PV cells and wind turbines generate less than 10% of the world’s electricity; however, installations are proliferating as system costs continue to decrease sharply. It feels like everywhere you go, you are bound to see a PV farm or in the case of NJ, PV panels on poles, a project I have launched through my company Petra Solar in 2009. There is a sense from the industry that there will be a clean-energy revolution at some point in the future. I for one feel that we are actually in the midst of the revolution. However, although this may sound exciting, it comes with vast complications and problems that must be solved to continue the transition from fossil fuels in the electricity industry.
The problem with renewable sources in the market is two-fold: intermittency and very low operating costs. By nature, electricity is not generated when the wind isn’t blowing and the sun isn’t shining. During these times, we have to use conventional power plants such as coal or natural gas to generate the electricity, matching the consumption. The reason low operating costs is a problem is due to the way the market works today, where electricity producers are picked based on their ability to generate electricity with the lowest operating cost. Renewables have near-zero operating costs (nature provides the fuel) and therefore take business from the traditional power plants which are more expensive to run all the while depressing power prices and hence revenues for all participants. The more renewables deployed, the lower the power prices, the less profitable traditional plants are, which drive away investors.
Throughout history, it is always new technologies that disrupt industries. And although renewable energy technologies have caused these drastic changes, I believe the solution ironically lies with new technologies as well. This includes demand response, self-generation, energy efficiency and most importantly, energy storage which I am focused on. My current company, Power Edison, is focused exclusively on energy storage. We believe we have cracked the code, making storage economical without the dependency on mandates or subsidies. The goal is to deploy enough storage on the grid to rely solely on renewable sources while keeping the retail price of electricity low. Is it possible? Only time will tell.