Connect with us

Electrification

The Exponential View of Solar Energy

Published

on

The Exponential View of Solar Energy, and Why the Cost of Solar has Plummeted

exponential view of solar energy

The Exponential View of Solar Energy

The human brain is terrible at comprehending exponential growth.

Much like the power of compound interest is a magical force for investors, it is also possible for innovations and technological breakthroughs to build off each other in the physical world, creating a similar compounding effect.

In this chart, we look at how solar technology has surpassed all expectations from an economics perspective, including those initially set by the International Energy Agency (IEA). Then later, we’ll also look at a new set of predictions for solar energy economics over the next 30 years.

Solar Energy: The Technological Overachiever

Back in 2010, the cost of utility-scale solar power ranged between $0.25-$0.37 per kWh. This meant it was at least three times as expensive as fossil fuels, and that solar was highly cost-inefficient at the time.

Going forward, most organizations projected a linear path for whittling down the cost of solar.

The IEA, for example, forecast that the global cost of solar would drop to roughly $0.22 per kWh by 2020. In reality, however, the price dropped to about one-fifth of that at $0.04 per kWh.

YearActual (BNEF Global) - $ per kWh2010 Forecast (IEA) - $ per kWh
2010$0.28$0.36
2020$0.04$0.22
Change-85.7%-38.9%

Almost all industry forecasters, including the IEA itself, missed the exponential factors at play.

Wright’s Law

Ramez Naam, the co-chair for energy and the environment at Singularity University, points out in his blog that the exponential decrease in solar costs stem from Wright’s Law:

For most technologies, every doubling of cumulative scale of production will lead to a fixed percentage decline in cost of the technology.
-Wright’s Law

Professor Naam says this occurs through “learning-by-doing”, and more specifically:

  1. Innovation that improves the technology itself
  2. Innovation that reduces the amount of labor, time, energy, and materials needed to produce the tech

Put another way, the more solar panels we make and the more we install—the better we get at the whole process over time. And once we’re making thousands or millions of panels, the costs come down exponentially, much like with lithium-ion batteries.

The Future of Solar Costs

Over the years, Naam has taken his own stab at forecasting the cost of solar energy into the future, leveraging the idea of Wright’s Law.

Here’s what he sees coming, based on using a 30% learning rate* for solar:
Future cost of solar based on 30% learning rate Wright's Law

*The learning rate is the fixed percentage decline that occurs with every doubling of the scale of production.

Based on these projections, even the costliest of solar installations will be more economical than the cheapest of utility-scale fossil fuel plants. This means solar can basically go anywhere, and make sense from a cost perspective.

Underestimate Solar No More?

For fun, here’s a final look at how IEA projections have constantly underestimated solar installations, which are one of the key factors dictating the “learning rate” under Wright’s Law:

missed iea solar capacity forecasts

With solar energy costs plummeting to record lows and global installations continuing to ramp, it’s possible that solar forecasters may no longer forget about the exponential nature of solar production.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.
Continue Reading
Comments

Electrification

The Road to EV Adoption: Fast Lanes and Potholes

Electric vehicles are a key piece of the clean energy puzzle. So what’s driving EV adoption, and what’s slowing it down?

Published

on

EV adoption

The Road to EV Adoption: Fast Lanes and Potholes

Electric vehicles (EVs) are a key piece of the clean energy puzzle.

However, the road to electrification is influenced by various factors. While some are helping speed up the switch to EVs, others are slowing it down.

The above infographic from Rock Tech Lithium outlines the fast lanes accelerating mainstream EV adoption, and the potholes slowing it down.

The Fast Lanes Accelerating EV Adoption

From government policies to falling battery prices, a number of factors are putting EVs in the fast lane to consumer adoption.

Factor #1:

Promoting Policies

The shift to a clean energy future is slowly moving from a goal to a reality.

Governments around the world have made automobile electrification a key part of public policy. More than 20 countries are targeting a complete phase-out of vehicles that emit greenhouse gases over the next two decades. Furthermore, 35 countries have pledged for net-zero economies by 2050, where EVs will play a key role.

As an example, here’s a recent tweet that U.S. President Joe Biden wrote before signing an executive order to make 50% of the U.S. auto fleet electric by 2030:

“The future of the auto industry is electric—and made in America.”

—President Biden on Twitter

Given the increasing importance of EVs, it’s no surprise that governments are not only promoting auto electrification but also incentivizing it.

Factor #2:

Consumer Awareness

The rapid growth of the EV market is partly due to consumers that are choosing to go electric.

Rising awareness around the risks of climate change as well as vehicle improvements from EV manufacturers is spurring EV adoption among consumers. Between 2015 and 2020, consumer spending on EVs increased by 561%, up from $18 billion to $119 billion.

As more consumers switch to EVs, the market will continue to grow.

Factor #3:

More Models

EV manufacturers are recognizing the need for a wider variety of vehicles to meet the needs of different consumers.

The number of available EV models has increased from 86 in 2015 to over 360 in 2020, and thanks to recent announcements from the auto industry, this trend is likely to extend over the next decade.

Company# of New EV Models AnnouncedYear
Volkswagen752025
Ford402022
GM302025
Hyundai-Kia1292025
BMW252023
Renault-Nissan2202022
Toyota152025
Total234N/A

1Hyundai is the parent company of Kia Motors.
2Refers to the Renault-Nissan-Mitsubishi Alliance.
Source: IEA

With more models available, consumers have a wider variety of cars to choose from, reducing the barriers to EV adoption.

Factor #4:

Falling Battery Prices

Batteries are the most expensive and important components of EVs.

