Chapter 1 Two Futures
The year is 2050, and the world is more polluted, unequal, and dangerous than ever. Megacities like New Delhi, Mexico City, and Lagos are suffocated by smog. More than a billion people around the world still lack access to reliable electricity. And climate change is serving up droughts, floods, and heat waves with alarming regularity.
The trouble is that fossil fuels continue to exert a stranglehold on the global economy. Coal and natural gas are still burned to produce most of the world’s electricity and run most of its factories, spewing carbon dioxide and other climate-warming gases into the atmosphere. And oil still fuels a majority of cars and trucks, as well as almost every single airplane and ship on the planet, further polluting the air.
Much of this disastrous state of the world is a result of the solar power revolution sputtering out. Way back in 2016, solar photovoltaic (PV) panels, which convert sunlight into electricity, became the cheapest source of electricity on the planet.1 Experts breathlessly prophesied that it was only a matter of time before solar PV dethroned fossil fuels—a bold claim for a technology that supplied less than 1 percent of the world’s energy needs.
For a time, those rosy projections were vindicated. Over the next two decades, solar PV would soar in popularity. In developed countries, new homes came with sleek solar roofs, and in the poorest corners of the developing world, stand-alone solar systems gave millions of villagers with no connection to an electricity grid their first taste of modern energy. From Chile to China, more solar farms—vast fields of PV panels—sprouted than all other types of power plants combined. And as producers—mostly in Asia—churned out silicon-based panels year after year, they got better at shaving the technology’s costs.
But sometime in the 2030s, solar’s once-unstoppable growth slowed, leaving it far short of dethroning fossil fuels. Markets around the world saturated as demand for additional solar power dried up. On its face, this stagnation was puzzling: if solar PV kept getting cheaper, widening its competitive lead over fossil fuels, why did its expansion slow?
Part of the problem was that even as the cost of producing electricity from solar PV fell, the value of that electricity—the amount that a utility, for instance, was willing to pay for it to then send via the grid to meet the needs of homes and businesses—decreased even faster. The value diminished because a power source tied to unreliable sunshine quickly becomes a nuisance as it grows. PV panels produce power only when they receive sunlight, so nightfall (or even a passing cloud) can sideline them. Even before 2020, this intermittency caused problems in some regions that were early solar adopters. In California, for example, solar PV quickly rose to meet most of the state’s power needs around lunchtime, when the sun was overhead. But then, adding a new solar panel, no matter how cheap, was worthless because when the state needed power—at dinnertime—the sun was setting. As a result, the gently declining cost of existing silicon solar PV technology was soon overtaken by the swift erosion of the value of the power the panels could produce.
Some countries—especially those that raced ahead to deploy solar PV projects—recognized that solar’s value was in decline. But they were confident that lithium-ion batteries, which were also getting cheaper alongside PV panels, would come to the rescue. The falling cost of these batteries did indeed make it feasible to store some of the unused daytime solar power for later in the evening. Batteries, though, were not the panacea that many expected. It made economic sense to use them to store power for a few hours; but they were too expensive to use for smoothing out the day-to-day variations in solar PV output and certainly for handling the biggest energy storage need: squirreling away surplus solar energy from sunny months for use in gloomier ones.
Solar PV’s growth also slowed because countries, especially in the developing world, failed to build out their electricity grids to keep up with the deployment of solar power. For example, India struggled to connect solar farms in distant deserts to its thirsty megacities. And when the government shifted focus to deploying solar panels on building rooftops, ramshackle urban grids buckled under the strain of absorbing sudden surges of solar power.2
Having leveled off, solar’s contribution to the world’s energy needs is respectable but limited today, at the mid-century mark. With the exception of wind power, other clean energy sources have not stepped in to pick up much of the slack. Wind power’s rise has mirrored that of solar PV, and the two sister sources of renewable energy jointly produce a third of the world’s electricity. But like solar PV, wind power is unreliable, so it too faces limits on its deployment.
More reliable sources of clean energy have disappointed. Nuclear power—politically radioactive—has declined from its glory days in the twentieth century to just a few remaining reactors in Asia today. New hydropower dams are just as unpopular. And various other potential clean energy sources—from geothermal to tidal power—remain mostly on the drawing board. As a result, the world still depends on fossil fuels to meet most of its electricity needs.
On top of this, many of the world’s energy needs don’t involve using electricity. Those needs are met almost exclusively by fossil fuels, and they have only grown as emerging economies have industrialized, with staggering consequences. Industrial facilities, like cement and steel plants, belch out soot from burning coal. Skyrocketing demand for transportation has also defiled the air and caused crippling congestion. Although fewer people own cars today than in decades past thanks to fleets of autonomous vehicles and convenient ridesharing, these advances have made it easier and cheaper than ever to get around; the resulting surge in travelers has packed more cars on the road at any given time.3
Many had hoped that electric vehicles might reduce local air pollution, and indeed they have risen to lead the pack in new vehicle sales. But over 1 billion petroleum-fueled cars and trucks still share the road with electric vehicles; and supposedly clean electric vehicles actually cause substantial pollution every time they charge up with electricity generated by fossil-fueled power plants. As a result, two-thirds of humanity face toxic air in miserable metropolises, in which global elites try to spend as little time as possible.
