The Great Energy Disruption
Nearly 10 months ago, Tony Seba, author of the 2014 book Clean Disruption of Energy and Transportation, posted a video on YouTube, “CleanDisruption.” In both, he projected that a nearly complete disruption of the energy business would begin in 2020 and be well underway by 2022, the year he projects for distributed solar power with battery backup to fall below the cost of transmitting electricity. It is a point at which centralized power plants, if they are to compete with solar-plus-storage, will have to provide power for free. He believes that all centralized electric power producers will be obsolete by 2030, as will conventional cars and utility companies.
I would suggest that anyone reading the book or watching the video keep in mind that the projections are wrong. Tony Seba gives really compelling reasoning leading to his conclusions. The problem is that the rate of change he expected seems to have been off a bit. It appears that he was much too conservative, and change is going on much faster than he anticipated.
In his March 2016 video, Seba talked about the fact that the cost of electricity from solar power had dropped below 5¢/kWh. Less than a year after that, it dropped below 3¢/kWh in multiple auctions. This is far faster than he anticipated, and would make the disruption happen sooner than 2022.
While the decline in the cost of solar power is clearly very great, however, the decline in the cost of grid storage appears to be taking off. Seba spoke of a decline in cost of 19% per year, but that rate has been exceeded by important technologies.
Lazard’s Levelized Cost of Storage Analysis – Version 2.0 has appeared, showing some important changes from version 1.0. While the Levelized Cost of Storage (LCOS) for several types of storage have declined at the rates consistent with what Seba suggested, three stand out — one of these is reported by Lazard, and the others appeared in recent news.
First, in the version 1.0 report, the LCOS of compressed air storage was reported at $192/MWh. This is a low figure for natural gas peaking plants. In version 2.0, however, the figure had dropped 33% to $116–140/MWh, well below what those peaking plants normally charge. This shows a technology for storage that is getting competitive with nuclear power generation.