Technological innovation and declining cost curves have allowed wind and solar power to become increasingly more competitive with fossil-fuel generation in recent years. However, in the past, there hasn’t been a cost-effective way to store the electricity being generated during the sunniest and windiest portions of the day. Thus, customers are still reliant on the power grid as a back-up system when the sun isn’t shining or the wind isn’t blowing. New storage technologies are changing this paradigm. Storage alleviates many of the variability issues associated with wind and solar electricity generation. The combination of innovations in energy storage technologies, coupled with a smarter grid which can manage energy use with demand response and targeted energy efficiency, and balance load over a broad region, makes a clean energy future very feasible.
Residential PV system prices fell approximately 9 percent over the past year, with system prices decreasing to less than $5 per watt installed. On the consumption end, it is expected that the levelized cost of distributed solar energy will be within range of utility retail rates within the next few years. These falling costs contributed to the 60 percent annual growth in residential PV installations, though distributed generation remains a very small percentage of the overall renewable energy market. In addition to this achievement in residential PV, developers of large-scale PV too have experienced significant cost declines. System prices for utility-scale PV decreased to less than $2 per watt in the fourth quarter of 2013, which drove record utility-scale solar PV installments. Nearly 3 GW of PV were installed in 2013, with 1.4 GW installed in the fourth quarter alone. Regardless of whether the electricity comes from a residential rooftop system or large-scale utility system, these changes contribute to a cleaner power mix for everyone.
With the continued advancement of storage and grid technologies, this increasing share of renewables will also be reliable. Tesla recently announced the construction of a battery manufacturing facility (known as the Giga factory) that will scale up lithium-ion battery production to drive down battery costs by as much as 50 percent by 2020. As batteries become less expensive, they will be incorporated across the smart grid: electric vehicles may be used to balance the daytime solar generation peak, and batteries could offset the need to construct additional fossil fuel plants by storing surplus power and distributing it whenever it’s needed.
Source: A123 Systems
As the costs of battery storage fall, higher levels of variable renewable power can be added to the grid cost-effectively and reliably. Public utilities commissions will need to consider how they reward services like storage, demand response, and energy efficiency. The role these technologies can play in the power sector will be dictated by their market value. In order to ensure clean and sustainable electricity generation, reliable transmission and distribution, and affordable rates, we should move to appropriately value all of the components of an optimized system.
Featured image courtesy of Solon Corporation