Solar fuels are much closer than most believe:

    The solar revolution, now well underway, will impact on all levels of the energy system. While the impact of PV solar has been most evident and direct to date in relation to domestic electricity generation – where it is already driving fundamental changes in the business models of utilities and networks service providers – the impacts of solar energy will now accelerate in relation to transport and industrial energy supply as well.

    Two parallel, complementary technology streams – solar energy generation and energy storage – are now accelerating, and these will transform the global energy system:

    – energy storage in the form of batteries, which will transform energy supply for domestic, commercial and transportation uses

    – large-scale (bulk) transportable energy storage – in the form of solar renewable hydrogen – which will transform industrial power, transport and ‘baseload’ electricity capacity.

    Together, battery storage and solar renewable hydrogen will transform global energy systems much more quickly than is currently imagined.

    Water electrolysis – the process of production of hydrogen from water and electricity – was first demonstrated by English scientists William Nicholson and Water Carlisile in 1800, and the laws of electrolysis were defined and reported in 1833 by English scientist Michael Faraday. In Norway, hydrogen has been produced from hydro-electricity for over 100 years.

    As the costs of solar electricity generation fall, the cost of renewable hydrogen production using solar-powered electrolysis and water will also fall – all that is needed is sunshine and water.

    Once stored in the form of hydrogen from electrolysis, solar energy can be converted efficiently into several forms for bulk international transportation – as ammonia (renewable H2 + nitrogen), as synthetic natural gas (CO2 + renewable H2 = CH4), combined toluene (SPERA hydrogen), or as liquefied H2.

    Solar renewable hydrogen in the form of ammonia (NH3) can be distributed through existing global ammonia trading and infrastructure systems. Synthetic solar-derived CH4 (solar-renewable methane) can be liquefied as LNG for international trading and transportation in bulk. The infrastructure and international market trading systems already exist.

    In short, there are no technical or market impediments to the global production and trading of renewable hydrogen from solar power as an international energy commodity. As solar generation costs fall and carbon pricing pervades world energy markets, solar renewable hydrogen will become increasingly competitive with fossil fuel alternatives.

    Australia’s Pilbara region is perhaps the best example globally of the intersection of the 5 ingredients for creation of a successful renewable hydrogen supply chain: 1. world-leading solar resource, 2. ready access to water, 3. ready access to land, 4. existing ammonia and LNG infrastructure, and 5. stable political and market systems.

    Australia is in the position to be a leader in the global supply of renewable solar hydrogen – all that is needed is that we begin to see our solar resources as an exportable commodity our Asian neighbours will very soon seek, rather than as a threat to the coal and natural gas markets of the 20th century.

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