This would all be bad enough, but scientists predict it will only get worse because the cumulative carbon emissions from burning all those fossil fuels have set irreversible climate shifts in motion. It seems laughable that way back in 2015, countries around the world signed the Paris Climate Change Agreement, committing in all seriousness to limit global warming to 2°C. Just fifteen years later, those countries had already pumped enough greenhouse gases into the atmosphere to guarantee at least such a temperature rise.4
Climate change has already taken a toll around the world. Rising sea levels have spurred waves of mass migration from the floodplains of Bangladesh. Ocean acidification has decimated fisheries from Norway to Nicaragua. Droughts across Africa and the Middle East have left hundreds of millions in a persistent state of famine and water scarcity; Egypt has just declared war on Ethiopia for choking off its supply from the parched Nile river.5
Far from interceding, the United States has turned inward from the crumbling world order to weather superstorms on the Atlantic seaboard and extinguish the wildfires perpetually raging in the west. But the worst is yet to come. Miami and New Orleans will be underwater before the century is out. New York will be the new Bahrain of heatwaves.6 For climate change is actually speeding up. The white ice sheets at the globe’s poles have largely disappeared, leaving only darker ocean water that reflects less sunlight away and warms the Earth’s surface even faster. Vast stores of greenhouse gases, once trapped by permafrost that has since melted, are escaping into the atmosphere from Siberia and the bottom of the ocean. Like a runaway train, the changing climate can’t be stopped. Not now, nor for the next 10,000 years.7
Belated international efforts to drastically curb global emissions have stalled. Emergency negotiations at the United Nations over a global carbon tax don’t stand a chance of finding common ground among bickering blocs. A corporate coalition of fossil fuel majors and heavy industries adamantly opposes what it calls draconian proposals to leave fossil fuels in the ground, arguing to great political effect that doing so would further impoverish the developing world. While the political theater has played out, entire countries—including the Marshall Islands, Tuvalu, and Fiji—have been swallowed whole by the Pacific Ocean.8
The time for decisive action is long past. With the benefit of hindsight, it is increasingly clear that the meteoric growth in solar power lulled governments into false confidence before their rude awakening to the solar slowdown. They had left the transition to clean energy on autopilot. Had they instead made a small course correction in those early days—by planning for, and investing in, the future—today’s gloomy outlook might have been avoided.
A Brighter Future
The year is 2050; despite facing grave challenges, the world still controls its destiny. Nightmare scenarios of economic and humanitarian catastrophe—toward which the planet once hurtled—are off the table. The climate is undeniably changing, but at a manageable pace that has allowed countries to adapt. Now, the foremost priority of governments around the world is to find fulfilling employment for a global population of 10 billion in the era of artificial intelligence and the data economy.
The dramatic rise of clean energy has prevented climate change from spiraling out of control—and in the process powered economic growth and lifted the world’s destitute out of darkness. For the first time in history, fossil fuels are on the wane. A dwindling number of plants still burn coal and natural gas to produce electricity and run factories, but their carbon emissions get captured and either used in industrial processes or stored deep underground. Oil still fuels a large percentage of global transportation, but that share falls every year as electricity and clean fuels are used instead.
Solar energy is the linchpin of this clean energy revolution. For 3,000 years, civilizations have yearned to harness the sun—an inexhaustible fireball that could power the world’s energy needs thousands of times over. Finally, in recent decades, solar energy has risen relentlessly, clawing market share from fossil fuels. Today, solar supplies a third of global electricity; well before the century is out, most of the world’s energy needs will be met by converting sunlight into electricity, heat, and portable fuels. When that happens, the twenty-first century will be remembered as the one in which humankind finally tamed the sun.
Obviously, today’s solar technologies bear little resemblance to the quaint, silicon-based solar PV panels that China produced back in the opening decades of the twenty-first century. Those PV panels played an important role in establishing solar technology as a feasible source of energy. Their early success also reassured the world’s biggest investors that it was safe to invest in clean energy projects. And they still reliably pump out electricity in some of the world’s oldest solar parks.
But those original PV panels—heavy, ugly, and maxed out in terms of performance—evolved to become lightweight, attractive, and much more efficient at converting sunlight into electricity. By 2030, industrial printers were churning out rolls of solar PV coatings in a range of colors and transparencies. A decade later, solar-coating your house was as cheap as painting it.
Architects rejoiced. Today at the mid-century mark, most urban buildings are wrapped in electricity-generating solar materials that tint the windows, enliven the facade, and shrink the carbon footprint. Nearly free electricity has induced heavy industries to switch from burning fossil fuels to running off solar power. Solar PV isn’t just powering glamorous urban buildings or massive industrial plants; PV materials are now light enough to be supported by flimsy shanty roofs in the slum outskirts of megacities in the developing world. And way outside the cities, even the poorest of the poor can easily afford solar power. Abject energy poverty has been eradicated—nearly every person on the planet has access to some electricity—although much work remains to address energy inequality.
Still, these wondrous solar PV coatings remain at the mercy of unreliable sunlight. Their trivial cost has helped mitigate this concern, making it economical, for example, to unroll a solar PV carpet over vast swathes of California’s Mojave Desert and throw away excess power in the middle of the day. This, in effect, gives rise to a reliable power plant capable of producing a constant amount of electricity from late morning through early evening.
