Optimum Mix of Power Sources

Energy research is not consistent and often does not fit a common standard for comparison. The calculations are made especially without considering so-called “externalities”, volume (size), different capital costs or existing subsidies and tax cuts. On the other hand, most of the time a single source of energy is compared with other sources, without considering a possible combination of energies. Last but not least, in some regions, geothermal energy works very well and in others, solar or wind is preferred. Any attempt to generalize possible energy solutions is not an ideal way to deal with this complex issue.

It is important to agree on industry standards for calculations. This could be the basis for defining the ideal energy mix for each region or even for each city.

Many academics and practitioners, though with very different opinions in other details, agree that a viable and scalable clean energy solution that can satisfy all the earth’s energy needs now and in the future is solar energy. Some propose to use the deserts of the world and others include decentralized panel installations. One of the problems is the relatively high investment that would be required to generate and transport solar energy to the final consumer. Another challenge for local power generation and storage is that many countries do not have a two-way intelligent network infrastructure.

Kammen (2014) indicates that each region and country has its own legislation and regulations to encourage investments in clean energy. In California, it is an obligation; In Germany, there are special rates, and so on. Such policies seem to have had positive results. But it is not really clear whether it was the policy or the simple and efficient use of solar technology. It is known that oil and gas companies have received many more tax benefits and subsidies compared to most clean energy projects. According to Kammen (2014), to drive the clean energy industry, companies large and small are needed. Large enterprises are needed for economies of scale in production, and small enterprises for innovation. Kammen (2014) also proposes the integration of power generation in a decentralized way, turning buildings into a network of power generators, while encouraging the use of electric vehicles.

Overcapacity and flexibility of supply and demand

According to Green and Staffel (2016), the following problems are related to the energy market: Supply should always be sufficient to meet demand; If it is not enough for a few seconds, the system collapses. Only a few storage technologies are viable, but more research is needed.

Strategies to address these challenges include building more capacity than needed and maintaining standby power sources, which can be used to provide power if required (Green and Staffell, 2016). Building more capacity than needed introduces risk associated with investments.

A possible solution would be to use excess energy in non-peak hours for certain flexible demand alternative applications. A flexible demand could be charging stations for electric cars or building storage. When no electricity is required in the main electricity market, or when prices are too low, power generators could use such arrangements to supply power for alternative uses that use distributed storage.

An Intelligent Infrastructure Network

Electricity infrastructure in most countries does not seem to have the technological characteristics that would make it possible to have some flexibility in the generation and distribution of energy without having to agree on considerable excess capacity and long modes of transport. The infrastructure appears to be designed with a centralized power generation and distribution approach.

A more decentralized approach would provide greater market security. A decentralized approach to energy creation could be a concern for utilities from a business perspective, but the local installation of power systems would be highly fragmented and therefore competitive and probably more effective in providing better prices and quality. In addition, more people can consume more energy when prices fall. Self-power generation could help households soften abrupt changes in electricity prices.

Local solar installations are much easier to handle

According to Navigant Research, global microrred capacity is expected to grow from 1.4 GW in 2015 to 7.6 GW in 2024 in a baseline scenario.

A study by Stauffer (2015) concludes that the deployment of decentralized solar energy to scale requires costly equipment and the development of critical technologies, which translates into added net cost to consumers. However, this study did not take into account the reduction of the necessary capacities and the increase of the installation providers that can have positive effects due to the competition in a liberalized market.

Policies related to microrred installations should include making the electricity network ready for smart grid applications that allow a bidirectional flow of electrical energy. An optimal public network would be to allow any power generator not only to inject electricity without limits, but also to draw electricity when necessary.

Large scale solar development

Desertec proposes the use of desert regions to theoretically generate all the energy required in the world. The following map shows the world in colors according to the direct solar incidence (DNI), which is an indication of the maximum potential output that can be generated by the physical size required for the generation of solar energy.

Seba (2009) states that 1% of the size of the United States’ desert lands (Mojave Desert) would be sufficient to feed the entire US. Part of the desert regions of Chile would be sufficient to feed many parts of South America. Spain, Turkey and the Sahara of Africa would be candidates to feed both continents (CleanTechnica 2011, Seba 2009, Breyer and Knies 2009, Schillings, et al.). Basically in all parts of the world, there is desert land with no more than 3000 km of distance (Breyer and Knies, 2009, Seba 2009). With new intelligent network transport lines would be enough to reach any region. “The deserts of the world receive more energy under the sun in six hours that humanity uses in a year” (Desertec 2009, Scientific American 2013). The global potential for concentrating amounts of solar energy is approximately 3,000,000 TWh / year, considerably more than the current global electricity production of 23,322 TWh / year (IEA, 2015). A large part of this renewable energy source is concentrated in the deserts of the earth.

Transition effects

Oil and gas companies may have difficulty competing in the clean energy industry. For example, we can mention Shell and BP. The two oil giants entered the clean energy industry, especially solar, with a large investment in the supply chain. Finally, both companies failed and were forced out. Miller (2013) mentions in his research that the reasons for failure included not having solar experts on the executive management team, as well as the lack of speed in the learning curve to succeed.

The market is huge as it requires a lot of new infrastructure investments for the transition to renewable energy. The risk associated with these investments will depend in part on the public policies mentioned above. While the decentralized approach could probably be competitive, large-scale solar development would likely require more active involvement of governments to secure project payments and mitigate risk. A good approach could be the launching of projects in different regions, starting with the regions with the highest solar incidence (DNI). These projects could feed local markets first and then, step by step, export to other countries.