Complications
The sun rises, but sometimes that's not the only thing
Solar power is rising in basically every place on the planet because it has become an incredibly cheap source of generating electricity. There’s an even more convoluted long version, but the short(ish) version is pretty simple. Governments around the world (US, Japan, Germany, Spain) supported research and development of solar technology and began to subsidize deployment of it. Chinese firms jumped at the chance to serve this market niche and invested in building out the full solar supply chain, from polysilicon, ingots, wafers, cells, and modules. The Chinese government stepped in to support those firms who kept on investing, and innovating and improving. And all of a sudden there was factory capacity to make around 1 TW (terrawatt, or 1000 gigawatts or 1 million megawatts) every year. The world isn’t really ready to digest 1 TW of panels every year, so a lot of those factories are running at less than full capacity, and they are doing everything possible to cut costs and make sure that people buy their panels rather than some competitors. But in the end, these have become cheap commodities — people love their solar panels, but they don’t love the brand of their solar panels. Competition is almost exclusively on cost and efficiency.
This is a good thing for a world fighting climate change. My last post explicitly argued that cheap renewables (and batteries) changed the core political economy dynamic of decarbonization. It used to be that we thought of climate change as an impossibly wicked problem characterized by collective action dynamics. I won’t agree to sacrifice because I don’t trust that you’ll agree to sacrifice and so on. But cheap renewables have remade the dynamics into one much more about distribution (and existential politics, as Jessica Green argues in her soon to be published book) than collective action.
The industries of the future are increasingly clear and economical, but there are still lots of politics to figure out — where will the transmission lines be built, is the community going to build a seawall or relocate, can solar panels be built on cropland, who will build EVs and where, etc. While these politics are hard, they’re still preferable to the old alternative, which was all of the same questions but the panels, batteries, EVs, and transmission lines all just cost more. We were locked into a future of less that still has a grip on everyone’s psyche but isn’t the real dynamic materially.
The clarity of this vision of the energy transition feels obvious and overwhelming to me, but there are so many complications and dramas to behold in how the future plays out.
Two short examples. I fell into birding while living in Ithaca, NY. As one does. It’s the home of Merlin and the Cornell Lab of Ornithology, and there always seems to be an osprey scanning for fish while flying over Cayuga Lake.
Just north of the idyllic location where I captured what is one of my favorite photos ever was an eyesore. The Milliken / Cayuga Operating Plant was a 327 MW coal-fired power station that first began operating in 1955. It was still burning coal when I moved to the area a little over a decade ago. Its ownership history is not simple. Here’s how a Tompkins Weekly story from 2019 summarized it:
In 1999, New York state sought to deregulate utilities and ordered NYSEG to sell off its generation assets. NYSEG sold off its fleet of power plants, and the plant was sold to AES and renamed AES Cayuga. In 2011, AES Cayuga declared bankruptcy. In June of 2012, the shareholders took ownership under the name, Upstate New York Power Producers, and operated as the Cayuga Operating Company. Upstate sold the assets to Beowulf Energy in May of 2016, and the company is the current owner [2019] of the power plant. Even though it is now operating under a new company, the plant is still referred to as the Cayuga Operating Company.
Everyone knew the plant would shut down because its economics were terrible. However, that reality also meant that the town of Lansing where the plant resided needed to figure out how it would fund itself since its largest taxpayer would no longer be making contributions to the public coffers.
In 2018, the owners filed paperwork to convert one of the plant’s two generating units to burn natural gas instead of coal. Opposition was strong, and the plans didn’t go forward. The plant ran out of coal in August 2019 and formally retired that October.
What do you do with an old coal plant? The plant was next to land acquired by the Finger Lakes Land Trust, which, somehow, was a site of a proposed nuclear plant that never was constructed. The grid connections are valuable, and a data center project was proposed, as was a solar farm. The plant shut down in 2019, and only now are we seeing real action on getting the solar farm going. This story from last fall suggests that in 2028 the panels will start generating. Obviously things should move faster, but it was nice to see this “local” story show up in a dataset that Milo McBride put together at Carnegie Endowment for International Peace on coal conversions.
Even when everything seems to be pointing in the same direction, it takes effort to move from alignment to progress.
Upstate New York has been quite slow to get on the solar bandwagon, but so has the US midwest and northeast more generally. Compared with California and Texas, these regions are incredible laggards (as are the southern states that aren’t part of larger regional transmission organizations (RTOs)). But my favorite American electricity grid data website, gridstatus.io, had a nice post about how solar is finally booming in MISO (the Midwest) and PJM (a behemoth that stretches from Chicago to New Jersey). You should go read it: The Sun Also Rises in the Eastern Interconnection.
Here’s a happy graph for you.
Beyond the basics of massive solar generation growth finally showing up in these regions, the post had a very surprising twist that I wasn’t expecting.
After years of continued decline, both PJM and MISO saw a sharp increase in coal generation. The increase in generation was not the result of a “dead coal bounce” from a retiring plant, nor was it driven by shifts in spot pricing, with only small changes year-over-year, as pricing was largely stable year-over-year. According to the EIA, April’s spot Central Appalachian sat at $3.25/MMBtu, 4% higher than 2024’s average of $3.12/MMBtu.
Instead, coal appears to be increasingly dispatched to fill in the gap left by gas generation pushed out by a combination of higher fuel prices and increased midday solar generation.
Catch that?! Natural gas generations is being squeezed in two directions.
The first is the simple one that is the heart of the story — solar is displacing gas. This is good! Burning gas produces emissions, and clean generation absorbing those parts of the energy system helps. These regions are just starting the journey that other parts of the world have taken that have seen large chunks of generation become carbon free.
The other direction of the squeeze is a national level story about natural gas. Global oil price declines have led to more and more rigs (in say Texas) to stop drilling, since their profits are a function of the global oil price. Yet those rigs whose main economic driver is oil also produce gas that they then sell off as a bit of a bonus. But when they shut down their oil fracking, the gas production also drops. This downward pressure in domestic gas production is accompanied by an increase in the export of natural gas as LNG to other parts of the world. A secret fact of life that Americans are mostly blissfully unaware of is that the rest of the world pays much more for gas than Americans do. Gas is troublesome to transport, and while there were Germans or Koreans who might pay more for gas than was on offer from Americans, gas producers in the USA had limited ability to get the gas to them. Unlike oil’s global market, gas was much more segmented. However, with the rise of LNG, we’re seeing a unification of prices, which for Americans means an increase from our cheap baseline.
So, back to MISO and PJM. Natural gas generators can’t compete with nature’s gift of solar at zero marginal cost, and the higher prices that they are facing in general is making a very different alternative rise from the grave: coal.
Despite massive boost in solar, emissions went up in both MISO and PJM because of coal’s return. This is something to keep an eye on, though I imagine that the growth of batteries in both markets should reverse this trend before it becomes something truly worrying.
In the end, while the energy transition is beginning to move, we have to remember that we’re in the middle of things, the “mid-transition.” Energy systems power civilization. They are Rube Goldberg machines that are always operating everywhere. Changing parts of their operation can both take awhile and not always follow our expectations.