But solar PV still cannot supply California with power once the sun sets. Fortunately, that need has been met by a completely different solar technology that enjoyed a renaissance in the 2020s after analysts prematurely wrote it off as dead. Concentrated solar power plants, which employ armies of mirrors to focus the sun’s rays to generate heat that can run a power plant, have improved dramatically in cost and performance. Most important, they are able to store the heat that they capture to produce power throughout the night. So, in tandem, PV coatings and concentrated solar power plants generate 24/7 electricity for a fraction of the cost of running fossil-fueled power plants.
In recent decades, the term “solar energy” has supplanted “solar power.” That’s because PV and other solar technologies not only generate electric power now, they also produce fuels that can store energy to be used where electricity is less practical. In the mid-2030s, firms began to mass-produce materials to convert sunlight directly into hydrogen fuel. Slowly but steadily, the makeup of the world’s fuel mix has shifted toward clean solar fuels. Just as oil refineries convert crude oil into products like gasoline, jet fuel, and asphalt, so do solar refineries convert hydrogen into liquid fuels for vehicles, ships, and aircraft and into a whole range of other products, from fertilizer to plastics.
Hydrogen itself has become a popular fuel for cars and trucks. Petroleum-fueled vehicles are now a distant third-place choice, behind electric and hydrogen-fueled vehicles, neither of which contribute to local air pollution. As a result, even though urban denizens complain of ever-worsening traffic, air pollution levels peaked in 2040 and have been declining ever since.
Today’s panoply of solar technologies is the result of farsighted decisions made over three decades ago in the public and private sectors to invest in innovation. The United States led this push and has profited handsomely as a result, now that the combined market for solar technologies is bigger than that for petroleum products. Just as America had surged past Saudi Arabia in 2013 to become the world’s biggest oil producer, so too did it dethrone China twenty years later as the leading manufacturer of solar technologies. That was just as well—or else America might have developed a dangerous dependence on imports of Chinese energy products. Instead, the United States managed to achieve prosperity and energy security at the cost of a few billion dollars a year in additional funding for research into and development and demonstration of new technologies—a rounding error on the federal budget.9
Solar PV remains the most widespread method of harnessing the sun’s energy even as other technologies, such as solar fuels, rise in popularity. To cope with the massive fluctuations of electricity from solar PV, countries have innovated in the design of their energy systems.
For example, countries have cooperated to build out continent-spanning power grids—the biggest ones are in Asia and North America—that connect solar PV in sun-drenched deserts with power-hungry cities. Not only are grids bigger, but they are smarter. They transmit signals to billions of Internet-connected devices—such as air conditioners, water heaters, and industrial machinery—that adjust their electricity demand on the fly to match the availability of solar PV supply. In addition, they can call upon various options to store intermittently produced solar energy, from batteries to hydropower reservoirs to underground wells. Grids can even intelligently decide when to charge up or draw down the millions of plugged-in electric vehicles that act as mobile batteries to back up solar PV.
Although solar energy has emerged as the star of the energy revolution, every star needs a supporting cast. Wind power has ably supplemented solar, rising steadily during this century. And the renaissance of nuclear power has shored up the supply of reliable electricity after governments around the world braved political headwinds to invest in a new generation of safer, cheaper reactors. Seeing the writing on the wall, fossil fuel companies have done their part as well, lavishly funding the development of technologies to capture and store the carbon emissions from the fossil-fueled plants that remain. They have even invested heavily in their own portfolios of renewable energy projects.
Despite the tremendous strides countries have made in reducing carbon emissions, the climate has still changed substantially. Again, solar energy offers hope for countries seeking to adapt. To ease water scarcity, countries have turned to cheap solar PV to run desalination plants that transform saltwater into freshwater. Concentrated solar power plants have also been repurposed in the developing world to power refrigeration, preserving badly needed food supplies and blunting famine.
The sobering scientific consensus predicts that the climate will continue to change for the foreseeable future. To stabilize it, governments are in final negotiations before unveiling a massive effort to suck carbon dioxide out of the atmosphere. Some of the countries hardest hit by climate change are clamoring for alternative approaches, like seeding the world’s clouds to reflect more sunlight. Fortunately, governments can afford to deliberate carefully over whether and how to engineer the climate. Sharply reducing global carbon emissions from energy bought them time to do so.
Few would dispute that solar energy has emerged as one of the most important technologies—if not the most important one—of the twenty-first century. It may not have ensured victory over global challenges like climate change. But it has given the world a fighting chance.
The Sky’s The Limit
The world may well be bound for the first of the two futures laid out here—and that’s terrifying. But there is cause for optimism: the second future is not science fiction, but rather still an achievable goal. To arrive at it, the world must address the many challenges of realizing solar energy’s sky-high potential—and that will require sharply increasing investment in innovation.
