Tony Seba was among the first to recognize the disruptive potential of solar PV with the publication of his book “Solar Trillions” in 2010. His think tank, RethinkX, recently published a report titled “Rethinking Energy 2020-2030 – 100% Solar, Wind and Batteries is Just the Beginning.”
In early December, pv magazine publisher, Eckhart Gouras, interviewed Seba and Adam Dorr, the two authors of this report. As Seba and Dorr make clear in the interview, a 100% solar-wind-battery system is not only possible, but the cheapest way to build an electricity system in the U.S. by 2030. (Read Part 1.)
In the initial interview, they introduce the concept of the “Clean Energy U-curve,” which shows that the cheapest system is actually one that involves a lot more solar PV and wind power capacity than the peak power demand profile.
And they go one step further by introducing the concept of “SuperPower”: by investing in even more solar PV and wind power than the lowest-cost system defined by the “Clean Energy U-curve,” the gain in additional energy, or “superpower,” is exponential to the money invested.
The conversation continues below.
pv magazine: The CEO of Vistra Energy, America’s largest integrated generator and retailer of electricity in competitive markets, recently said that President Joe Biden’s plan to decarbonize electricity by 2035 would be “prohibitively expensive for consumers.” Curt Morgan went on to say that: “I think reality will set in when he has serious people sit around the table talking about what is achievable and what is not.” IPPs like Vistra produced 2 out of every 5 megawatt-hours generated in the U.S., so getting these players to participate will be critical to decarbonizing this sector. How can this uphill battle be won?
Tony Seba (TS): Classic incumbent: fear, uncertainty and doubt, right? Happens with every disruption. When faced with the reality of disruption–and it’s now a reality–it’s not out there, it’s here, it’s now. Basically, incumbents go through the five stages of grief, including denial, anger and attacking the messenger.
We saw that not long ago in transportation with the CEO of Daimler, for instance, poo-pooing Tesla and saying that electrification was decades out and Tesla was building toys, right? And now they’re running for their lives.
So this is classic incumbent fear, uncertainty, doubts. Microsoft said there was no chance in hell that the iPhone was going to be successful, right? No chance, and so on. It’s classic.
pv magazine: But with the iPhone you have that big pull from the consumer, which once they realized what the smartphone could do, a much bigger market was created and classic disruption. But how do you get that pull from the consumer with electricity? It might be the cheapest, but you won’t have people rushing online or in stores to get this gadget. So it seems to be a very different dynamic?
TS: I would disagree with that. Essentially, the move to solar, wind and batteries is being constrained by the monopolies. They have no incentives for the world to go 100% solar, wind and batteries. None. They’ve had this cushy rent extraction system for 100 years. They don’t want to let it go, right?
If you give consumers and businesses their right to generate, store and trade electricity, just like we have the right to information, for instance; I mean, we didn’t ask anyone else for permission to have this conversation … we can sell and buy anything on eBay.
But for some reason, electrons are all monopolies. If you give consumers that right, and businesses, then you’re going to get competition. And if you make the electricity market competitive, then you’re going to see a different dynamics. What you’re going to see is the Walmarts of the world giving away electrons. Electrons are going to be so cheap that a Walmart would give away electrons for somebody to come in and shop right at their store.
Adam Dorr (AD): Another source of competition is entire regions are going to be able to compete once superpower is recognized for the opportunity it is. Today, in places like Germany and California that are early adopters of solar and wind, there already is some superpower being generated for some small part of the time: when it’s very sunny out and you have a surplus of output from solar.
But today, the incumbent system, the old system has an irrational response to this essentially free electricity, almost zero marginal cost, clean energy. What could be better? The irrational response to the existing system is: this is a problem, it’s a threat, and we need to curtail this output of electricity – let’s flush it down the drain. It’s completely crazy, but this is the current system. A clear sign the disruption is imminent, if you have irrational system behavior like this.
Historically, disruptions are led from the outside, not by the incumbents. We will see examples emerge, where a region says “we’re going to lead this disruption, take advantage of this incredible opportunity that superpower presents. It’s not a problem. It’s an opportunity. And watch: we can give electricity at an extremely low cost, maybe even free for some time, part of the day, if manufacturers move to our regions to take advantage of that.”
Regions will end up competing with one another with entirely new business models and ways of creating value because the new system produces electricity in such a different way than the current system does. With zero or near zero marginal costs, this changes the game completely. We are going to see competition, whether the incumbents like it or want it or not. It may not be from individual consumers who are pulling the market with demand, but we’re likely to see competition at different scales. And that will push the entire system towards disruption.
pv magazine: According to Vistra it would take an investment of $7 trillion to decarbonize the electricity sector in the U.S. and then only by 90% by 2050. What accounts for this massive disconnect between Vistra’s figure and your analysis?
AD: There is a prevailing myth that 90% is somehow better than 100%. It’s better economically. It’s more affordable. It’s more feasible. This is a mistake, it is an error.
What we’ve discovered with the clean energy U curve, and especially with superpower and disproportionate returns, is that a 100% system has much better benefits and a lower cost of electricity than a 90% system does. This is very un-intuitive and really flips the existing narrative. The idea that we need to only go to 90% and it will be a struggle and a mistake or a problem to go to 100 is backwards. It isn’t just wrong. It would be a mistake to only go to 90%.
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