Improvements in battery technology, in addition to expanding production, have driven down the cost of EV batteries. As battery costs fall, so do EV prices, bringing EVs closer to price-parity with gas-powered cars.

YearBattery Pack Price ($/kWh)% Price Drop Since 2010
2010$1,1910%
2011$92422%
2012$72639%
2013$66844%
2014$59250%
2015$38468%
2016$29575%
2017$22181%
2018$18185%
2019$15787%
2020$13789%

Source: BloombergNEF

According to BloombergNEF, at the battery pack price point of $100/kWh, EV prices will become competitive with gas-powered cars, providing a boost to electrification.

All of the above factors are playing a major role in accelerating the EV transition. So what’s slowing it down?

The Potholes Slowing Down EV Adoption

Although the EV market is growing exponentially, it’s still in its early days, with various obstacles to overcome on the way to mainstream penetration.

Pothole #1:

The Supply of Battery Metals

EV batteries rely on the properties of various battery metals to power EVs. In fact, a single EV contains around 207 kg of metals.

As EV adoption grows, the demand for these critical minerals is expected to reach unprecedented highs. In turn, this could result in supply shortages for metals like lithium, cobalt, and graphite, potentially slowing down the growth of the EV market.

To avoid potential shortages, EV manufacturers like Tesla and Volkswagen are vertically integrating to mine their own metals, while governments work to build domestic and independent metal supply chains.

Pothole #2:

Charging Infrastructure

With more EVs on the roads, drivers need more places to plug in and recharge.

However, most countries are lagging behind in the installation of public chargers. The global average ratio of public chargers to EV stock is less than 0.15. This means that on average, there are less than 3 chargers for every 20 EVs.

But there are signs of optimism. Global charging infrastructure has doubled since 2017, and governments are incentivizing charger installations with subsidies and tax rebates.

Pothole #3:

Charging Times

While filling up gas tanks takes less than five minutes, it can take up to eight hours to fully charge an EV battery.

Fast chargers that use direct current can fully charge EVs in a couple of hours, but they’re more expensive to install. However, the majority of publicly available chargers are slow, making it inconvenient for drivers to charge on the go.

As charging technology improves, faster chargers are being developed to boost charge times. According to Bloomberg, new ultra-fast chargers can fully charge EVs in less than 30 minutes. Furthermore, the market share of fast chargers is expected to grow from 15% today to 27% by 2030.

Pothole #4:

Range Anxiety

Compared to gas-powered vehicles, EVs do not go the distance yet.

Limited driving ranges are known to cause “range anxiety”—the fear of running out of power—among EV drivers, presenting a hurdle for mainstream EV adoption. Additionally, the lack of charging infrastructure reinforces the problem of limited ranges.

However, consistent improvements in battery technology are resulting in longer driving ranges. Between 2015 and 2020, the average range for battery EVs increased by 60%. With further technological improvements, extended ranges will allow EVs be compete more aggressively with their gas-guzzling counterparts.

The Decade of the Electric Vehicle

The EV market is growing at a remarkable rate. EV makers sold around three million vehicles in 2020, up 155% from just over one million vehicles sold in 2017.

With several factors driving EV adoption and stakeholders working to overcome the industry’s obstacles, mainstream adoption of EVs is on the horizon.

Continue Reading

Electrification

How Much Land is Needed to Power the U.S. with Solar?

Solar power is essential for the clean energy transition, but how much land is needed to power the U.S. using solar panels?

Published

on

How Much Land is Needed to Power the U.S. with Solar?

The Biden administration has set a goal of reaching 100% clean electricity throughout the U.S. by 2035, and solar power is a key for this American energy transition.

In the last decade alone, solar has experienced an average annual growth rate of 42% in the U.S. thanks to federal tax credits, declining costs, and increasing demand. It is projected that more than one in seven American homes will have a solar power system by 2030.

To put this trend into perspective, this graphic uses data from the United States Department of Energy to see how much land would be needed to power the entire country with solar panels.

Solar Panels Across the Ocean State

The U.S. has 102.9 gigawatts of total solar installed capacity which is equivalent to 965 square miles, roughly the size of the country’s smallest state, Rhode Island. This current solar capacity generates enough electricity to power 18.6 million American homes, which is nearly 13% of the nation’s households.

According to a report from the National Renewable Energy Laboratory, roughly 22,000 square miles of solar panel-filled land (about the size of Lake Michigan) would be required to power the entire country, including all 141 million households and businesses, based on 13-14% efficiency for solar modules.

Many solar panels, however, reach 20% efficiency, which could reduce the necessary area to just about 10,000 square miles, equivalent to the size of Lake Erie.

Solar Installations Spreading Across the States

Today, solar represents only 3% of the total U.S. electrical generation.

While California has traditionally dominated the market, other states like Florida and Texas are expanding rapidly, boosted by the residential market.

Large companies with clean energy goals such as Walmart, Apple, Target and Amazon have also helped push solar adoption to near-record levels in 2021.

How much land is needed to power the U.S. with solar?

Despite having a high installation cost, the technology tends to bring savings in the long term. An average-sized residential system has dropped from a price of $40,000 in 2010 to roughly $20,000 in 2020. Along with this, solar panels can save between $10,000-$30,000 over a 30-year lifetime.

Between land and rooftops, the United States has more than enough space to build all the solar panels necessary to power the country. Until then, the future of clean electricity will also depend on hydro, nuclear, geothermal, and wind energy.

Continue Reading

Subscribe

Receive updates when new visuals go live:

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Latest News

The latest news from our sponsors:

Popular