
New Record Bid Set for World's Cheapest Solar, Undercutting Coal - Osiris30
http://www.bloomberg.com/news/articles/2016-05-03/solar-developers-undercut-coal-with-another-record-set-in-dubai
======
tokenadult
Bloomberg News reports[1] that David Keith, a Harvard professor of applied
physics and public policy, used to be a solar power skeptic but has reexamined
the economics of current solar power and now expects solar power to be
important because the economics have changed.

Professor Keith's recent essay on solar power, "Cheap Solar Power,"[2] shows
the facts and calculations to explain why solar power now beats several other
sources of primary electricity for many applications. It is very likely that
many industries will move to places where solar power is especially abundant
and inexpensive.

[1] [http://www.bloomberg.com/news/articles/2016-05-04/harvard-
sc...](http://www.bloomberg.com/news/articles/2016-05-04/harvard-scientist-a-
former-solar-skeptic-now-sees-the-light)

[2]
[http://www.keith.seas.harvard.edu/blog-1/cheapsolarpower](http://www.keith.seas.harvard.edu/blog-1/cheapsolarpower)

~~~
wjnc
This is the best quote imho: "If we can get CO2 from the air at 125 $/t-CO2
then the idea of making fuels at prices of order 1 $/L looks plausible over
the next few decades."

It's uplifting to me, both for the high value on a ton of CO2 and the (still)
low resulting price of fuel. Solar beats fusion (chance * impact)!

~~~
patrickg_zill
Solar is fusion-at-a-distance, though...

------
barney54
One very important thing missing is that solar is not dispatchable. It does
not serve the same purpose as coal and it is an apples to oranges comparison
between solar and coal.

Coal provides baseless power--coal plants are designed to run at a relatively
steady level for more than 90% of the time. Reliable power is critical for
things like server farms which draw power all the time. Solar cannot serve the
same purpose without battery or other backup.

At this time of year in places like California, solar doesn't help meet peak
demand either.
[http://content.caiso.com/green/renewrpt/20160503_DailyRenewa...](http://content.caiso.com/green/renewrpt/20160503_DailyRenewablesWatch.pdf)
Solar has a role, but comparing it to coal is misleading.

~~~
svalorzen
There's something I never understood though. Technically there's always a side
of the Earth that is under the Sun, so why can't countries make some sort of
equal-sharing energy agreement to avoid needing batteries, if not at all at
least hugely decreas the need for them? So that when it's night on one side of
the Earth, everything just runs off the surplus on the other side?

Is it just too hard to move electricity so far away?

~~~
brianwawok
So you are saying run a power line across the ocean, so the US can power
Europe and Vice Versa?

Maintaining fiber optic cables can be hard across the ocean. How about a power
line that has a diameter of 50 feet? I can't even imagine the engineering of
that.

Info on losses here:
[https://en.wikipedia.org/wiki/Electric_power_transmission#Lo...](https://en.wikipedia.org/wiki/Electric_power_transmission#Losses)

No idea on the math for what % of power we would lose across the ocean.

Seems local batteries would win out..

~~~
fdsaaf
The article says that a 100-mile 765kV transmission line loses 1.5% to 0.5%.
Let's be optimistic and assume we can get closer to the latter and deliver
99.5% of original power over 100 miles. NYC-LON is 3,466 miles on the shortest
possible path. Let's call it 3,500 miles. Over that distance, we'd deliver
99.5% ^ (3,500 / 100) = 83% of our original power.

The circumference of the earth at the equator is 24,901 miles. Halfway around
the world, we'd deliver 29% of original power.

------
beat
There's been some discussion of solar generation cost vs storage cost here,
with the idea that any generation project is necessarily coupled to storage.
But is that really the case? I can see a model where generation and storage
are completely decoupled businesses.

Large, somewhat unpredictable fluctuations in the cost of generation (solar
and wind) should lead to large fluctuations in price of generated electricity,
down to minute-by-minute. Ideally, generators want to sell every kwh they can
at peak production, even at a lower cost. With modern computer controls, this
makes a delightful opportunity for an arbitrage market.

Storage providers - and this could be giants like lake-scale hydro, or dwarves
like the batteries in electric cars - could buy electricity from generators
when it's cheap, and sell it when it's expensive (the sun isn't shining, the
wind isn't blowing, hot day spikes demand, etc). _This can be fully
automated_. Just plug your car into the wall at night. It might decide to buy
electricity, or sell electricity, depending on the price at the time.
Aggregators could pool capacity across many small providers. Large storage
systems could benefit from economies of scale and long-term contracts.

Create a smart grid that can support this, and let the free market solve the
pricing problems for us.

