A few lonely scholars Keep warning for many years Solar energy faces a fundamental challenge that may prevent the rapid growth of the industry.Simply put: in You add more solar When it comes to the grid, the less valuable it becomes.

The problem is that solar panels generate a lot of electricity on sunny days, often exceeding the required electricity, which drives down the price—sometimes even to a negative value.

Unlike natural gas power plants, operators of solar power plants cannot easily adjust power up and down as needed, or generate space power during the day, night, and dark winter. You are free when you have time, that is, when the sun is shining. At that time, all other solar power plants were also generating electricity at the highest level.

A kind New report California, which discovered that it produces one of the world’s largest shares of solar energy, has severely experienced this phenomenon known as the solar energy value crunch.

According to a Breakthrough Institute analysis to be released on July 14, since 2014, the average wholesale price of solar energy in the state has fallen by 37% relative to the average price of electricity from other sources. In other words, utilities are paying less and less for solar power plants. In general, due to fluctuations in its generation mode.

The wholesale price is basically the amount that the utility company pays for the electricity that the power plant provides to homes and businesses. They rotate throughout the day and throughout the year, supporting solar operators in the morning, afternoon, and other times when there is no excess supply. But as more and more solar power plants come online, periods of oversupply that drive down these costs will become more frequent and more obvious.

The lower price may sound good to consumers. But it has a disturbing effect on the world’s hopes of rapidly expanding solar capacity and achieving climate goals.

If developers and investors make less and less money, or even lose money, it will be difficult to convince them to continue to build more solar power plants. The study pointed out that, in fact, California’s buildings have been flat since 2018. But if it wants to achieve its ambitious clean energy goals, the state will need the industry to accelerate its development significantly.

This may also quickly become a broader issue.

“As we significantly expand the scale of solar energy, California is a small peak of what is going to happen in the rest of the world,” said Zeke Hausfather, director of climate and energy at the Breakthrough Institute and author of the report.

This is because although solar energy accounts for about 19% of California’s electricity generation, other regions are also rapidly installing photovoltaic panels. The study found that, for example, Nevada and Hawaii, the share of solar power generation in 2019 is about 13%. The levels in Italy, Greece and Germany are 8.6%, 7.9% and 7.8% respectively.


So far, huge solar subsidies and the rapid decline in solar power costs have offset the decline in the value of solar power in California. As long as the cost of building and operating solar power plants is getting lower and lower, value deflation is not a problem.

But as the state’s share of solar power continues to climb, it may become increasingly difficult to achieve this trick. The report found that if the cost of building and installing solar panels gradually decreases, California’s solar energy contraction may lead the race against cost reduction as early as 2022 and climb from there. Hausfather pointed out that by then, wholesale prices will be lower than the subsidized cost of California solar, destroying the purely economic justification for building more factories.

United States SB 100 legal, Passed in 2018, Requiring all electricity in California by 2045 to come from “renewable and zero-carbon resources.”By then, about 60% of the state’s electricity may come from solar energy, based on California Energy Commission Model.

The Breakthrough study estimates that the value of solar energy—or the average wholesale price relative to other sources—will fall by 85% by then, at least with the current existence of the California grid, which will weaken the economics of solar farms.

How do we fix it?

There are many ways to alleviate this effect, but none of them may be a panacea.

The solar industry can continue to work hard to find ways to reduce the cost of solar energy, but Some researchers think It may need to switch to new materials and technologies to reach the extremely cheap levels needed to transcend value deflation.

Grid operators can add more energy storage-although once renewable energy provides most of the power to the grid, this method becomes very expensive. Learn Rear Learn Find. States or countries can also increase subsidies for solar energy; add more long-distance transmission lines to allow regions to exchange clean electricity as needed; or incentivize customers to shift energy use to a time of day that is more suitable for high power generation periods.

The good news is that these will all help simplify the transition to clean power sources in other ways, but they also require a lot of time and money to get started.

The California solar market is a reminder that the climate clock is ticking.

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