Most metrics will tell you that renewable energy is growing at an astounding rate, with solar energy being the fastest growing. However, it is very difficult to connect all of the new renewable energy to our aging electric grid.
This is creating a bottleneck as even if we create more solar capacity, the electric grid cannot incorporate it at the same rate for a variety of reasons.
As of 2023, solar makes up about 5.6% of the total US electricity generated. Yet, as more companies seek to net zero energy emissions, solar is poised to make up 58% of all new electricity generation installed.
That is going to overwhelm what our electric grid is capable of handling and will ultimately create a bottleneck.
Why Is Solar Energy Growing So Fast?
While solar energy started out more expensive than traditional fossil fuels like coal and natural gas, that has changed over the years. Today, solar energy is cheaper than natural gas, and coal has become nearly extinct.
Naturally, that has raised the demand for solar energy as companies are looking to increase their capacity.
In the past, one of the major criticisms was that the sun is not always out, which can disrupt how much energy is generated. This can cause rolling blackouts if it is the sole energy source used.
However, battery storage technology has proven to be the perfect solution to this issue. And just like solar, the technology is being produced on a massive scale. This is rapidly shrinking the costs, thus making it more competitive with natural gas.
With this said, most companies are not planning to rely entirely on solar. Natural gas and nuclear energy are still going to play a big role.
Unprecedented Energy Demand
If you have been paying attention to the technology sector, you have heard everyone talking about AI. Perhaps the only thing you don’t hear about it is the incredible energy demand that it has created as nearly every business is rushing towards artificial intelligence.
AI is going to cause data centers to see a 160% energy increase by 2030. This is because of the computing power needed to operate the AI. For reference, a ChatGPT reply takes 10 times the energy as a Google search.
While this will be one of the largest contributors to the demand shift, it is not the only one. Another pivotal change in achieving net zero emissions is replacing our car fleet with electric vehicles (EVs).
EVs need to charge the batteries inside of them to operate. Naturally, this is going to have a massive impact on the energy grid. You don’t have to wait as you can already see it happening in real-time.
Consider for a second a typical 9-to-5 job. Someone drives home after work, parks their car, and plugs it in before heading inside. You have just added an extra power demand for possibly millions of homes during peak hours.
And cars are really just one thing that have been electrified. Nearly all appliances today use electricity as more stoves, ovens, heaters, and water heaters are turning from gas.
The demand is constantly growing.
Connecting to the Grid Takes Time
It is well known that there is currently a massive backlog of solar and wind projects awaiting to be connected to the electric grid. However, between 2000 and 2018, only 19% of all requests have been connected to the grid by 2023.
Naturally, this is a bad sign for all companies that are backing major problems as even if the projects are completed, it typically takes at least 3 years before they are connected to the grid.
This bottleneck has been nicknamed gridlock, as it will be the deciding factor. So why does this happen?
There are a variety of factors. Most of these all stem from transmission, which is the process of delivering the energy from the source (solar panels, wind turbines, power plant) to the grid.
Outside of seeing a solar panel on a roof, how often do you actually see a solar or wind farm? Realistically, probably never unless you specifically travel to one. This is because they are built away from most urban settlements.
They take up a lot of space, and in the case of wind turbines, generate a lot of noise. As such, to connect these farms to the grid, you need to create transmission lines that connect to the grid. While this doesn’t sound complicated, it is.
This is because these companies need to get approvals for every county, city, or state they pass through, which can be numerous. This legislative process by itself can take years, not to mention the actual construction efforts.
For this reason, even when a project is completed, it can take several years before it is connected to the grid.
Battery Technology Will Play A Huge Role
One of the biggest talking points with the electric grid is batteries. Currently, lithium batteries do not have the capacity to store the energy required for the grid when not enough energy is generated from renewables.
For example, if the sun wasn’t out, you could face blackouts if that was your only source. While that is a bit of an exaggeration, there is some truth to it. But a battery would solve the issue as you could store the excess energy generated and use it to cover this disturbance.
Today, the batteries could store about 4 hours worth of energy for the grid, with some ranging upwards of 8 hours. The technology is advancing fast, but it will take years before the necessary capacity is achieved.
The bigger problem is the cost. While solar energy itself is cheaper than natural gas, when you add battery storage, the story changes. Battery technology is expensive, but that is quickly changing as EV production is ramped up.
The mass production of lithium batteries has driven the price down significantly, and it will only continue over the years.
The Electric Grid Will Be the Biggest Hurdle
The world is racing towards a net zero future, and for that to happen, we need to use renewable energies exclusively. This will take time, but nearly every new major project is renewable, and that won’t be changing anytime soon.
This is because it aligns with many major corporation’s ideals, which are paying for the projects.
Unfortunately, the problems facing the electric grid will not be overcome quickly. This will require actual legislation that can help streamline the process of connecting electricity generation to the electric grid quicker.
With this said, natural gas will also play a key role in bridging the gap while the transition takes place. With any luck, the energy grid will be a very different place by 2030.