~~~
rhino369
There is already an large arbitrage opportunity. The difference between peak
and baseload pricing is pretty high.

If it was clearly economical, someone like Exelon (who owns nuke plants) would
probably be doing it.

Then again, at lest several utilities claims they were going to buy Telsa
powerwalls to do it. So maybe the pricing is getting to the point where it's
profitable.

~~~
beat
Building something genuinely new, like caching electricity, is fraught with
technical risks, financial risks, and regulatory hurdles. It's the kind of
thing that can put a billion-dollar enterprise out of business. So expect a
decade or more of research, small-scale experiments, political negotiation,
and more, to bring storage online at any sort of scale. It's really, really
hard, and really risky.

Nuclear plants, as you probably know, are almost pure base load solutions.
They can't just be scaled up or slowed down arbitrarily. A volatile,
arbitrage-based market efficiency would be pretty hard on the existing nuclear
base, and could render a lot of plants unprofitable.

Meanwhile, the gas-fired peak load plants are tremendously expensive, because
they have so much downtime and are inefficient. One or two decades ago,
competing against them with storage was economically impractical. Now, it's
becoming feasible. Especially once we start building gigawatts of sitting
capacity anyway, in the shape of EV cars.

------
ljf
Discussion yesterday:
[https://news.ycombinator.com/item?id=11617988](https://news.ycombinator.com/item?id=11617988)

------
coldcode
It's not cheap because the costs of building it is cheap, the companies are
willing to undercut each other for the benefit of getting the contracts. The
question is whether they will ever be profitable at this level.

~~~
akhatri_aus
Why would someone bid at a price like this before the project is set up if it
was not the least bit feasible?

~~~
beambot
PR? Hidden subsidies? Lucrative maintenance contracts? Desperation for revenue
in a competitive market? Overly aggressive sales staff? Contract loopholes for
cost overruns?

~~~
beat
High risk, high reward investment by individual actors who don't have to
answer to boards and regulators.

------
diafygi
I work in solar, and here's some quick facts:

1\. 1 out of 78 jobs created in the U.S. last year were solar jobs[1].

2\. There are more solar employees in California than utility employees[2].

3\. Soft costs (non-hardware) were recently 64% of the installed cost of
solar[3].

4\. Solar is expected to reach a load defection point (i.e. cheaper to leave
the grid) in most places in the next 10-15 years[4].

5\. Energy over the next 25 years is a potential $200 trillion opportunity[5].

Like OP's article states, this industry's hardware has gotten really cheap,
but the software in the industry hasn't kept up in places. So much so, in
fact, that an entire startup accelerator program in the bay area,
Powerhouse[6], has been created to try and attract tech entrepreneurs into the
solar industry to make the next generation of solar software. My startup
recently went through the program, and being a part of this industry is one of
the most empowering and rewarding things I've ever done. It's one of those
extremely rare instances where you can have a solid business model and a
positive impact on the world.

And we need all the help it can get. Solar expected to grow 100-200x over the
next 25 years[7], but it won't happen if smart people don't join in. Smart
grid, machine learning, energy storage, demand response, customer acquisition,
logistics, energy efficiency, inventory tracking, IoT, security, and many more
software areas are currently in the dark ages in energy. Solar, wind, nuclear,
geothermal, storage, and other clean energy sources have to replace 87% of the
worlds energy in the next 32 years[8]. PLEASE HELP US!

If you're a tech entrepreneur, and want to do something that matters, please
please please consider doing a startup in solar or other clean energy
industry. To start, if you're in the bay area, there's a hackathon next
weekend around solar software[9]. I encourage you to come and learn more about
solar and software in the clean energy sector.

[1]: [http://energy.gov/eere/articles/1-78-new-jobs-america-
solar-...](http://energy.gov/eere/articles/1-78-new-jobs-america-solar-job)

[2]:
[http://www.calseia.org/index.php?option=com_content&view=art...](http://www.calseia.org/index.php?option=com_content&view=article&id=231)

[3]: [http://energy.gov/eere/sunshot/reducing-non-hardware-
costs](http://energy.gov/eere/sunshot/reducing-non-hardware-costs)

[4]:
[http://blog.rmi.org/blog_2015_04_07_report_release_the_econo...](http://blog.rmi.org/blog_2015_04_07_report_release_the_economics_of_load_defection)

[5]:
[https://www.citivelocity.com/citigps/ReportSeries.action?rec...](https://www.citivelocity.com/citigps/ReportSeries.action?recordId=41)

[6]: [https://powerhouse.solar/](https://powerhouse.solar/)

[7]: [http://www.bloomberg.com/news/articles/2015-06-23/the-way-
hu...](http://www.bloomberg.com/news/articles/2015-06-23/the-way-humans-get-
electricity-is-about-to-change-forever)

[8]: [http://www.pvsolarreport.com/the-next-
internet/](http://www.pvsolarreport.com/the-next-internet/)

[9]: [https://suncode.splashthat.com/](https://suncode.splashthat.com/)

~~~
nroets
Most people will find leaving the grid very inconvenient, whatever the saving.
Here in South Africa, rolling blackouts caused chaos. Yet very few people left
the grid.

