Taming the Sun

Innovations to Harness Solar Energy and Power the Planet

Varun Sivaram
MIT Press © 2018
392 pages
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Rating Take-Aways

9
10 Importance • Solar energy production must increase rapidly by 2050 to slow the worst effects of
climate change.
9 Innovation
8 Style • China’s success in solar photovoltaic production has driven down costs, but the value of
solar is also falling – thus discouraging investment.

• Creative financial instruments could speed greater investment in the sector.

Focus • Existing utilities are in the best position to deploy solar quickly, but regulations hamper
them in many markets.

Leadership & Management • Cheap off-grid solutions currently provide the world’s poor with electricity.
Strategy
Sales & Marketing
• A pay-as-you-go model creates an opportunity to securitize contracts for investment.
Finance • Large regional grids can minimize the amount of storage that solar power requires.
Human Resources
IT, Production & Logistics • “Microgrids” – less commonly known as “minigrids” – can provide power to regions
lacking access to a main grid.
Career & Self-Development
Small Business • New materials development will lead to the next generation of solar technologies and
Economics & Politics will continue to drive costs down more quickly than solar values.
Industries
• The US Congress should eliminate the $4 billion in tax subsidies for gas and oil
Global Business companies that don’t effectively preserve the country’s energy security.
Concepts & Trends

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getabstract

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Relevance
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What You Will Learn
In this summary, you will learn:r1) How to understand and address the obstacles to building more solar-powered
energy infrastructure quickly enough to meet mid-21st century goals; 2) How changes in financial incentives will
spur investment; and 3) Why investment in next-generation solar matters.
getabstract
Recommendation
The world is on a deadline to 2050, when renewable sources, predominantly the sun, must generate at least a third of
global electricity. The United States lags in solar R&D, and trade barriers threaten robust deployment. Clean energy
expert Varun Sivaram reveals a vision of what it will take to shape solar into the necessarily robust global industry
the world will require by mid-century. His approach encompassing economic, political, scientific, technological
and practical angles can become repetitive and the book’s organization is somewhat awkward, but Sivaram
rewards readers with a fresh, comprehensive overview of this surprisingly complex sector. Environmentalists,
clean energy investors, policy makers and those who want a glimpse of a positive energy future will gain a new
understanding of the issues and consequences facing the solar industry and its governmental and financial players.
getabstract
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getabstract
Summary
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Solar Is the Future
In the early 21st century, the global economy still depends on fossil fuels, which contribute
to global warming. The quickest way to reduce carbon emissions is to make the world’s
energy systems less reliant on carbon-based fuels and more reliant on renewables. One-
getabstract third of the world’s electricity must come from renewables – including solar – by
“If the world can
zero out carbon
2050, so solar must scale up quickly. Scaling solar is problematic, as is the way the
emissions within a half- power industry currently finances it. For example, China leads in manufacturing silicon-
century, then it stands based solar photovoltaic (PV) panels. Its success is driving down solar’s costs. As solar
a chance of avoiding
catastrophic climate penetrates more markets, the value of solar energy also falls – lowering revenues and
change.” discouraging investment.
getabstract

Contracts known as “power purchase agreements” (PPAs) between solar power suppliers
and utility distributors provide incentives for and protect up-front investment in large
installations. But as values fall and up-front costs remain high, financiers will find it harder
to justify subsidies and guarantees. This may halt solar’s growth before it reaches its 2050
goal. Solar companies invest few profits in R&D – only 1% in China and 4% in the United
States. The industry must innovate how it uses materials, builds grids, and finances and
manages solar to avoid the stagnating impact of “value deflation.” Today, grid operators
getabstract decide whether they have surplus energy and what to do with it. Their agreements with
“But if the transition
toward solar energy government regulators determine whether the operators receive compensation.
sputters by mid-
century, there will be no
opportunity for another Attracting Solar Investment
do-over.” Solar PV projects are safe, long-term investments that can supply power for years. The
getabstract
solar sector lobbies for tax changes so builders can include solar projects in master limited
partnerships (MLPs) and real estate investment trusts (REITs). Multilateral development
banks (MDBs) like the World Bank mitigate risk by guaranteeing loans to developers
who build solar installations. Banks or governments can issue “green bonds,” which set
money aside for sustainable projects. Institutional investors favor bundling consumer solar