The reason that, for millennia, the sun has eluded humanity’s best efforts to harness it—despite being the planet’s most abundant energy source—is that its rays are terribly inconvenient to tap into. The amount of sunlight fluctuates wildly depending on cloud cover, time of day, and season of the year, whereas a barrel of oil or a ton of coal is a reliable store of energy to be used on demand. Like fossil fuels, sunlight is distributed unevenly. In some places it scorches the terrain; in others, it hides behind the clouds. Yet unlike the energy packed into dense fossil fuels, the sun’s energy arrives much more spread out. Consequently, a field of solar panels typically requires hundreds of times more land to produce the same amount of power as does a power plant that burns natural gas.10
It will take human ingenuity to tame this troublesome energy source. Familiar solar PV panels that convert sunlight into electricity have made tremendous strides. In recent years, PV panels have gotten dramatically cheaper, and in 2016, solar PV projects attracted more investment globally than did any other type of power plant. But solar PV panels have a serious limitation: they only generate electricity when the sun shines. As a result, despite their early success as a niche energy source, they will struggle to dislodge convenient fossil fuels that offer on-demand energy.
And if the ongoing expansion of solar PV stalls, few clean energy alternatives to fossil fuels are on track to compensate. According to the International Energy Agency (IEA), twenty-three out of twenty-six clean energy technologies—from efficient industrial plants to nuclear reactors to clean fuels for trucks and planes—were being deployed too slowly as of 2017 to slash the world’s carbon emissions enough to limit dangerous climate change. The remaining three—solar PV, wind power, and batteries (for the grid and in electric vehicles)—all enjoyed rapid commercial adoption.11 But solar PV and wind are intermittent sources of electricity, and batteries can only do so much to smooth out their output. If solar PV stops expanding, slotting into a bit role in a clean energy ensemble, the first future could be in play. Realizing the second future instead will require solar energy to take center stage to make up for disappointing progress from other clean energy technologies.
Innovation is needed to make that happen. The solar industry will need new ways to attract vast sums of investment to fund solar’s continued rise. Countries will have to redesign their energy systems, starting with their electricity grids, to tolerate intermittent solar PV output. And scientists and engineers will need to develop the next generation of solar technologies—better suited to harnessing abundant but inconvenient sunlight to meet the world’s diverse energy needs—to succeed today’s PV panels.
These wondrous technologies are not mere fantasies. Early versions of all of them already exist. In the last five years, scientists at the lab bench have made rapid strides in creating efficient solar PV coatings from dirt-cheap materials.12 Researchers are even further along in demonstrating the next generation of concentrated solar power plants, which could cost-effectively store sunlight in the form of heat to generate electricity night and day.13 And recent prototype devices in the lab have achieved on a small scale what many scientists consider the holy grail: transforming sunlight into energy-dense fuels efficiently and with inexpensive materials.14 Private investors are sinking real money into these technologies. For example, Bill Gates has launched a $1 billion investment fund and identified “solar paint” and “solar fuels” as two of the most important breakthrough clean energy technologies.15
Gates recognizes that harnessing the energy from the sun will probably be the single most important element of a clean energy transition. But he also knows that progress to date, though encouraging, is nowhere near sufficient to unlock the full potential of sunlight. The problem is that very few others have had a similar revelation.
Everybody’s Doing It
A global push for innovation will require countries to realize that they’re headed toward the first future and need to do something about it before it’s too late. It doesn’t help that the paths toward each future start out looking deceptively similar—both involve today’s solar PV panels surging in popularity over the next decade or two—so it’s not obvious which path the world is on right now.
Blissfully unaware of the two futures, countries around the world are jubilant at the arrival of cheap solar PV panels and focused today on installing them as fast as they can. They installed 50 percent more solar capacity in 2016 than in the prior year. And even though solar PV still supplied less than 2 percent of the world’s electricity through 2016, that rapid growth has convinced governments that solar is on track to solve their most intractable problems.
They will be sorely disappointed if the first future materializes and solar’s early growth hits a wall down the road. Whenever I’ve visited burgeoning solar markets—in Asia, the Middle East, or Latin America—I’ve left feeling unsettled about the gulf between the hopes that the first future would dash and the rewards that the second future would bestow.
New Delhi, India
We sipped chai on a verandah overlooking the expansive gardens of an ornate colonial relic, New Delhi’s Imperial Hotel. Dressed in an immaculate pinstripe suit, complete with Hermès tie and a matching pocket square, my interlocutor explained his plan to meet India’s rising energy demand with solar power. He radiated confidence as he remarked that his firm’s track record of working with the government would guarantee it a slice of the growing solar pie. Left unspoken was the pedigree that backed Rahul Munjal, the scion of the Hero motorcycle empire that manufactures the dominant brand of two-wheelers in India.
Munjal isn’t the only industrialist to venture into solar power; producers of everything from textiles to tractors have all made forays into the entirely unrelated solar power sector in India.16,17 What’s more, India’s solar sector has attracted deep-pocketed foreign players as well, including the Japanese conglomerate Softbank.18 These firms and investors are drawn by the prospect of powering India’s expanding economy and by the Indian government’s all-in bet on solar.
Prime Minister Narendra Modi has hailed solar as the “ultimate solution to India’s energy problems.”19 As soon as he entered office in 2014, he announced an audacious target for solar power: by 2022, India would install 100 gigawatts (GW; a measure of how much electricity a power plant can pump out every second) of solar to provide roughly 10 percent of its electricity use. Starting from basically nothing, Modi was pledging to install in India more than half as many solar panels as existed in the entire world. He didn’t waste time getting started. A year after he took office, annual deployment of solar PV in India more than doubled.
