A Terawatt of Solar

A TeraWatt of Solar, the May issue of TerraJoule.us, reviews the falling costs and accelerated schedule now driving the buildout of global solar capacity. Because India is now very much in the solar game–and because the economics of coal have also quickly become unattractive–we speculate the world will achieve its first terawatt of solar sometime in the next 5-7 years. Relatedly, TerraJoule.us also makes a more complex projection in this month’s issue: that sometime before 2025, solar will compose 20% of total world power capacity. While capacity is not generation, of course, the figure is a testament to solar’s rapacious advance. Finally, we note the number of domains across the world where, surprisingly, solar generation is already producing surplus power. Indeed, many of the forecasts made just five years ago about solar’s costs, competitiveness, and generation, have been completely overtaken by the global solar buildout.

In the second essay of this month’s issue, “Oil Update–Shoulder Season or Worse?,” we consider the impact of oil’s recent price recovery on the enduring hope that the market will find balance. While US production has finally started to fall meaningfully, upward supply pressure across OPEC and Russia has continued to negate the much needed supply declines in Non-OPEC. The factor that would render these calculations moot, of course, would be a shift in demand. Even the slightest uptick in global demand would be enough to return prices back to a healthier level around $75/barrel. Alas, here too pockets of stronger demand are negated by weak demand growth elsewhere.

In the continuously updating TerraJoule.us Global Grid Decarb Monitor, projections for solar generation are slightly raised, both for 2016 and 2017. We are also slightly increasing the market share of new generation from combined wind and solar in 2016, owing to faster retirements of existing coal capacity, and, the more recent blunting of new coal capacity additions.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, stands at 101.34 as of April 30, 2016 having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position. Industrial names in the index continue to perform well in 2016, while the basket of solar equities continues to underperform.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.