Is the current energy generation model going to break?

954838_204501379701698_1765426126_nIs the current energy generation model going to break?  Maybe not immediately but over the next 10 years?  This is the question many free market analysts are starting to ask.  Over the last decade but with increasing speed over the last 5 years the cost of renewables, especially solar, has fallen.  Solar by 80%.  Much of this massive increase in solar capacity is distributed generation, that is its on the low voltage distribution network.  So its its relatively small scale with the largest arrays being ground mounted at the 5-10MWp scale.  Much of its on people’s roofs and sheds or in their gardens at the kW scale.  Its this that should worry the utilities with their current energy generation model.  This existing model goes all the way back to Edison. The big boys generate lots of power in large power stations and sell it to us.  Once lots of people start generating their own electricity in large quantities things start to get interesting.  Instead of power flowing one way, power is flowing in all directions.

Many people have dismissed micro-generation has being pointless since each individual array generates so little compared to a large power station.  But lots of small arrays add up and of course you are cutting the demand for centralised generation.  We have seen this in Germany with at weekends huge amounts of solar generated electricity hitting the grid.  This summer most of electricity generated was solar in origin on some days.  The problem is what to do with this surplus power?  The best thing is for people to use themselves, with most feed-in tariffs this is what makes sense.  In our household we do everything we can to achieve this using the breadmaker and washing machine during daylight hours.  But even with a small system its impossible to stop “spill over” onto the grid.  The obvious thing to do is to store the power, which is what they are encouraging people to do in Germany (even on a micro household scale)*.  The problem is that the current technology (special lead acid batteries) are bulky, expensive and heavy and in any case don’t last more than about 5 years even if they are very well maintained (although they are almost completely recyclable).

What may cause the current generation model to break is not just solar power but cars, or more precisely electric cars.  For the reasons outlined above no one is going to use lead acid technology to power a car.  The only game in town is lithium batteries (although other battery technologies are frequently mentioned).  Up until now the cost of this technology has been prohibitive which is one reason electric cars have not sold well (the other being range).  However, the manufacturers are starting to ramp up production and with this the cost of this type of battery is set to plummet.  If there is enough lithium for cars and other energy storage uses then once the cost is competitive (estimate 2020), then demand for centrally generated electricity will fall drastically as millions of people generate their own power during the day and use it at night.  The current energy generation model will break.  We have seen the early signs of this in Germany.  At peak times when the utilities make most of their profits they cannot give the power away.  Large plant such as coal fired power stations are being shut and at least one of the big utilities (RWE) has made huge losses.

Like any market disruption such as mobile phones this will have its plus and minus points.  On the plus side electricity should be more affordable for millions as well as being green.  On the minus side we still need large scale generation and only the utilities have the financial clout to build offshore wind farms and the up and coming technologies such as wave and tidal power.  If they are struggling who is going to invest in these and the grid which we will still need?  Small scale storage is never going to make us totally autonomous especially in winter when PV output is low, but the signs are it will break the current energy generation model.

Neil

* not only in Germany my solar installer offered me this, but for the reasons outlined above I turned him down.

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