The term "sun tax" might sound like a joke, but unfortunately, it is not.  It represents a significant setback for the advancement of renewable energy sources.

This flashback was prompted by our study of new technologies, during which we observed that solar energy has experienced unprecedented growth, making it the fastest-growing energy source over the past five years.  This trend is underscored by headlines such as "Germany's solar power output jumps to record highs." (1)

Imagine the madness…

Consider the prospect of being subjected to taxation or tolls for independently producing solar energy without any governmental regulation.  This scenario represents a significant deviation from the norm in the context of renewable energy generation, as it introduces a variable associated with solar energy known as natural consumption.

The so-called sun tax was an energy policy implemented in Spain in 2015 through Royal Decree 900/2015.  Despite its name, it was not a tax in the traditional sense; rather, it consisted of tolls and charges imposed on solar power producers.  This policy, which appeared disconnected from the realities of the electricity industry, dealt a severe blow to the advancement of solar energy and resulted in the bankruptcy of hundreds of initiatives that were utilising this technology.

The irrational fiscal measure was enacted during Mariano Rajoy's conservative administration in response to a substantial negative balance in the stabilisation fund for tariffs.  This decision was made without adequately assessing the financial implications and potential consequences.

Fortunately, on October 5, 2018, three years after its introduction, the Spanish government enacted a Royal Decree that delineated new regulations governing electrical self-consumption.  This decree promotes collective self-consumption and introduced a streamlined mechanism for compensating self-generated and unused energy. Consequently, Spain aligns more closely with its European counterparts and is making progress towards achieving the European Union's energy objectives for 2030.

The analysis of the historical context surrounding the fiscal policy known as the sun tax indicates that, regardless of the political affiliation of those in power, economic constraints often result in the adoption of misguided fiscal strategies.  Historical patterns which suggest a tendency for similar circumstances to recur over time further corroborate this observation.

The importance of battery storage systems in the boom of solar power…

Finally, it is essential to highlight the promising role of battery storage systems.  These systems are emerging as one of the key solutions for effectively integrating high shares of solar power into energy systems.  A recent analysis from the International Renewable Energy Agency (IRENA) illustrates how storage technologies can be used for a variety of applications in the power sector, from behind-the-meter applications to utility-scale use cases.

(1) https://www.reuters.com/business/energy/germany-solar-power-output-jumps-record-highs-maguire-2024-05-14/

Today…

The exponential growth of solar power will change the world.

An energy-rich future is within reach…

The Economist, Jun 20th 2024

How high could the oil price go?

Geopolitical risk is rising. But so is the supply of oil…

The Economist, oct 10th 2024

The History of Solar Energy: Past, Present, and Future…

Historical Tools, March 30, 2024

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The exponential growth of solar power will change the world

An energy-rich future is within reach…

The Economist, Jun 20th 2024 

It is 70 years since AT&T’s Bell Labs unveiled a new technology for turning sunlight into power. The phone company hoped it could replace the batteries that run equipment in out-of-the-way places. It also realised that powering devices with light alone showed how science could make the future seem wonderful; hence a press event at which sunshine kept a toy Ferris wheel spinning round and round.

Today solar power is long past the toy phase. Panels now occupy an area around half that of Wales, and this year they will provide the world with about 6% of its electricity—which is almost three times as much electrical energy as America consumed back in 1954. Yet this historic growth is only the second-most-remarkable thing about the rise of solar power. The most remarkable is that it is nowhere near over.

To call solar power’s rise exponential is not hyperbole, but a statement of fact. Installed solar capacity doubles roughly every three years, and so grows ten-fold each decade. Such sustained growth is seldom seen in anything that matters. That makes it hard for people to get their heads round what is going on. When it was a tenth of its current size ten years ago, solar power was still seen as marginal even by experts who knew how fast it had grown. The next ten-fold increase will be equivalent to multiplying the world’s entire fleet of nuclear reactors by eight in less than the time it typically takes to build just a single one of them.