Modi is betting that the tumbling costs of solar PV—which fell by three-quarters between 2010 and 2017—will enable India to keep installing more of it. And his government plans to harness the versatility of PV installations—which can take the form of one panel or a million—to solve a whole range of pressing problems.
As figure 1.1 illustrates, India’s 100-GW target breaks down into three categories. Most of the planned solar expansion will be in the form of utility-scale solar projects—massive solar farms sited in the sunniest areas—that are cheapest to build thanks to economies of scale. But over a third of the target is reserved for rooftop solar panels, distributed across India’s crowded cities. A last sliver of the target is small, off-grid setups in rural villages having limited or no connectivity to the main power grid.20
India’s solar targets for 2022 and its electric power capacity mix in 2016. The chart on the left plots the Modi government’s target for 100 GW of solar power generation capacity by 2022. The pie chart on the right breaks down India’s electric power–generating capacity by source in 2016.
Source: Sivaram, Shrimali, and Reicher (2015), International Energy Agency.
One of the fastest-growing major economies in the world, India is hungry for power. As the population grows, farmers move to the cities, and a swelling middle class chases the energy-intensive trappings of a modern lifestyle, India could use four times as much power by 2040 as it does today. The government is betting that solar PV could displace coal power as its main engine of growth, and it has scrapped plans for new coal power plants.21
That’s not all. The government has also pinned its hopes on solar to clear India’s air. Beyond utility-scale solar plants substituting for polluting coal plants, rooftop solar panels are meant to replace household diesel power generators that cause urban smog. And Modi hopes to stamp out energy poverty with off-grid systems. That is long overdue in a country where nearly 300 million people lack any access to electricity and many more suffer from unreliable access.
Finally, the Modi government is banking on solar to meet India’s international commitments as well. India is increasingly in the international spotlight because of its rising contribution to climate change. By mid-century, India could vault above China and the United States to become the world’s biggest emitter of greenhouse gases. In response, the Modi government’s 100-GW solar power target is the most ambitious part, by far, of its climate pledge under the 2015 Paris Agreement.
The problem is that Modi’s wide-ranging wish list for solar—to power economic growth, clean the air, deliver energy access, and curb climate change—depends on a wildly optimistic extrapolation of solar’s future growth. From 2012 to 2016, roughly 100,000 households gained access to electricity thanks to off-grid solar systems—but over 50 million households remained in the dark.22,23 In 2016, total solar power capacity doubled, but coal still generated over 50 times as much electricity as did solar PV.24 Even if India managed to achieve Modi’s audacious 100-GW solar target, fossil fuels would still produce most of India’s electricity. For solar to deliver what the government expects out of it, today’s red-hot market will have to continue to grow for decades to come.
But that market could very well cool down. India has historically struggled to maintain its ailing power grid. If that trend continues, the grid may not be up to the task of transmitting power from faraway solar farms to growing cities or absorbing the swells and sags of unreliable solar power. And after an initial surge in solar PV installations, India might find little use for adding more; additional panels will not solve the problem of meeting electricity demand that peaks in the evenings. As a result, the nation might be left scrambling in search of other sources of cheap power to sustain its economic growth. That need might prompt it to double down on tried-and-true coal power, which would continue to foul India’s air and drive its carbon emissions higher.25 And outside of the electricity sector, other uses of fossil fuels could worsen air pollution in India’s cities, with more petroleum-fueled scooters, cars, and lorries on track to crowd the streets while electric vehicles remain comparatively marginal.
The first future would be disastrous for India. And the stakes couldn’t be higher for the planet. As the world’s fastest-growing source of carbon emissions, India could make or break the quest to contain climate change.
Rokkasho, Aomori Prefecture, Japan
The northern tip of Honshu, the main island of Japan, is known for its picturesque peaks and hot springs. So it’s a jarring change of scenery to emerge from the rolling countryside to find the forbidding gates of the Rokkasho Reprocessing Plant. The facility is designed to convert depleted fuel from Japan’s nuclear reactors into fresh fuel to reduce the need for uranium imports. I’d been invited by the Japanese government to tour the plant, and although I wasn’t allowed to take pictures, I still vividly remember the sprawling complex of chemical towers, labyrinthine pipework, and hulking centrifuges. It’s an engineering marvel. After three decades and $25 billion in construction costs, Rokkasho is finally set to open in 2018.
Rokkasho is a symbol of a Japanese obsession: energy security. An island nation with negligible domestic energy resources, Japan has fretted about its energy security ever since the oil shocks of the 1970s. And for most of the last half-century, nuclear power has anchored its strategy to seize control of its energy supply. Yet even as Rokkasho prepares to start recycling nuclear fuel to end Japan’s dependence on imports, most of its nuclear reactors have been shuttered. As a result, a desperate Japan is now looking to urgently ramp up its supply of solar power to achieve energy self-sufficiency.
Less than a decade ago, solar wasn’t even on the table. In 2010, Japanese policymakers unveiled an ambitious plan to secure 70 percent of the country’s energy needs from domestic sources by 2030.26 The centerpiece of that plan was building enough nuclear reactors to supply half of Japan’s power.