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 loans into tradable securities. American solar companies finance about half of all solar
installations. They extend credit to consumers who make monthly payments. Existing major
power companies are best equipped to scale up solar utilities quickly. China Light and
Power (CLP), for instance, manages billions of dollars worth of power plants. Chinese
getabstract interests align with the Paris Climate Change Agreement. To cut carbon intensity 75% by
“Eliminating the
first 10% tranche of 2050, CLP is moving quickly into renewable-powered plants.
emissions is much
easier than eliminating
the last one.” The “So-Called Death Spiral”
getabstract North American and European energy markets suffered heavy regulation until
recently. Governments granted monopolies to large, vertically integrated utility
companies. Now unregulated companies have built their own renewable generators.
Utilities in the United States fear “net metering” that forces them to buy power from
customers who’ve installed solar. Net metering is a major incentive for customers to have
solar. But the end result costs utility companies and makes consumers less dependent on
the companies’ grid.
getabstract
“Solar PV will
experience much As home solar expands, an ever-smaller pool of customers bear the costs of a power utility’s
more severe value grid, thus provoking the so-called death spiral for its business. Home rooftop solar costs
deflation for every
additional increment more per watt than a utility’s solar plant installations. In the past, the only way to bring
of electricity that it electricity to remote areas, which tend to be poor, was to expand the grid. Now millions of
generates because its
power output cannot be poor people can afford “stand-alone solar PV systems.”
shifted to another part
of the day.” Pay-As-You-Go Systems
getabstract
Under pay-as-you-go (PAYG), companies pay substantial up-front costs to install solar and
customers make monthly reimbursements. In East African countries that lack government
oversight, entrepreneurial companies operate efficiently, receiving payments by phone and
remotely shutting down systems for nonpayment. A PAYG model for off-grid electricity
can turn these contracts into securities and bring capital investment. In communities with
getabstract old deteriorating grids, microgrids can extend coverage to wider areas. Analysts forecast
“In some cases, off- that this could bring electricity to three billion people by 2030. Linked microgrids can
grid solar PV is
powering microgrids, provide what researcher Sebastian Groh calls “swarm electrification,” in which networks
which connect whole “rise organically from the bottom up.” Microgrids that never connect to the main grid should
communities and one
day could link up with
choose direct current (DC) power. Solar produces DC, which batteries can store. Most of
the main grid – if it ever the world’s energy-efficient items – such as TVs and light bulbs – run on DC.
arrives.”
getabstract
Governments should invest in grid upgrades in areas where they won’t compete with
off-grid deployment. Governments should limit financial aid until the sector is up
and running. International activity varies greatly. Peer-to-peer networks in Bangladesh
use blockchain technologies to transfer funds among accounts. Tariffs and trade barriers
impede solar operators in West Africa. And India’s kerosene subsidy is an obstacle to more
solar power. China benefits from the proliferation of PV solar and sees no reason to change
course. This could create a technology “lock-in” that leaves start-up rival technologies
getabstract unable to grow sufficiently to compete.
“It is ironic that
regulated utilities are a
lonely category of firms “Reinventing Solar”
that are not cashing in Achieving 50% solar by 2050 requires driving down materials costs and innovating the
on the solar boom.”
getabstract storage of solar energy so that costs decrease faster than values. Researchers are developing
PV coatings to spray onto flexible materials. One of the most promising is perovskite, which
is flexible and cheap to manufacture in different colors and transparencies. Perovskite’s
properties would allow manufacturing configurations that theoretically increase efficiency
to 50%, whereas silicon alone has not yet exceeded 26% efficiency to reach its theoretical

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 maximum. But perovskite’s technology remains unproven at a large scale. Investors are
cautious about it because existing solar PV remains a sure bet.

Organic solar has no toxic components and is lightweight and flexible. Current units
getabstract
“Community solar has convert only 12% of sunlight to energy, but the research looks promising. “Quantum
shot up, accounting for dots” are microscopic particles that function efficiently in the lab. These newer
nearly 5% of annual
US solar installations materials might transform the solar marketplace, but require R&D investment to become
in 2017 from next to viable. “Concentrated solar power” plants heat up water or molten salts, creating heat for
nothing in 2015.”
getabstract later use. New mediums may spur breakthrough efficiencies by generating heat at much
higher temperatures. A “falling-particle receiver” model utilizing superheated sand-like
particles might reach 55% efficiency to be competitive with natural gas plants. Hybrid
solutions would use solar and natural gas to superheat air.

The transition to a decarbonized future requires breakthroughs in developing hydrogen

or hydrocarbon fuels. Achieving new solar technologies is likely to take two decades
of continual R&D. Electric vehicles are gaining some ground, but they demand carbon-
getabstract free storable fuels. The holy grail is a replacement for fossil fuels that requires minimal
“A carbon price is infrastructure retooling.
no panacea – just a
sensible policy that
should be accompanied International Grids
by others that advance
innovation.” Softbank CEO and Japanese billionaire Masayoshi Son, known usually as “Masa,” has
getabstract proposed a Global Energy Interconnection – a worldwide “supergrid.” In 2016,
Russia, South Korea and China signed with Softbank to explore building a pan-Asian
supergrid. The Nordic Synchronized Area regional grid connects Denmark’s wind,
Sweden’s hydropower and Germany’s solar. In North America, building 20,000 miles of
high-voltage direct current (HVDC) lines could link the entire US grid by expanding on the
“well-integrated US-Canada grid.” Creating a multinational grid that connects vast areas
across time zones and that shuttles solar power where needed would minimize required
storage. But politics will likely thwart any cross-border or worldwide connection.
getabstract
“Only if solar projects
have the potential to be Decentralization
profitable will financial
engineering and public
The structure of the utility sector provides a continual incentive to overbuild the centralized
incentives succeed in grid instead of making it “smarter.” A decentralized power structure with distributed
unlocking large flows of markets would encourage dynamic pricing schemes and other market-friendly approaches.
private capital.”
getabstract Smarter, automated ways to manage the flow of power could contribute to the cost
efficiencies of a more decentralized grid. Deep-learning algorithms increase the accuracy
of computing predictions about usage and shortage. Microgrids connected to a main grid
with local controls provide the best fail-safe mechanisms and efficiencies.