Solar energy is rapidly expanding and cost-effective, poised for substantial growth…

Solar cells will in all likelihood be the single biggest source of electrical power on the planet by the mid 2030s. By the 2040s they may be the largest source not just of electricity but of all energy. On current trends, the all-in cost of the electricity they produce promises to be less than half as expensive as the cheapest available today. This will not stop climate change, but could slow it a lot faster. Much of the world—including Africa, where 600m people still cannot light their homes—will begin to feel energy-rich. That feeling will be a new and transformational one for humankind.

To grasp that this is not some environmentalist fever dream, consider solar economics. As the cumulative production of a manufactured good increases, costs go down. As costs go down, demand goes up. As demand goes up, production increases—and costs go down further. This cannot go on for ever; production, demand or both always become constrained. In earlier energy transitions—from wood to coal, coal to oil or oil to gas—the efficiency of extraction grew, but it was eventually offset by the cost of finding ever more fuel.

As our essay this week explains, solar power faces no such constraint. The resources needed to produce solar cells and plant them on solar farms are silicon-rich sand, sunny places and human ingenuity, all three of which are abundant. Making cells also takes energy, but solar power is fast making that abundant, too. As for demand, it is both huge and elastic—if you make electricity cheaper, people will find uses for it. The result is that, in contrast to earlier energy sources, solar power has routinely become cheaper and will continue to do so.

Other constraints do exist. Given people’s proclivity for living outside daylight hours, solar power needs to be complemented with storage and supplemented by other technologies. Heavy industry and aviation and freight have been hard to electrify. Fortunately, these problems may be solved as batteries and fuels created by electrolysis gradually become cheaper.

A world with more energy is generated without oil and gas…

Another worry is that the vast majority of the world’s solar panels, and almost all the purified silicon from which they are made, come from China. Its solar industry is highly competitive, heavily subsidised and is outstripping current demand—quite an achievement given all the solar capacity China is installing within its own borders. This means that Chinese capacity is big enough to keep the expansion going for years to come, even if some of the companies involved go to the wall and some investment dries up.

In the long run, a world in which more energy is generated without the oil and gas that come from unstable or unfriendly parts of the world will be more dependable. Still, although the Chinese Communist Party cannot rig the price of sunlight as OPEC tries to rig that of oil, the fact that a vital industry resides in a single hostile country is worrying.

It is a concern that America feels keenly, which is why it has put tariffs on Chinese solar equipment. However, because almost all the demand for solar panels still lies in the future, the rest of the world will have plenty of scope to get into the market. America’s adoption of solar energy could be frustrated by a pro-fossil-fuel Trump presidency, but only temporarily and painfully. It could equally be enhanced if America released pent up demand, by making it easier to install panels on homes and to join the grid—the country has a terawatt of new solar capacity waiting to be connected. Carbon prices would help, just as they did in the switch from coal to gas in the European Union.

The aim should be for the virtuous circle of solar-power production to turn as fast as possible. That is because it offers the prize of cheaper energy. The benefits start with a boost to productivity. Anything that people use energy for today will cost less—and that includes pretty much everything. Then come the things cheap energy will make possible. People who could never afford to will start lighting their houses or driving a car. Cheap energy can purify water, and even desalinate it. It can drive the hungry machinery of artificial intelligence. It can make billions of homes and offices more bearable in summers that will, for decades to come, be getting hotter.

But it is the things that nobody has yet thought of that will be most consequential. In its radical abundance, cheaper energy will free the imagination, setting tiny Ferris wheels of the mind spinning with excitement and new possibilities.

This week marks the summer solstice in the northern hemisphere. The Sun rising to its highest point in the sky will in decades to come shine down on a world where nobody need go without the blessings of electricity and where the access to energy invigorates all those it touches.

How high could the oil price go?

