鈥淕ermany had so much renewable energy on Sunday that it had to pay people to use electricity.鈥� That was the on the Quartz news site last week. Excess electricity can overload a grid, so to even things out some big consumers were .
Wind and solar provided . That isn鈥檛 typical but it鈥檚 not the only place with too much energy at times. In Texas there is now so much wind energy that some firms .
It sounds like wonderful news. The cost of wind and solar is falling so dramatically that they are finally becoming competitive with other electricity sources. The tempting conclusion is that the days of fossil fuels are numbered. Clean, green energy is going to deliver cheaper power for us all. Problem solved.
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Except this is not how it works. To understand why, imagine you鈥檙e a potential solar investor in a free market. The question you have to ask is will you be able to sell electricity for more than it costs you to produce it. If you鈥檙e the first to install solar in an area, the answer could well be yes. But as more solar comes on line, there鈥檚 going to be a surfeit of electricity on sunny summer days, meaning no one will want to buy yours. You will have to sell it cheap if you can sell it at all 鈥� whereas your fossil-fuelled competitors, who can adjust production to demand, will still be able to sell theirs for a decent price.
In reality, the market is not free. To聽make renewables profitable, governments have had to subsidise them: most wind and solar firms get a guaranteed price for their electricity. This means they can sell power even when too much is produced 鈥� hence why Germany was paying customers to use electricity. Rather than being something to celebrate, this is a sign of a serious economic problem that could bring the renewables revolution grinding to a halt.
New ideas needed
We can鈥檛 keep subsidising forever. The UK is already slashing subsidies because they cost so much聽鈥� and wind and solar only supply around 3 per cent of the country鈥檚 energy. Globally, it鈥檚 1 per cent. It would be exorbitantly expensive to keep subsidising as that figure rises, says Varun Sivaram at the Council on Foreign Relations, a think tank based in Washington DC.
What鈥檚 that, you say? Batteries? Well, very cheap batteries would help but they are still costly. And while they are ideal for smoothing out the daily variation in solar, batteries don鈥檛 help much with the seasonal variation.
The solution is to keep reducing the cost of installing solar, so companies can still turn a profit even as the price of their electricity falls. The bad news is this might not be possible with the silicon solar panels currently used. But other, more efficient solar technologies in the pipeline might do this better.
So although it may look like some places are getting close to realising the聽renewable dream, with existing technologies this is an illusion. The only way forward, , is to keep investing in new technologies that can deliver even cheaper power.
This is why it鈥檚 worrying to see headlines like . This is hubris. If left to market forces, the revolution is all too stoppable. The message politicians need to hear is, 鈥淭he renewable revolution will only happen if you make it happen.鈥�
This article will appear in print under the headline 鈥淭he dangerous myth of cheap renewables鈥�
