by Robert Zaremba

Smart Grid: the Solar Power

The age of solar revolution

In recent years we experienced a great boost in renewable energy sources. Hundreds of companies have born to supply the need for wind and solar plants installation. Tesla, the market leader in environmental friendly energy, moves the Solar power to the next level with their new products (Solar Roof [1], Gigafactory [2], Powerwall 2 [3]) and SolarCity acquisition. The world doesn’t end with Tesla. Big corporations like Samsung, Panasonic, LG are participating in the manufactures pursuit. Oil companies, like Total [4] are taking the challenge as well. We see lot of emerging companies: Powervault SolarEdge, Leclanché, Verengo Solar, SunPower, OneRoof Energy, Suniva, Global Solar ... This only confirms the big shift in energy production which is happening now [5]. Speculants agree that solar will become a dominant energy source by 2050.

Smart Grid

So what is a Smart Grid? In a traditional setup, consumers are connected to an electric network, which is controlled by DSO (Distribution System Operators). The energy is supplied by semi-centralized big utilities. An average John has little to no impact into that network. The energy flow is one-directional, more predictable and controllable. Basically, tt looks like this:

http://i.imgur.com/d3HbuRb.png

In the Smart Grid the energy distribution is managed down at the local level (villages, districts, individuals). People can produce, buy, store or sell energy. Individuals are able to exchange energy without utility involvement. The diagram below represents the transformation from traditional model to Smart Grid.

http://i.imgur.com/VK0YgXU.jpg

In the new model we have more energy sources, and the distribution model is more open:

http://i.imgur.com/OQeR3Ed.png

> source: www.edsoforsmartgrids.eu

In Smart Grid we have a sophisticated systems which optimize the energy flow across the distribution network:

http://i.imgur.com/lY1eCwO.jpg

> source: www.isa.org

Future or reality?

Solar power is essential to the planet’s sustainable energy supply. According to the International Energy Agency, it is on the path to becoming the largest source of electricity by 2050.

Photovoltaics (PV) installations in the past few years demonstrate that they have emerged as one of the key technologies for generating electricity from renewable sources. Wikipedia has a special article dedicated to Growth of photovoltaics. New solar photovoltaic capacity installed in 2016 reached more than 76 gigawatts, a dramatic increase on the 50GW installed the year before.

http://i.imgur.com/DvIUysn.png

From the chart below we can observe that new PV global installments grows exponentially:

http://i.imgur.com/NTMuuZE.png

Today, we’ve become mired in partisan bickering among politicians and oil, gas, and coal lobbying interests who insist that fossil fuels are necessary for jobs and the US economy. However, this narrow debate has failed to notice that the world has already embarked on a transformation in how we use energy that is so fundamental, it defines a new Solar Epoch, as monumental as the discovery of fire, the development of agriculture, and the exploitation of fossil fuels in previous centuries.

The truth is that solar power–getting radically cheaper by the year–is not only a viable solution but, forms a clean energy system that can completely replace fossil fuels [6]. We can gradually phase them.

Most commentators seem overly focused on the disruptive effects of solar but overlook the opportunities that “going large” on solar can bring to the utility value-chain. According to UBS studies, we will have €1trn capex potential by 2025 in large-solar projects, intelligent networks and energy storage. Furthermore UBS research states:

Contrary to common perception, solar is not primarily a residential phenomenon: 80% of solar additions in 2012-13 in US and Europe were either “utility-scale” (ground-mounted) or “utility-like” (developed by or for I&C customers). We believe large-solar will continue to drive global growth, on (i) better economics vs smaller scale, (ii) declining costs.

We observe that solar loom is greatly supported by the technology breaktrhoughs. Currently Europe is half of the global solar market. Today we see that Asia is going to play a lead role. That being said Europe is researching it’s potential of 480 GW PV by 2030, covering more than 10 % of the European electricity demand [7].

The case of batteries

Batteries are essential part of a smart grid setup. In case of local prosumers (producers who are also consumers) batteries can lower the Return of Investment time by 30% (although the total cost of the setup increases significantly - can be around 100% more expensive).

PV lets consumers produce power for their own needs and feed surplus energy into the grid. Solar power is becoming ubiquitous: from large-scale utilities to micro-grids. We can see solar plants everywhere: from big factories, airports to farms households. Energy storage is an essential link needed to make intermittent solar energy reliable. Batteries installed inside homes can store excess energy produced by panels during peak hours of operation and then release the energy during evening hours, when energy rates are high.

Moreover, batteries combined with smart meters and digital technologies, batteries can help utilities regulate the grid by providing power reserves which can be tapped and transmitted on demand.

Tesla rolled out an excellent solar + battery setup at Kauai - Hawaii, demonstrating the power and cost efficiency of new technology [8].

As shown in The Economics of Grid Detection [9] Solar + battery setup significantly lowers the levelized cost of energy and brings closer the grid parity, which is already reached in some areas in the world (like aforementioned Hawaii Islands).