Solar energy continues to gain market share worldwide. It’s estimated to achieve a compound annual growth rate of 20.5% between 2019 and 2026. Despite this momentum, obstacles remain.
Obstacles to the growth of solar energy
There are three major hurdles:
- Grid interconnection delays
- Negative pricing
- Solar curtailments
What could cause delays in grid interconnections?
North America has two major—and three minor—power grids, or “interconnections.” Every new utility-scale solar site must request connection to these grids. At this point, they enter whatas’s known as the “generator interconnection queue.” This queue consists of four stages:
- The project developer initiates the interconnection request
- The necessary interconnection studies begin
- The utility and generation owner negotiate the interconnection agreement
- Commercial operation starts
Projects can spend years waiting in this queue, with some assessments finding 3.7 years to be the typical time required for generation projects to complete the interconnection request process and begin commercial operations.
What does negative pricing mean?
Negative pricing happens in the spot markets when demand for solar energy is low andor supply suddenly increases. It can force renewable power plants to give away electricity or even pay distributors to take it. If the price goes negative, developers cannot recoup the costs of building their solar projects and are therefore less inclined to build projects where negative pricing is a possibility.
For reference, spot markets are “a commodities market in which the commodity is sold for cash and is delivered to a specific location for a specific time period that occurs on the day of the sale or on the day after the sale.”
When are solar curtailments used?
Excess renewable energy supply can also lead to curtailment. This is when operators or utilities require reduced solar energy from generators as a way of reducing transmission congestion. Sometimes curtailment goes so far as to completely shut down generation from a project for a period of time, wasting the solar energy that could have been produced.
Negative pricing and solar curtailments occur worldwide. One recent example of curtailment happened in Spain. Curtailment caused by insufficient energy transmission—failure to move enough power from renewable generators to locations needing power—has also occurred frequently in Texas, a leader in wind and solar power installations.
Potential solutions to the obstacles facing the solar industry
Long-term power purchase agreements between utilities and solar projects (PPAs) provide financial support to build out more renewable energy generation. However, while PPAs may bypass spot market mechanisms, the power generated might not always be able to flow across the grid. This is usually due to infrastructure issues.
So how do we solve these threats to solar power? As a global provider of solar trackers, we at Array take a broader, long-term view of these issues. We see solar curtailment as a pressing but relatively temporary concern.
Three potential solutions are:
- Improving transmission and eliminating bottlenecks
- Advancing current energy storage and developing new energy storage technology
- Improving market stability
Grid operators, markets, and policymakers are responding to the demand for expanded transmission. For example, the Midwest Independent System Operator (MISO) recently approved 18 new transmission projects to support the shift to more renewables in the generation mix.
MISO’s grid spans all—or a portion of—15 U.S. states and the Canadian province of Manitoba. The first of the new transmission projects is expected to come online in 2028. Prior to these recently approved projects, the last major transmission project in the MISO region was approved more than 10 years ago.
Improved and expanded transmission will alleviate logjams in distribution, reducing the need for curtailment.
Expanding the use of storage—whether batteries are deployed at the site of generation or distributed across the grid—can provide an outlet when there is excess power. If more power is generated than is immediately needed, it can be saved for later when demand is high. This avoids wasting renewable energy and provides the opportunity to sell the power when it is needed rather than sell it below its value when it’s not needed.
Thinking beyond the energy storage options we already have in place could also be a major piece of the energy mix puzzle. There are solutions that simply haven’t been uncovered yet.
Solar power expansion is a necessity for economic development and climate action. We’re hopeful that the growing recognition of local renewable energy as being vital to national energy security will spur further interest in clean energy manufacturing and technology innovation.
Our wish list for enabling more solar power covers many of the things we see as hugely important in achieving more market stability:
- A stable and incentivizing regulatory environment that will provide certainty for the long-term investments needed to expand renewable energy, including sustained tax credits
- Infrastructure enhancements to speed access to grid interconnection and to meet demand
- Streamlined permitting for solar power projects
- Breakthroughs in battery technology to widen deployment of energy storage
- Improved global trade transparency and reliability
Better market stability will address all three of the hurdles discussed above. Interconnection delays will grow shorter with streamlined permitting, and negative pricing and curtailments will be alleviated by a more stable regulatory environment, infrastructure enhancements, and better storage.
What’s Next for the Renewable Energy Industry?
Solar power is crucial for industrialized and developing countries to ensure access to emissions-free, reliable electricity. Technological and engineering breakthroughs have lowered the costs of photovoltaics, but now economic shortfalls and logistical roadblocks threaten further progress.
Thankfully, a growing number of investors, regulators, and consumers are sounding the call for clean energy. The industry is ready to build on its success and win over even more energy consumers—the ultimate drivers of market forces.
In the meantime, we’re continuing to develop new ways to make solar tracking both simpler and more sophisticated. By focusing on making solar sites as functional and productive as possible, we’re doing our part to make our solar wish list come true.Click here for other articles by this author