Geopolitical risk is rising. But so is the supply of oil…

The economist, Oct 10th 2024 

All around the world consumers, motorists and politicians are nervously eyeing the oil price. The conflict between Israel and Hamas that began a year ago is spreading. If all-out war erupts between Israel and Iran, the threat to the Middle East, a region that produces a third of the world’s crude, is as obvious as it is scary. Few commodities affect the global economy as much as oil does. And, as America’s presidential candidates are keenly aware, few are as likely to sway an election. The past two years of inflation have shown just how much voters hate sticker shock.

The price of oil rose by 10% in a week, as Israel attacked Hizbullah, a Lebanese militia backed by Iran, and Iran retaliated with around 200 missiles fired directly at Israel. On October 7th it reached $81 a barrel, before falling. Two and a half years ago Russia’s invasion of Ukraine sent oil prices surging beyond $120, as the West imposed sanctions on Russia and fears intensified of disruptions to the supply from the world’s second-biggest exporter. What could happen this time? If the fighting gets worse, a serious oil shock is possible. But a glut of supply means the oil market is less vulnerable to such a shock than it was in 2022.

As we published this, Israel had yet to retaliate against Iran. On October 3rd Joe Biden, America’s president, jolted the market when he hinted that Iran’s oil infrastructure might be in Israel’s cross-hairs. However, that is only one of many possible targets. And even if Iran’s oil output were disrupted, it is not as big a producer as Russia. It exports nearly 2m barrels per day (bpd), about 2% of the global supply. By comparison, Russia exports nearly 5m bpd.

The global picture, too, is markedly different from 2022. When Russia invaded Ukraine oil was in short supply and demand was roaring back, as the world’s economies came out of covid lockdowns. The market was ripe for an upset. Today the world is swimming in oil. The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, spearheaded by Saudi Arabia, had sought to keep prices high by pumping less. But that plan has failed, fuelling indiscipline and cheating by other members. Now it is being abandoned, with the cartel promising to increase output in December.

Even Saudi Arabia, which is desperate for higher prices to finance its gaudy spending plans at home, is throwing in the towel. It has reportedly dropped its price “target” of $100 a barrel, so that it can at least shore up its market share. OPEC and its allies have spare capacity of more than 5m bpd; Saudi Arabia alone could ramp up production by 3m.

OPEC’s squabbles mask a more fundamental shift. Nearly 60% of the world’s oil now comes from countries other than the cartel and its allies, up from 44% in 2019. America’s shalemen have become the biggest producers in the world by far. Brazil, Canada and Guyana have all increased their output in recent years. According to the International Energy Agency, production by non-OPEC countries will grow by 1.5m bpd next year.

At the same time, demand for oil has been tepid. After their post-pandemic bounce-back, the economies of America and Europe are slowing down as past interest-rate increases start to bite. China’s economy is struggling under the weight of its property slump. On October 8th America’s Energy Information Administration revised down its forecast for global oil demand in 2025 as a result of weakening manufacturing activity around the world. Before the latest escalation in the Middle East, oil traders had expected a glut in 2025 as a consequence of weakening demand growth and expanding supply, pushing prices below $70 a barrel.

Today’s ample supply provides a shield against geopolitical shocks, but not an impregnable one. If Israel were to hit Iran’s own oil infrastructure, Iran could attack oil producers that have signed economic accords with Israel, such as Bahrain or the United Arab Emirates. Or it could block the Strait of Hormuz, through which much of the Gulf’s oil travels. That might push the oil price close to its highs of 2022.

Iran’s theocratic rulers would be foolish to take such actions, which could draw America into the conflict and infuriate Iran’s few remaining friends, such as China, the world’s biggest oil importer. But in the Middle East, nightmare scenarios can never quite be ruled out. Because oil production is still concentrated in a handful of countries, the supply remains vulnerable to the reckless decisions of a few autocrats. Thanks to rising global production and weakening demand, however, the market is better cushioned than it has been before.