~~~
astrodust
I'm surprised a domestic solar installer hasn't grabbed market share. South
Africa should be an ideal market, like Hawaii.

------
dingo_bat
I remember a few days ago when we had a thread about an Indian minister saying
the same thing, and everyone was being skeptical and negative. Well look now,
seems like he was right.

------
mactitan
In the USA heating, HVAC, etc.. account for half of the energy used in
residential buildings.
[https://en.wikipedia.org/wiki/Solar_thermal_energy](https://en.wikipedia.org/wiki/Solar_thermal_energy)
Direct solar water heating (passive) has been used for quite a while and has a
maximum efficiency of solar thermal systems are between .46 & .74.
[https://en.wikipedia.org/wiki/Solar_water_heating](https://en.wikipedia.org/wiki/Solar_water_heating)

That compares to a solar panel efficiency of .15; and I guess a lot less when
applied to water heating due to conversion. And implementing in dense urban
areas, passive is not as viable as active. If we were serious we would first
implement passive systems. But we don't. I guess there’s something I don’t
understand.

~~~
maxerickson
Why would you expect physics to dominate economics?

For investors, a big power station like this is a purely economic decision
(will it be profitable or not).

For a homeowner, a few dollars a month for hot water is not a significant
motivator to make a change (replacing a thing that works to save money after
several years is not exciting).

It would probably be a good idea to figure out how to incentivize rental
property owners to increase building efficiency. Or maybe just pay for it
directly in exchange for a few years of not capturing the benefit in the rent.

------
marze
It's nuclear power from a remote reactor, and it isn't too cheap to meter but
is heading that way.

------
johnchristopher
Wait, these are still projected costs, right ? How can they guarantee they'll
be able to recoup their costs and honour their prices?

~~~
ljf
From the discussion of this yesterday, I understand that most other companies
could also meet these costs, if they had the same access to very cheap loans.
These bids are supported by near minimal cost loans, that are being offered to
help kickstart the industry in these areas, and to acquire skills and
knowledge. Plus in the hope that the continued improvement in solar panels,
rather than relying on the tech they can get their hands on today.

------
peteretep
The potential desalinisation this could lead to is also pretty exciting

~~~
hyperbovine
Desal is not the panacea many believe it to be. There are serious
environmental consequences associated with all the brine discharge.

~~~
MichaelBurge
Can't you just dump it back in the ocean where it came from?

The sea critters are already happy to swim around in it, and you're not going
to meaningfully change the concentration of the ocean. You could mix it with
sea water near the exit point to avoid temporarily raising the concentration
there.

~~~
hyperbovine
Nope, not if it's not carefully dispersed. Brine is denser than saltwater. It
tends to sink to the bottom, where there is little wave action or tidal flow,
and remain there. It's believed that many marine organisms are negatively
affected by the increased salinity, although the overall impacts are not well
understood.

------
fgGAMI
Based on Dubai's recent history, I'd speculate there is some slave or slave-
like labor involved to make it viable.

~~~
beat
Slave labor doesn't help much for high-tech projects. Slaves are mostly useful
for manual labor that doesn't require literacy or complex skills.

Remember, before we invented tractors, if you wanted to move a thousand tons
of rock a mile, it had to be done largely by hand. _That_ is a use case for
slave labor. Before we invented harvesters, cotton had to be picked by hand.
That is a use case for slave labor. Domestic servants are a use case. But the
invention of powered machinery made most slave jobs obsolete.

------
kumarski
This is great news in terms of econometrics, but I think the major looming
questions still exist.

1/ Can solar impact CO2 emissions beyond single digit percentages?

2/ On what order of magnitude would battery storage capabilities have to
improve to match performance characteristics of natural gas peaker plants or
dare we say Oil/Natural gas?