Disaster struck just a year later. In 2011, an earthquake and resulting tsunami caused three nuclear reactor meltdowns at Fukushima-Daiichi and the release of some radioactive material, forcing 164,000 residents to evacuate and deeply traumatizing the country.27 Immediately, Japan shut down its entire fleet of nuclear reactors. Whereas nearly 40 percent of its power needs were met by local sources before the accident, that figure plunged to 12 percent in the aftermath of Fukushima (figure 1.2).28 Now, to restart its nuclear plants, Japan must subject each reactor to a rigorous review process and withstand grassroots legal challenges—through the end of 2016, it had managed to restart only four of nearly fifty reactors.29
Japan’s electricity mix before and after Fukushima. The bar on the left breaks down the sources of Japan’s electricity in 2010, before the 2011 Fukushima disaster. The middle bar shows the mix of sources after the disaster in 2014. Finally, the bar on the right displays Japan’s targeted electricity mix for 2030.
Source: Institute of Energy Economics, Japan.
To fill the void, the government has turned to renewables, such as solar and wind power. Thanks to generous public subsidies, Japan’s solar market ballooned to become the third-biggest in the world in 2016.30 By then, the cost of solar had fallen so steeply that the government was able to yank most of its subsidies and still expect healthy solar growth—it is aiming for solar power to supply 7 percent of its electricity by 2030. Some analysts are more bullish, anticipating that solar will actually hit 12 percent by 2030.31 That would be remarkable, given that before Fukushima, Japan got less than 1 percent of its power from solar.
But even 12 percent won’t be nearly enough to meet Japan’s ultimate goal of securing most of its energy from domestic sources. That’s because the government’s forecast for nuclear power is probably wildly optimistic. The government faces stiff resistance from judges and the court of public opinion over restarting reactors. Building brand new ones, which will be needed to replace reactors at the end of their useful lives, is a political nonstarter. So, nuclear power might fall short of providing even 10 percent of Japan’s electricity needs in coming decades.32
In the first future, solar power would slow down well before it could deliver meaningful energy security to Japan. Already, Japan’s power utilities have warned that its balkanized grid may not be up to the task of integrating large quantities of intermittent solar power, and that the need for storage is growing.33
Still, Japan is taking baby steps toward realizing the second future. The government is third in the world in its funding for research and development (R&D) of advanced solar energy technologies.34 And Japan is enthusiastic about setting up a nationwide hydrogen economy to slash fossil fuel imports and instead run its industries and vehicles off a fuel that could one day be produced from sunlight.
The symbolism was all around me as I left Rokkasho. Just as the nuclear reprocessing plant was now behind me, the era of rapid nuclear power expansion is probably behind Japan, for better or worse. A couple of minutes later, on the highway, I found, on my right, an array of storage tanks—a strategic petroleum reserve to protect Japan from foreign oil disruptions—and on my left, a solar farm. Those tableaus represent the two possible futures for Japan. The first would leave Japan at the mercy of foreign energy imports. But if Japan can invest in the innovation needed to realize the second future, the island nation can finally achieve the self-sufficiency that has long eluded it.
Mexico City, Mexico
Nervously clutching the conference room table in the Ministry of Energy, I hesitated before trying out the Spanish vocabulary I’d studied on the plane ride over. My host, the undersecretary of energy, patiently listened as I mangled my question: “How did Mexico manage to contract for some of the lowest-cost solar power in the world?”
Of course, he then answered in impeccable English, “We did it without government sweeteners. We ran an open auction, and solar beat out every other source including natural gas, plain and simple.”
Cheap solar PV is sweeping through Latin America. Mexico’s 2016 announcement of ultra-low solar prices came on the heels of similar announcements in Chile and Peru. This trend is prompting countries to breathe a sigh of relief, for the arrival of solar power could cushion Latin America from the ravages of climate change.
To see why, consider that Latin America, more than any other part of the world, depends on hydropower. Overall, hydropower supplies a majority of the region’s power needs; the dependence rises to as much as 70 percent in some countries, such as Brazil. Yet climate change is inflicting droughts that are depleting reservoirs from Santiago to Sao Paolo; it’s also melting the Andean glaciers that supply the mighty rivers of the Amazon.35 As a result, the region faces chronic shortages of hydropower in the future.
As PV prices plummet, countries have seized the opportunity to make up the shortfall in hydropower with an equally clean and increasingly cheap power source. Now Latin America has emerged as one of the hottest solar markets around the world, poised to reach 10 percent of global solar PV demand by 2021, up from zero a decade earlier.36
Yet there are already warning signs that solar PV will face challenges in the region as more of it is deployed. For example, in Chile, a boom in solar PV installations led to a glut of power in the afternoon. As a result, the price that PV plants could fetch in the marketplace for the power that they produced was literally zero during those times.37 And giving power away for free makes it impossible to repay the cost of constructing a solar PV plant, no matter how cheap that cost is.
Chile is a harbinger for what could happen across Latin America in the coming decades. Despite solar’s rosy growth prospects today, its value to prospective electricity customers could sharply deteriorate as more of it comes online. And if solar’s growth stalls in Latin America, consistent with the first future, the region could suffer from chronic power shortages as climate change wreaks havoc on hydropower plants.
For now, most in the region are simply content to ride the wave of cheap solar, although I did get the sense that a wary few are waiting for the other shoe to drop. Later in my day of meetings in Mexico City, another official remarked to me in Spanish, “When the charity is so great, even a saint wouldn’t believe it.” I had to look that one up—it turned out he was calling Mexico’s solar boom too good to be true.
