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Solar – An Evolution or a Revolution?

March 3, 2020
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The history of power generation is rich with technology shifts. Some have been significant, some subtle. Technology has been dominated by rotating equipment (turbo-generators) from the very beginning. Fuel sources until the 1980’s were mixed with a bias toward coal. But, the confluence of increasing gas turbine efficiency and reliability with an increasing supply and falling prices of natural gas resulted in one of the first significant technology revolutions. A shift from coal fired steam plants to gas fired combined cycle technology had a major impact on the industry in the 2000’s.

However, the economic impact of the rush to adopt open cycle and combined cycle technology was still not sufficient enough to cause “early” retirement of existing power plant assets. In fact coal and nuclear facilities continued to see “life extension” projects that extended their useful contribution to the grid well past their original expected useful life. From that perspective, it’s probably been more of a fast evolution and not a revolution.

In the past decade we’ve also seen the early impact of non-hydro renewables. Still tiny in terms of the overall installed generation mix, but nonetheless making up more than half of the new generation added to the US grid in 2014.

Twenty five years of experience at Siemens and ABB as a provider of turnkey coal and gas power plants has conditioned me to believe that changes in technology and fuel are destined to be evolutionary if not even glacial events. Certainly nothing has yet changed the economics significantly enough to create a dent in the massive installed base.

In 2007 and 2008, as a CMO for a major player in the Thin Film PV business, it was already apparent that Solar PV costs were going to see a long term and dramatic decline, albeit from a very expensive starting point. At that time, electricity cost from PV had already dropped from nearly 40 to about 15 cents/KWh. Impressive, but not enough to move the needle when coal and gas were on the order of 5 to 10 cents/KWh. With clear further cost reduction in the offing, it was easy to predict an evolution toward solar sometime in the next 10 years.


Fast-forward to 2015. Very few rational minds would have predicted that we would see new large scale solar facilities bidding into the system at close to 4 cents/KWh!

So, does Solar have the potential to change the paradigm?

We can now predict that solar (along with wind) will make up the lion’s share of new generation added to the grid. But, will it have the ability to impact the installed base by causing early retirement of fossil and nuclear plants?

Indeed, there are significant barriers to an all-out revolution. Dispatch-ability/availability is probably the most significant. Storage must be added to solar in order to compare costs head-to-head with base load coal, gas and nuclear plants. Storage technology, while promising, is still nascent and expensive. Also, massive investment will have to be made to the grid to allow significant amounts of distributed solar to be manageable.

On the other hand, concerns about global warming is driving the trend to tighten carbon and other emissions on existing fossil plants. This alone has the effect of increasing pressure on the early retirement of older (especially coal) facilities. Recently there are indications from major independent power plant asset owners in Europe that valuations of existing fossil plants are starting to show a clear and significant downward trend.

Personally, I still lean toward evolution, but current events are starting to test that perspective.

Are we headed toward one of the rare revolutionary moments in the 100 year history of power generation?