The History of Solar Energy: Past, Present, and Future…

Historical Tools, March 30, 2024

Solar energy, often seen as a modern innovation, has a history of nearly two centuries. The 1839 discovery of the photovoltaic effect laid the groundwork for today's solar panels, but decades of innovation were needed to develop this high-efficiency energy source. This overview highlights solar energy's history and future potential, from early solar-powered satellites to current rooftop arrays and utility-scale solar farms.

The Rise of Solar Energy…

The story of solar energy began in 1839 when French physicist Edmond Becquerel discovered the photovoltaic effect, generating electric currents in materials exposed to light. This finding revealed the potential to convert sunlight into electrical energy.

Other scientists began experimenting with solar cells made from selenium. In 1883, American inventor Charles Fritts built the first solar array on a New York City rooftop, using selenium wafers to generate electrical currents. Despite achieving only 1% efficiency, this prototype showcased solar energy's practical potential.

Early 20th Century: Steady Progress

Solar energy technology advanced slowly in the early 20th century until Albert Einstein's 1905 paper on the photoelectric effect earned him the Nobel Prize in Physics. His work highlighted the particle nature of light and introduced photons, improving the understanding of the photovoltaic effect.

Silicon-based solar cells were first developed in the 1940s but were too costly for widespread use. The Space Age accelerated their adoption, as solar energy became an attractive power source for satellites and spacecraft.

The Space Race Boosts Solar Energy…

In 1958, the U.S. launched Vanguard 1, the first solar-powered satellite. It used six solar panels to stay in orbit for over six years. This innovation led to other solar-powered satellites, like NASA's Nimbus and the Soviet Sputnik 3.

During the 1960s Space Race, solar energy became vital for extended space missions. The lightweight Ranger moon probes used solar arrays with thousands of solar cells, while the Mariner 2 probe, the first successful interplanetary spacecraft, powered its 1962 flyby of Venus with solar energy.

Early applications highlighted solar energy's advantages for space exploration. With no moving parts and the ability to generate power indefinitely, solar arrays were more practical than batteries for long missions. In the 1970s, as NASA explored the solar system deeper, photovoltaics became the standard power system for its spacecraft and remains so today.

The 1970s Oil Crisis Fuels a Solar Revolution…

Solar energy technology progressed slowly through the mid-20th century but was uncompetitive with cheap fossil fuels. The 1970s oil crisis, marked by rising oil prices and market uncertainty, highlighted the need for alternative energy sources.

The oil crisis led to heightened government and private investment in solar energy worldwide. In 1977, the U.S. established the Solar Energy Research Institute (now the National Renewable Energy Laboratory) to promote photovoltaic innovation. Germany and Japan also emerged as early leaders in solar technology and manufacturing.

By 1980, the global solar industry produced over 500 megawatts annually, with costs plummeting from around $100 per watt in 1975 to under $10 by 1985. While still a minor part of overall energy generation, solar was increasingly viable, setting the stage for a revolution in solar energy.

Exponential Growth and Lower Costs: The Current Solar Era…

Solar energy has become one of the fastest-growing energy sources in the last four decades, with statistics reflecting its exponential growth.

In 1983, global solar photovoltaic installations were just 21.3 megawatts. By 2021, they had surged to over 843,000 megawatts, a nearly 40,000-fold increase.

Since 2010, solar energy costs have fallen over 85%, making it competitive with fossil fuels. It is now the cheapest source of new electricity for over two-thirds of the global population.

Solar contributes nearly half of new global electricity generation capacity annually, a share that is increasing. In a sustainable development scenario, it could meet 20% of global electricity needs by 2030.

Advancements in technology and economies of scale drive the rapid growth of solar energy. Solar cell efficiency has doubled since the 1970s, and new materials have lowered costs. Governments globally have also introduced subsidies and tax incentives to encourage solar adoption.

