I recently came across an article in Quartz with the provocative title “It’s time to waste solar energy”. The article has all the hallmarks of a story journalists like. It refers to an expert who did a study that apparently showed that we all could pay up to 75% less for electricity and that businesses are either not thinking outside the box enough to realise that or are actively preventing these solutions to become reality in order to protect their profits. But, as H. L. Mencken already wrote in 1920:
"And nobody builds a solar power plant that has three times the capacity of peak demand, which is what the optimal grid would require."
Why not? If solar panels are indeed cheap enough in comparison to either storage or other sources (especially taking into account a carbon tax), then that is the optimal model. Excess energy could be used for other purposes to such as smelting or crypto mining. Things that are more energy dependent than time dependent.
"And in the real world, the money to build these power plants and grids doesn’t fall from the sky".
Negative real rates would suggest otherwise.
I think you will be eating your words in 10 years time when this does actually prove to be the optimal model (to overbuild).
"And nobody builds a solar power plant that has three times the capacity of peak demand, which is what the optimal grid would require."
Why not? If solar panels are indeed cheap enough in comparison to either storage or other sources (especially taking into account a carbon tax), then that is the optimal model. Excess energy could be used for other purposes to such as smelting or crypto mining. Things that are more energy dependent than time dependent.
"And in the real world, the money to build these power plants and grids doesn’t fall from the sky".
Negative real rates would suggest otherwise.
I think you will be eating your words in 10 years time when this does actually prove to be the optimal model (to overbuild).
You might be right, but solar power is currently the cheapest form of energy given existing load factors. If you reduce the load factor from 80% to 30% every energy source becomes much more expensive. Just look at Fig. 16 in my chapter on the geopolitics of renewables: https://www.cfainstitute.org/-/media/documents/book/rf-publication/2021/geo-economics-ch-8.ashx