After Hurricane Sandy left more than two million New Yorkers without power in 2012, New
York City planned to build a more resilient, decentralized power grid to protect hospitals and
getabstract keep damage from spreading. New York State gave utilities incentives to work in harmony
“Stable cash flow from
customers making
with decentralized energy sources, but the status quo works for incumbent utilities – which
monthly payments are in no hurry to change. However, the virtues – and costs – of a hybrid system could soon
over multiple decades overwhelm that passivity. Crucial steps to a zero-carbon future include translating solar
makes distributed solar
investments a natural energy to home and industrial heating as well as charging electric vehicles via the smart
fit for institutional grid to smooth out the demand for intermittent solar. Tesla founder Elon Musk’s vision of
investors.”
getabstract merging the electricity industry with car manufacturing is visionary, although his bet on
lithium-ion battery storage may not pay off. For now, hydropower stores energy better
than batteries can store it, but batteries have other sorts of potential. Adelaide, Australia,
for example, linked 1,000 home batteries together to help hedge against blackouts.

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 Future Scenarios
Flexible-base energy plants – like natural gas fitted with carbon-capture capability and
nuclear – could ramp up power quickly and, based on demand, could fill gaps in otherwise
intermittent flows from renewable sources. Long-term contracts or “capacity” contracts to
getabstract
A hybrid system keep these plants on hold can provide the necessary financial bulwark. The quickest way
“would combine to get to zero-carbon electricity would be to build flexible-base plants to generate 43% of
microgrids that
efficiently use all power. But current market structures would drive nuclear out of business. Cogeneration
distributed energy plants, which generate both heat and power, could serve high-population areas and meet
resources to regulate
supply and demand
industrial needs for heat. Integrating transportation, heating and power generation through
at the local level solar power and heat could create a strong flexible grid.
with long-distance
transmission links.”
getabstract To focus on research and future innovations in energy, the US government modeled
its Advanced Research Projects Agency-Energy (ARPA-E) project after DARPA – the
Defense Department’s early-stage innovation office, the Defense Advanced Research
Projects Agency. ARPA-E research led to almost $2 billion in private investment.
Supporters overcame the Trump administration’s efforts to zero-out ARPA-E’s budget,
but the government’s lackluster investment in R&D is slowing necessary innovation
worldwide because the United States continues to retain the world’s top talent. Evidence
is showing that research that cross-pollinates between pure science and applied
getabstract
“Solar becomes up to technology often leads to the greatest success.
50% more expensive
when the additional
costs of integrating it The United States shouldn’t let promising research projects go overseas in search of
onto the grid are taken funding. As China races to the lead in PV solar and wind turbines and storage, America
into account.”
getabstract is at risk of future energy dependence on Chinese exports. The United States must lead by
example, such as acting in 2020 to walk back the Trump administration’s promise to pull
out of the Paris Climate Change Agreement. Innovating for the future of energy should be
a bipartisan endeavor. If America leaves the Paris Agreement and reneges on the money it
pledged, not only would it hurt the United States’ standing in the world, but it would put
the country even more behind in developing the renewable technologies of the future.

Tax Incentives
getabstract
“US policy makers Current tax incentives reward investment in solar PV rather than riskier investment in
should recognize emerging technologies. The MLP Parity Act would extend the benefits of “master limited
that [the federal
government’s] paltry partnerships” to solar projects. Most economists recommend taxing carbon to penalize
funding pales in polluters, but the need for R&D investment remains. Perhaps a carbon tax could fund
comparison with
the importance of needed research. Continuing to subsidize existing rather than emerging solar technologies
solar innovation. This will speed the United States to the saturation point of carbon-based power with no way to
mismatch afflicts the
broader state of support
keep growing. Congress should eliminate today’s $4 billion in tax subsidies for gas and
for energy innovation.” oil utilities that don’t effectively preserve the country’s energy security. State governments
getabstract could lead by funding projects that make sense for their regions. California provides
incentives for solar plants to install smart inverters that provide synthetic inertia to the grid
as needed. Federal and state investment in long distance HVDC lines supports solar’s future
and would ease the effort to move power to match localized demand.
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About the Author
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Varun Sivaram, PhD, is the Chief Technology Officer of ReNew Power Ventures, India’s largest renewable energy
firm. He directed the Program on Energy Security and Climate Change at the Council on Foreign Relations. An expert
on clean energy technology, climate change and sustainable urbanization, he also wrote Digital Decarbonization.

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