Could Solar Go Mobile? Black Swans and Tipping Points

Could Solar see unparalled growth for an energy technology? should it be viewed as a consumer product and hence follow adoption curves more common say with mobile phones?

As solar becomes increasingly plug and play systems, the barriers to rapid deployment are being removed.

Global mobile phone usage:

1990 – 11m
1995 – 91m
2000 – 700m
2005 – 2000m
2010 – 5000m

As PV continues to scale (China’s 12GW in 2013 alone) it continues to get cheaper and as it gets cheaper, it continues to scale in an ever increasing virtuous circle (overtime the installed base of solar doubles costs reduce by 24%). The initial key tipping point is grid parity on LCOE (Levelised Cost of Energy) and grid parity has already been reached in at least 19 markets as of January 2014 (Deutsche Bank sees a “second gold rush” for the photovoltaic industry to come).

The Reverse Network Effect of Grid Connection

For me the tipping point would be beyond the LCOE grid parity but a short payback period of circa 5 years. As costs continue to decline the payback periods will continue to decline and with advances in integrated solar storage systems (perhaps with integrated Electric Vehicle units, Elon Musk’s Tesla tying up with his brother inlaws Solar City and the Gigaom factory) then more people will go off grid. Those remaining on the grid will have to increasingly have to pay more for access to the centralised transmission network, accelerating their move to off grid and hence a reverse network affect.

In June 2014 Barclays downgraded bonds of U.S. utility companies. Barclays expects more competition by a growing self-consumption due to a combination of decentralized PV-systems and residential electricity storage. This could fundamentally change the utility’s business model and transform the system over the next ten years, as prices for these systems are predicted to fall.

The Solar Black Swan

The Black Swan theory is interesting in a renewable context, simply put Black Swans arrive and often make large disruptive change that was not widely predicted but often inappropriately rationalised after the fact, with the benefit of hindsight. Is solar going to be a black swan for the established energy industry?

We currently have solar penetration rates of around 1.5% in Germany (with 40m households this is comparable to mobile phone penetration in Germany in 1990) and 1.9% in Italy (Australia 7.5%, Hawaii 2.8%).

If they follow the growth of mobile phone adoption (but with a smaller population of roofs) then how many systems would there be? what would a solar everywhere scenario look like? all roof tiles were solar, all glass was solar, all bus stops, lights, car ports were solar? would there be 2 billion global solar pv systems in 2035? how would this impact energy economics? could this be a chart we are looking at in 20 years time?

2e81badSolar Households penetration?

2015 – 5m
2020 – 30m
2025 – 500m
2030 – 1000m
2035 – 2000m

#KeyTakeaway Look outside the energy industry to understand the speed of change in other “prosumer” markets

Contributor: Nad