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What happens when renewables are overproduced?

The writing is on the walls, or in this case, the roofs. We all knew the time would come sooner or later, the day government solar incentives began to decline. While America has yet to see such a trend, some countries around the world have begun to produce more renewable energy then they are capable of consuming.

 

Most recently there was Chile, which produced so much solar that it was giving it away for free. A Bloomberg chart shows how spot prices reached zero for 113 days through April since the beginning of 2016
d97d8978-b846-431d-ad45-3830b76eb693And then there was Germany, which generated so much renewable energy in May that it saw power prices go negative for several hours–meaning that power companies were actually paying customers to consumer energy!

 

The list goes on: last year in 2015 Denmark produced 140% of its energy needs through renewable energy and began exporting its excess to neighboring countries; Costa Rica ran its entire country on renewable energy for 75 days; and then there’s Austria, Norway and Iceland–all of which achieved close to 100% renewable power years ago and, well, see the writing on the roofs now?

 

Incase it’s still difficult to read, perhaps Ray Kurzweil’s accurate predictions about the exponential growth of installed PV panels along with this neat graph might get the point across:

f66916e4-7d6c-419c-87e4-45617eb2f9b6

 

The world is shifting to solar fast, and that means the government incentives to do so are quickly disappearing.

 

It’s not unimaginable that in the near future, homeowners will be faced with the choice of either continuing to purchase power off the electrical companies or become independent suppliers of power to the electrical companies. While the latter will provide freedom from big corporations it will also have the drawback of no longer being subsidized–making it much more of an upfront financial burden to bare.

 

No doubt the energy companies have read what the solar trend spells for their future–it’s been a message we’ve known for a long time.

Author: Harold Tan

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