Dubai, United Arab Emirates
I arrived in Dubai all charged up. The Middle East Electricity Summit had invited me to give a keynote address about the future of solar power, so I’d prepared a detailed slideshow to share my vision. But once I got on stage, slide after slide detailing solar coatings on skyscrapers, slower rates of climate change, and cheap power for the developing world were met with yawns from the audience. I noticed several members fiddling with their headsets. Perhaps the live translation had stopped. Perhaps the electronics were more interesting than my speech.
Then, in unison, everyone perked up. I was making what I thought was just a minor point: in the near term, solar PV could offer Middle Eastern countries—notably Saudi Arabia—a way to burn less oil and gas at home and sell more of it abroad. Obviously, this wasn’t part of my long-term vision: down the road, new solar technologies are supposed to replace fossil fuels.
But the crowd wanted to hear about how solar PV could goose fossil fuel profits (never mind the irony). The people who approached me after my talk were all businessmen with interests in Saudi Arabia, Kuwait, and Qatar. Those three are wealthy petrostates whose economies depend mostly on revenues from oil and gas. But they currently squander much of that oil and gas to generate power and sell it at a deep discount to domestic customers, encouraging wasteful consumption at home and foregoing export revenue abroad. Therefore, all three countries have launched ambitious solar programs to free up oil and gas for international sale at more lucrative prices.
In particular, Saudi Arabia has big plans for solar PV. In April 2017, the country announced an ambitious renewable energy program—a central component of its grand campaign to diversify its economy.38 Following through on its solar plans could be crucial to keeping the country afloat. The kingdom consumes over one-quarter of the oil that it produces to generate electricity at home, limiting the amount that it can export abroad.39 Constrained exports and sustained low oil prices have conspired to create yawning budget deficits for Saudi Arabia.
Whereas the rest of the world will be worse off in the first future, Saudi Arabia might be just fine. Even if it just derived a small fraction of its electricity from solar PV, the oil export revenue that it would gain might enable it to continue its lavish spending habits. Most important, in the first future, the world would remain addicted to oil—good news for the kingdom’s coffers. Nevertheless, even Saudi Arabia would enjoy some benefits in the second future. Less extreme climate change would spare it from deadly heat waves, and improved solar technologies could make a transition to clean energy much cheaper at home, offsetting some of the pain from slowing global demand for Saudi oil.
Indeed, it is striking that even Saudi Arabia could find a silver lining in the second future, in which solar power would challenge fossil fuel dominance. In either future, there will be winners and losers. But there will be far more winners and many more prizes to go around if the world can realize the second future, not the first.
We’ve Seen This Movie Before
This isn’t the first time that countries have pinned their hopes on a revolutionary clean energy technology to solve a range of their problems. The world would be wise to keep the nuclear industry’s experience in mind as it tries to bridge the gap between solar’s promise and today’s realities.
Way back in 1954, Lewis Strauss, chairman of the U.S. Atomic Energy Commission, predicted that within a generation, nuclear power would be “too cheap to meter.”40 One of his successors, Glenn Seaborg, went further, predicting in 1969 that abundant nuclear power would alleviate water and food scarcity, power automated factories, and enable everyone to work a twenty-hour week.41
Yet those predictions would go unfulfilled. Nuclear did have a good run, rising rapidly in the second half of the twentieth century and achieving a 17.6 percent share of the world’s power in 1996. But it would never surpass that figure. Ever since, nuclear’s share of global electricity has steadily declined; it stood at around 10 percent in 2016.
What went wrong? One explanation is that accidents, activists, and ascending costs have plagued nuclear, stymying plans for new reactors across the developed world. From this perspective, the history of nuclear power has very little to do with how the future of solar power might unfold. It’s hard to imagine a solar farm melting down and inciting a political backlash, and the costs of solar PV have steadily fallen and look set to continue doing so.
But there is a deeper reason that nuclear power may provide a cautionary tale for solar power. It is well documented that the technology in commercial nuclear reactors has stagnated. For over a half-century, nearly every nuclear plant built around the world has been a light-water reactor, a design that in rare instances, like Chernobyl or Fukushima, can allow a meltdown. Advanced designs that could be cheaper, more efficient, and meltdown-proof have remained on the drawing board for decades.42
Solar power might experience a similar technological stagnation. Nearly every single solar PV panel sold around the world is made of silicon. Over the last half-century, researchers and companies have brought silicon PV panels near their theoretical performance limits, in some cases converting over 20 percent of the sun’s energy to electricity. Yes, every year solar panels get cheaper, but the gains are wrung from incremental optimization of manufacturing lines and supply chains, not breakthroughs in the lab.43 At the same time, there is worryingly little investment in innovation. Massive firms in Asia, which dominate the industry, invest less than a penny from every dollar of revenue into R&D of new technologies.
If the technology stagnates, solar power is in danger of following in nuclear’s footsteps, as occurs in the first vision of the future. Solar could also halt its expansion if countries (particularly those in the developing world) fail to build out their power grids and otherwise invest in ways to accommodate a rising share of power from solar. In those countries, the rise of solar could hit a ceiling sooner rather than later.
