Wednesday, June 15, 2016

The Race to Solar Dominance

By Sage Ertman, Policy Intern

A Charged Debate post by Tyler Johnson in March addressed an issue the United States has with India’s 2010 resolution to reach 20 GW (20,000 MW) of total solar energy generation capacity by 2022. Under this resolution, India explicitly plans to use specific domestically made parts in certain situations, which the U.S. argues discriminates against foreign producers in violation of the General Agreement on Tariffs and Trade (the GATT) and Article 2.1 of the Agreement on Trade-Related Investment Measures (TRIMs). This post will instead touch on the world’s race to solar dominance and how more countries are beginning to reach for increasingly ambitious solar energy goals.

Though India is likely to surpass its initial goal (13 GW of capacity are currently under construction with another 9 GW proposed and awaiting approval), in June of 2015, India’s Prime Minister, Narendra Modi, gave approval to increase its solar target five-fold from 20 GW to 100 GW (or 100,000 MW) by 2022. However, this goal might prove to be a little too ambitious, according to Bridge to India, the leading consultancy and knowledge services provider in the Indian renewable market. In its 2015 release of the India Solar Handbook, an annual market report providing a reliable and comprehensive source of data on India’s solar market, industry analysts estimated that India may only achieve 35-38 GW in solar capacity by 2022. Regardless of the program’s success, India is clearly taking steps in the right direction and is even the proud home of the world’s first fully solar powered airport. These strides toward a sustainable future will hopefully inspire and motivate others to join the renewable energy movement.

Luckily, India is not the only country with its sight set on the sun. Chile’s central power grid has more than quadrupled its solar capacity to 770 MW since 2013. Although this pales in comparison to India’s proposed plans even with another 1.4 GW expected to be installed in Chile this year, that does not change the fact that Chile is producing solar energy so far beyond its demand in certain areas that they are giving it away for free. That’s right. Spot prices in parts of the country reached absolute zero for parts of both this year and last. Chile has 29 solar farms online with 15 more on the way. Unfortunately, increased investment in solar energy alongside a reduction in Chile’s economic growth has led to regions being oversupplied with power.

Chile faces two big problems in the wake of this expansion. First, it operates on two main power networks, a central grid and a northern grid. Not only are the grids not connected, such that a surplus of power in one region cannot be used to supply the other, but there are numerous areas where congestion in the grids has caused power transmission lines to collapse. Chile is working to address this issue and has plans to build a link between the two grids as well as additional transmission lines to mitigate the congestion points. The second problem it faces is that while this expansion is ideal for consumers and the environment, companies that operate power plants are struggling to generate revenue since their product is selling for free. This means investors are losing money. According to Rodrigo Violic, head of project finance at Banco Bice, a Chilean lender, this issue will likely limit future development since uncertain revenue means banks will be reluctant to finance new power plants.

Shifting gears, in the middle east the Dubai Water and Electricity Authority (DEWA) recently launched the world’s largest concentrated solar power project. Morocco was hoping to hold the world record; however, currently its $9 billion three-phase concentrated solar power project will ultimately only yield an estimated 580 MW of solar capacity. While this capacity is staggering on its own and is estimated to be able to provide electricity for over a million people, Dubai has even more ambitious goals. Under Dubai’s clean energy strategy, the country hopes to obtain 7% of its total power output from clean energy by 2020, 25% by 2030, and 75% by 2050. This new concentrated solar plant should help immensely given its goal of reaching 1,000 MW (1 GW) of solar capacity by 2020 and 5,000 MW (5 GW) by 2030. Whether or not this endeavor meets its mark, these levels are unprecedented and should have everyone in the
clean energy community excited for what the next big project holds.


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