The convergence of trends has transformed the solar energy landscape. At the turn of the millennium, solar energy contributed less than 0.01% of global electricity generation; today, it exceeds 3% and is rapidly increasing. In countries like Germany, Italy, and Australia, solar accounts for over 10% of electricity generation.

Modern Solar Technology and Applications…

Solar energy technology has advanced from inefficient, costly solar cells. Modern solar panels use key innovations for exceptional efficiency and cost-effectiveness.

Monocrystalline silicon is the main material for solar cells, which are made from thin wafers of a single silicon crystal. In high-end models, these cells achieve over 25% efficiency.

Multi-junction solar cells, designed for satellites and spacecraft, layer various semiconductor materials to capture a broader range of light wavelengths, achieving nearly 40% efficiency in NASA's advanced models.

Solar concentrators utilize lenses and mirrors to focus sunlight on photovoltaic material, improving efficiency and reducing costs. Concentration ratios range from 2x to over 1,000x.

Bifacial modules are a new solar panel design featuring photovoltaic material on both sides, allowing the rear to capture light reflected from the ground or other surfaces.

Anti-reflective coatings are thin layers on solar cells that reduce reflection and improve light absorption, boosting efficiency by several percentage points.

Advances in photovoltaic technology have showcased solar energy's versatility in various applications, including:

1) Utility-Scale Power Generation

Large solar farms supplying power to regional grids are the most notable application of solar energy. India's largest Bhadla Solar Park has 2.2 gigawatts and over 10 million solar panels across 5,700 acres. In the U.S., several projects are nearing or exceeding 1 gigawatt, including the Samson Solar Energy Center in northeast Texas.

2) Distributed Rooftop Solar

Distributed solar energy in homes and businesses is as vital as large utility-scale projects. Falling costs have made rooftop solar an attractive investment for millions worldwide. In Australia, over 30% of homes have solar panels, while the U.S. share is about 3%, increasing. Energy storage solutions like the Tesla Powerwall provide backup power and reduce dependence on the electrical grid.

3) Solar Lighting and Off-Grid Use

Solar energy is increasingly used for lighting and power in areas without electrical grids. It effectively serves remote villages and forward operating bases, reducing reliance on dangerous kerosene lamps in developing countries.

Solar Heating & Cooling

While photovoltaic systems dominate the solar industry, solar thermal technology is also significant. Solar water heaters use the sun's energy to provide hot water for various facilities at a lower cost than electric or gas systems. Furthermore, solar air conditioning, which employs solar heat for cooling, is becoming increasingly popular.

The Future: Solar Energy's Potential

Although solar energy has advanced significantly, it still represents a small portion of global energy production, primarily dominated by fossil fuels. With decreasing costs and the pressing need for clean energy due to climate change, experts expect substantial growth in solar energy in the coming decades.

The International Energy Agency forecasts that solar energy may become the largest source of global electricity by 2050, providing nearly 30% of total generation. Other studies suggest that it could meet most energy demand in sunny regions with available land.

Realizing solar energy's potential requires overcoming challenges, particularly its intermittency—no power is generated at night or on cloudy days. Affordable, long-duration energy storage solutions are essential for dispatching solar electricity as needed.

Integrating more solar energy into electrical grids requires upgrades to transmission infrastructure, advanced distribution electronics, and new tariff models. Concerns about land use for large solar farms and the disposal of old solar panels also need to be addressed.

Despite challenges, the future of solar energy looks promising. Advancing technology, decreasing costs, government support, and rising public demand for clean energy drive its global growth. Solar energy's vast, nearly limitless potential suggests we have only begun to tap into its capabilities.

The scientists who harnessed solar power nearly two centuries ago likely never anticipated its rapid advancement. The story of solar energy is just beginning, with the potential to meet humanity's energy needs cleanly and affordably for generations. Solar power will be central to our sustainable future, and the outlook is promising..