That vision of solar stalling is by no means a sure thing. Many argue that solar power will keep getting cheaper as more of it is produced and installed. What’s more, the cost of batteries to store that power is falling in parallel, thanks in part to demand for electric vehicles. Some analysts even predict that the combined cost of solar panels and batteries might be cheaper than any fossil fuel alternative by 2030.44 If that happens, they argue, neither technological change nor beefed-up power grids will be necessary for solar to continue growing.
But what if they’re wrong? After the nuclear false start, the world is running out of time to switch over to clean energy. It doesn’t help that global energy transitions take a very long time. As the energy scholar Vaclav Smil has pointed out, global energy transitions—for example, from wood to coal to oil—have each taken roughly a half-century.45 If the world can zero out its carbon emissions within a half-century, then it stands a chance of avoiding catastrophic climate change.46 But if the transition toward solar energy sputters by midcentury, there will be no opportunity for another do-over.
A particularly rosy 2016 study suggested that a clean energy transition could happen much faster—in just a decade or two—with the right support from policymakers.47 And some argue that more sensible climate policies than the ones we have today are inevitable. Surely, they contend, the ravages of climate change will soon persuade governments around the world to enact regulations that put a price on carbon emissions. Such policies would improve the economic competitiveness of solar power even further and fuel its continued rise.
But do not bank on a carbon price coming to the rescue. So far, the few places that have instituted one, such as the European Union and California, have set the amount too low to matter.48 Any push to set much higher prices on emissions could run into fierce political opposition from powerful entities like fossil fuel companies. Although several oil companies have come out in favor of a modest carbon price, they are unlikely to accede to a price high enough to seriously dent their bottom lines.
Switching Tracks
Policymakers can nonetheless help the world to switch tracks from the first future to the second. Targeted policy interventions to promote innovation are politically tractable and would yield outsize returns. But every year that the world dithers, diverting to the second track becomes much more expensive. Absent a decision to lay the groundwork needed to reach the second future now, the ride to a solar future could run out of steam.
The rest of this book will explore the promise of solar energy innovation and how to advance it. The remaining chapters in part I will set the stage, first by chronicling how far solar power has come, especially in the last decade. No longer a cottage industry, the solar industry is rapidly growing. Still, the barriers that solar PV has overcome to nip at the heels of fossil fuels are very different from the obstacles that stand in the way of solar energy upending fossil fuel supremacy. Achieving the latter will require three types of innovation.
As part II explains, firms can apply financial and business model innovation to do more with existing solar PV technology. Today, solar PV still struggles to woo the colossal investors who regularly finance fossil-fuel projects. With some financial engineering, the solar industry could gain access to massive pools of low-cost investment to deploy solar on an unprecedented scale. Similarly, even though villagers in Africa or India are willing to pay for solar power, off-grid solar has been slow to take off. Now, a new crop of entrepreneurs are deftly combining mobile phones, big data, and conventional PV panels to reach these customers and make a profit doing so. Prospects are rosy for these innovative financial and business models to fuel rapid solar deployment over the next decade.
Beyond that time horizon, technological innovation will be critical to continue solar’s expansion, and part III reviews exciting advances in scientific labs around the world. Researchers are making progress on developing solar PV coatings, concentrated solar power plants, and generators of fuels from sunlight. These advances still face an uphill road to commercial success. Without much more support from the public and private sectors, academic researchers will struggle to bring their technologies to market.
Finally, part IV introduces systemic innovation that would refashion the world’s energy systems to fully take advantage of abundant, but unreliable, solar PV output. Although doing so may be cost-effective, it will require shaking up sluggish industries and marshalling political courage. For example, change-averse power utilities need to be reformed before they will proactively equip electricity grids to cope with fluctuating solar power. And countries will need to be willing to take unpopular but prudent steps to support reliable generators, like nuclear reactors, that produce zero emissions while also compensating for intermittent solar power.
Public policy around the world can accelerate all three types of innovation. This book concludes by focusing on how the United States can provide global leadership through farsighted policies. Above all, U.S. policymakers should take steps to advance technological and systemic innovation, which are not proceeding as quickly as financial and business model innovation. In particular, they should sharply increase funding for the development of new technologies and investment in a more flexible power system.
Unfortunately, support for innovation in the United States has stagnated in recent decades, and funding for energy innovation in particular is in the crosshairs under President Donald J. Trump. The one solar policy likely to be enacted by the Trump administration, at the time of writing, was the erection of sweeping trade barriers to protect domestic manufacturers of solar cells and panels; but that policy would likely fail to encourage innovation and instead would dampen the U.S. solar market and probably incite trade retaliation from China. And on the international stage, the president will further damage U.S. credibility on energy and climate issues—and isolate America diplomatically—if he fulfills his pledge to withdraw the United States from the Paris Climate Change Agreement in 2020.
Abandoning a leadership role in making the transition to clean energy would be a grave mistake—especially when it comes to supporting innovation. Even though some investments—such as R&D into futuristic solar materials—may not pay off for years, the work has to be done now to ensure that the technology is ready when it is needed. What’s more, failing to invest in innovation—and instead building walls to limit free trade—could cause the United States to get shut out of the rapidly expanding global solar market and forego a massive economic opportunity.
If, on the other hand, the United States acts now and inspires partners around the world to follow suit, its leadership could unlock the most abundant source of energy on Earth for generations to come.