Market innovations can make our cities energy independent
By Edward Ring | November 15, 2024
A revolution in urban planning is well under way, driven by advances in wastewater recycling and runoff harvesting, along with waste-to-energy technologies and indoor agriculture. But perhaps the biggest and most unheralded breakthrough is the potential of photovoltaic and electricity storage technology. Prices have plummeted in recent years and there is no end in sight. It is no longer a stretch to imagine that for every essential – water, food, waste management and energy – urban areas can achieve near autarky.
Rather than emphasizing the existential terror of a climate crisis that renewable energy may help us avert, proponents should focus on the plummeting costs for photovoltaic electricity. A dose of heretical optimism may sway skeptics more than another recitation of impending doom. Moreover, ratepayers who are exhausted by the current run-up in California’s electricity prices compared to other states would be encouraged if they understood the path we’re on is likely within just a few more years to compel providers to compete on price to serve electricity in abundance.
To test this theory, consider the return on investment for a solar power producer even at today’s prices. The installed cost for utility scale photovoltaics is now down to under $1.50 per watt. This means that via a 25-year, 6% per year construction loan, the break-even cost for sold electricity is only $0.05 per kilowatt-hour. That’s an annual average, but even in winter, break-even productivity sufficient to cover the construction loan payment would only be around $0.08 per kilowatt-hour. At that rate, solar capacity can be profitably overbuilt to deliver affordable electricity even in winter. (The average cost of electricity in California is $0.31 per kilowatt hour.)
Not only has the cost of photovoltaics come way down, but tremendous advances are being made in stationary batteries that use less expensive materials, as well as solid state batteries for mobile applications. With vehicle-to-grid technology and evolving pricing models, owners can opt to use their parked EVs to not only absorb surplus electricity from the grid, but also to sell electricity to the grid. A decentralized network of photovoltaic arrays and storage assets will also reduce the cost and scope of transmission upgrades.
This trend actually favors decentralization of electricity providers, as it can offer private owners of storage and generating assets the chance to buy and sell electricity on a deregulated grid. This applies to individual homeowners, EV owners or larger commercial enterprises. If the market is sufficiently deregulated and standards are developed, everyone can become their own utility.
The incentives this may create are transformative. Individual investors at all levels will have the ability to store and supply electricity, leveling demand and establishing prices per kilowatt-hour that remain relatively stable throughout the day despite the ultimate source (the sun) remaining an intermittent provider.
Nowhere is the potential of these ongoing breakthroughs in price and performance greater than in California’s major cities, where people and structures are concentrated, and electrical infrastructure is fully built out. Critics of solar energy point to the land requirement. But even just in urban areas, there is an estimated 10 billion square feet of usable rooftop space (360 square miles) for photovoltaics in California – sufficient to generate around 290,000 gigawatt-hours per year if all of it were utilized. By comparison, California’s total electricity consumption in 2022, from all sources, was 287,220 gigawatt-hours.
California’s stated goal for renewable electricity production is 500,000 gigawatt-hours per year. To generate that much electricity with photovoltaics would require just over 600 square miles. To put that into perspective, California sprawls over 156,000 square miles; its entire urban footprint is about 7,800 square miles. The state has over 25,000 square miles of rangeland, suitable for cattle, but also suitable for solar panels.
But, again, urban sites for photovoltaics may have a competitive advantage, because generating and storing electricity inside urban areas means the supply and the demand are in the same place. Imagine if not only a high percentage of California’s urban rooftops, but also parking lots had photovoltaic installations. This would have the side benefit of justifying the ongoing existence of parking lots, helping to fulfill into mid-century and beyond the clear consumer preference for car ownership.
The potential for solar energy to deliver abundant, affordable energy to Californians has tremendous positive ramifications. Ensuring greater resilience for California’s densely populated urban areas is only one benefit. A photovoltaic installation occupying barely five square miles could generate enough electricity to desalinate 1 million acre feet of seawater per year. A photovoltaic array roughly half that size could treat 1 million acre feet per year of urban wastewater to potable standards.
Abundant, affordable electricity can improve the cost-competitiveness of EVs, and power the revolution that has just begun in robotics and AI. There are many ways to generate abundant electricity, of course, and photovoltaics aren’t without drawbacks. But their potential to date, if anything, has been understated even by their proponents.
When imagining the future city, the obstacles to massive development of photovoltaics are not financial or constrained by available space. If anything, the biggest objection may be aesthetic. And to that, solutions are also coming. For example, solar shingles cost more than traditional solar panels, but their costs are following the same downward trend. Solar shingles can even be installed as an integrated system that eliminates the need for sheet roofing.
As innovation in solar electricity continues, solar windows will become increasingly cost-effective, as will solar siding on buildings. The electric age is dawning, where sector by sector, we may transition from combustible sources of power to electrical sources of power. But there is no reason to think this transformation will render cities – even as our biggest energy consumers – more dependent on outside sources of power.
Distributed photovoltaic electricity and electrical storage technologies will continue to drop in price, with cities themselves as the greatest beneficiaries.
Edward Ring is a co-founder of the California Policy Center and the author of “The Abundance Choice: Our Fight for More Water in California.”
