Travis Bradford, “Solar Revolution: The Economic Transformation of the Global Energy Industry”

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Bradford argues in “Solar Revolution” that a transition to a worldwide energy economy based primarily upon solar collection is not only inevitable but in fact imminent. This is a surprising stance given that solar energy accounts for less than 1% of today’s electricity generation, is critically underfunded with regard to its competitors, and is generally considered to be economically uncompetitive. Bradford’s argument, however, is predictive rather than prescriptive. While briefly mentioning the social and environmental significance of a transition to solar, his analysis is primarily economic: the transition will happen, and happen soon, because economics dictate it. According to Bradford, this transition will be well underway within a decade, and nearly complete within several (he is writing in 2006).

Traditional methods of accounting have failed to accurately tally the costs of competing generation technologies, and have therefore greatly overestimated solar’s relative cost. The cost of a solar generation system is almost entirely up-front: the cost of purchasing and installing its components. Once in place, a solar collection system requires little maintenance, no fuel, and operates with predictable output for at least thirty years. The costs of other technologies are difficult to predict in advance, and include fuel and maintenance costs, which are subject to wide fluctuations over time. In addition, there are many “hidden” environmental costs to most competing technologies, including pollution and CO2 emissions for fossil fuels (gas, coal, and oil), human and animal displacement and silt blockage for hydroelectric, inefficient and widespread land usage for biomass, and risk of radioactive accidents for nuclear. When the long-term costs of mitigating and repairing these environmental costs are taken into account, solar quickly becomes cost competitive.

Bradford notes that the problem of quantifying remaining reserves of fossil fuels is a red herring; the earth’s fossil fuels will never be completely exhausted—rather, it is a question of expense. As oil fields pass their “peaking point,” their production can only decrease, even as the expense of extraction increases. The U.S. Oil supply peaked in 1970, most countries worldwide in the early 2000s, and most of the Middle East by 2025. Oil, then, can only become more expensive in the future. These costs will rise dramatically until oil is no longer cost-competitive with other energy sources. While coal suffers less from the phenomenon of peaking, it will nonetheless become scarcer and thus more expensive, even as its environmental costs continue to rise. The same will happen with natural gas. Meanwhile, according to Bradford, the costs of solar will continue to steadily decline. Even assuming no large-scale technological breakthroughs (which could nonetheless occur), PV cells will slowly become cheaper as new manufacturing methods are introduced and production is scaled up. At the same time, installation costs will continue to drop as the industry grows along its “experience curve.” That is, as technologies are newly marketed, their costs dramatically fall proportional to market penetration. While solar isn’t a new technology, it is a new industry, and therefore is and will continue to benefit from this experience curve, which has long since ceased to further lower costs for competing technologies.

The single greatest economic advantage of solar over its competitors, however, is its characteristic of decentralization. All other major sources of energy (including renewables) require centralized production systems and an electricity grid to deliver energy to the end user. Traditionally, energy economists calculate generation costs without taking into consideration the massively expensive grid that actually delivers electricity to users. This is the true “hidden cost” of centralized generation systems. Solar, while perfectly capable of being centralized and passed through the grid, is also capable of decentralized, distributed deployment, at the actual sites of consumption. When deployed this way, solar does not require a grid, and thus passes significant savings on to the consumer—savings that are not accounted for in traditional energy economics. What Bradford is really arguing, then, is for a new distributed-electricity economics. When we start calculating energy costs realistically, taking into account the unique status of solar, it quickly becomes cost-competitive with the alternatives, at least for peak power generation. These inherent economic advantages can easily be accentuated with government support, which succeeded in dramatically reducing costs for installed systems in Japan and Germany, each within on a few years. While solar is already cost-competitive in certain markets now, its costs will continue to come down as the industry grows in the near future, while most alternative energy sources will continue to become more expensive, making solar the best economic choice. As soon as the benefits of decentralized power generation become better understood, the trend will accelerate even further.

Bradford narrativizes his argument, exploring different facets of historical energy production in various chapters. He sees solar as the final step in a long historical process of “decarbonization,” or a change in the relative amounts of carbon and hydrogen in our fuels. Wood is practically all carbon, coal is mostly carbon, oil and natural gas a bit less, etc. Solar energy releases no carbon at all, but can be used with fuel cells and the process of electrolysis to generate hydrogen, which can act to store its energy for future use in both stationary and mobile systems (automobiles). Bradford thus sees solar generation, fuel cells, and hydrogen as complementary components in a revolutionary new system that is the logical end of our historical energy narrative.

-ZH

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