Strategy recommendations for solar industry executives:

A transition from market followers to market makers

July 2016



Grid Readiness


A bull by the horns approach is again needed. The technology for managing a dominating role of renewables on the grid is readily available. Identifying and investing in the appropriate power electronics technology is relatively easy. A tougher challenge is changing business processes to use the added technology. The critical bottleneck is not technology availability, but of organisational inertia in changing the processes for the daily operational management of the grid e.g. to advanced unit commitment methods for renewables, and more frequent, analytical information monitoring. The organisational change requires knowledge transfer and investment, and it is up to the renewables industry to deliver it. Otherwise the uptake of renewables will be held back by grid operators with little financial incentive, and substantial learning costs, to change. So far, PV companies have been competing on quotas of individual projects. They should now realise that they are competing for a share of the grid, as a whole, rather than just individual connections. And to secure a large share of the grid, they need to invest in the organisational change management of the grid operators.


Organisational change has to be motivated by financial incentive. Business models and strategies for co-opting grid operators in PV market expansion are recommended, joint ventures of different kinds for the grid operators to share financial rewards.


PV companies also need to creatively think around legacy infrastructure issues. One market acceleration strategy is a shift from grid compliance to grid development: the new build of a dedicted transmission grid network for renewables, suitably interfaced to the existing grid. Rather than grid impact analyses as an afterthought for individual projects, PV companies should initiate a total grid upgrade plan for the targeted markets. The PV supply chain has to closely collaborate for such grand strategies, bringing together an industrial consortium to pursue the objective.


Hybrid Systems, Energy Storage, and Grid Curtailment


PV and other renewable energy systems are inherently intermittent. The intermittency is not an insurmountable problem, it can be managed by hybrid systems for continuous 24 x 7 energy supply. The use of PV and wind turbines in hybrid combinations reduces the overall LCOE of the system.


For utility-scale electricity generation, grid curtailment can be a headache - i.e. when the power source has to be cut off because of oversupply. One solution is diverting the excess electricity supply to an energy storage system. Although large scale batteries are still expensive for energy storage, there are other centralised energy storage systems with an order of magnitude lower lifecycle cost e.g. pumped hydro and compressed air.


Another strategy is to take advantage of applications that can use a variable energy supply in their business model. The variable energy consumption of the applicatiion is an economical alternative to energy storage. One such application is clean water production. Every region on the planet has a need for producing clean water from saline/brackish or contaminated water. The production of clean water, its filtration, is driven by electrical energy. When there is excess renewable energy supply, it can be switched to clean water production. The excess energy results in an increase of clean water reserves, suitable for either human drinking or agricultural consumption. Clean water is stored rather than raw energy.




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