3/ Don't the fluctuations in peak demand make solar less attractive because
they require rapid natural gas peaking plants when there's increases in usage?
(Outside of summer is a great example)

4/ What would be the desired performance characteristics of batteries that
would make Solar a no-brainer for the environmental impact and actual
viability? Cost, capability, and reusability.

~~~
Osiris30
Comprehensive annual report on the state of various deployable grid storage
technologies - and answer to your questions here:

[http://blog.rmi.org/blog_2016_01_21_how_much_does_storage_re...](http://blog.rmi.org/blog_2016_01_21_how_much_does_storage_really_cost_lazard_weighs_in)

------
niels_olson
Everyone is talking about storage, but why not route power to need? Put 4000
square miles of solar in the Mexican desert and sell the power to to the
northern US and Canada all winter. Run power over Siberia and Alaska to get
across time zones.

~~~
neolefty
Ideally, yes we would do that! But see other comments about the cost and
efficiency of power transmission for the physical challenges involved.

[https://news.ycombinator.com/item?id=11628965](https://news.ycombinator.com/item?id=11628965)

------
prbuckley
I recently came across an interesting new approach to store renewable ebnergy
by moving large masses on rail cars up a slope. Here is some more information
on the approach
[http://www.aresnorthamerica.com/](http://www.aresnorthamerica.com/)

------
mdpopescu
Are these articles on how solar is poised to make it big Real Soon Now (tm) an
instance of pg's submarine? [1]

[1]
[http://www.paulgraham.com/submarine.html](http://www.paulgraham.com/submarine.html)

~~~
maxerickson
This is the far more common someone-wrote-a-press-release-that-makes-for-a-
headline.

[https://www.dewa.gov.ae/news/details.aspx?nid=1689](https://www.dewa.gov.ae/news/details.aspx?nid=1689)

------
JumpCrisscross
> _the Dubai Electricity & Water Authority, the utility for the Persian Gulf
> emirate_

Curious that Bloomberg opted for the Persian, over Arabian, Gulf when
referring to the United Arab Emirates.

~~~
mintplant
> The body of water is historically and internationally known as the "Persian
> Gulf". Some Arab governments refer to it as the "Arabian Gulf" or "The
> Gulf", but neither term is recognized internationally.

[https://en.wikipedia.org/wiki/Persian_Gulf](https://en.wikipedia.org/wiki/Persian_Gulf)

------
acomjean
And yet trying to work out the finances in my condo building, its not adding
up... We can get solar and do the right thing, but it will still cost us.

~~~
JshWright
Is your condo located in an extremely sunny desert?

~~~
acomjean
No the northeast. (massachusetts). Brick building. Flat roof that gets good
sun.

~~~
JshWright
That additional 20°s of latitude makes a big impact on the amount of sun
you'll see, regardless of how suitable the site is.

~~~
acomjean
For us its that the common part of the building doesn't use a lot of power.
Individual units do use more than we can generate. So we have to plug the
solar into individual units, which can be problematic and kind of a pain.

------
gaius
Is it this cheap because it is subsidized by oil revenue tho'?

------
sharemywin
Big giant government projects never have cost over runs.

~~~
hacknat
Actually they do, but they also result in dramatic changes (Railroads,
Highways, Apollo, TCP/IP, etc).

~~~
briandear
However for every Apollo, there's a dozen Solyndras.

~~~
dragontamer
Hmmm, looks like the US Government made the money back from that one. As a
whole, American Recovery and Reinvestment Act of 2009 is MAKING money from the
loans.

Even Solyndras is just one tiny failure in a massive pool of wealth-creation
with regards to the entire program. US Government makes money from the loans.
US citizens created jobs for each other. Solar energy development got
accelerated.

The only answer to Solyndras is... damn, that was a single battle lost (0.5
Billion loan default), but the US definitely "won the war" on the $800 Billion
program.

------
boona
"Prime Minister Justin Trudeau of Canada grabbed international headlines
recently with a simple explanation of a cutting-edge technology called quantum
computing."

While dodging a question about his understanding of economics. Forgive me, I'm
just a bitter Canadian upset that we're now running a huge deficit and passing
the buck on to our children.

~~~
Trisell
I can tell you as an American, that after a while you get used to the feeling
of a huge national deficit and multi-trillion dollar debt. It becomes
something like a warm blanket of guilt that helps you sleep at night.

~~~
xenadu02
Issuing debt is just an accounting trick to maintain credibility of the
currency (i.e. That we aren't just printing dollars willy-nilly to fund the
government)

The huge chunk of debt is owed from one part of the government to the other.

No one ever cut their way to growth. The key is almost always to grow the GDP
faster than you grow the debt on average. The nominal debt number will never
go down - ever - but it should stay fixed or shrink relative to GDP if
possible.

