Podcast #030: Dr. Greg Nemet: How solar became cheap and the lessons for other clean energy technologies

Join host Bill Nussey and Dr. Greg Nemet, Educator and author of How Solar Energy Became Cheap: A model for low-carbon innovation (https://www.howsolargotcheap.com).  Dr. Nemet has created the single best resource on the historical drivers behind the price decline in solar energy and the impacts this will have on our energy future. Listen as he shares powerful insights into how solar energy became so cheap and what those lessons can teach us about driving down costs on other energy technologies.

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Dr. Greg Nemet: How solar became cheap and the lessons for other clean energy technologies.

Join Host Bill Nussey and Dr. Greg Nemet, Educator and author of How Solar Energy Became Cheap: A model for low-carbon innovation (https://www.howsolargotcheap.com).  Dr. Nemet has created the single best resource on the historical drivers behind the price decline in solar energy and the impacts this will have on our energy future.

Transcript

Bill:
Hello, Freeing Energy Podcast audience. We have another great episode for you today, and we’re going to take a really unique look at how the industry that is changing the world, solar particularly, but broadly, clean energy, how it came into being and what were the factors and the key events that allowed this industry to emerge to essentially be positioned to change the world today. A lot of people ask me why I got out of the software industry and into clean energy, and really the first thing I tell people is that I stumbled into the fact that the price of solar was plummeting. It wasn’t just going down a little bit, but it was plummeting. And I saw that the price of solar was actually going to get cheaper than traditional energy sources, and it was following a path similar to what I’d seen in the computer industry with transistors and microprocessors and hard drives, and watching what those technology price declines did to completely disrupt computing and communications markets.

And our guest today literally wrote the book on the story and the history of how solar became cheap. His book is called, well, How Solar Energy Became Cheap: A Model for Low-Carbon Innovation. Greg Nemet is a lifelong energy expert, and most recently, is the professor of public affairs at La Follette School of Public Affairs at the University of Wisconsin, Madison. He teaches courses in policy analysis, energy systems, and international environmental policy, and he’s also an incredibly interesting guy. So Greg, I’m really thrilled to have you with us today. Welcome to the podcast.

Greg:
Hi Bill, thanks. It’s great to be on your podcast.

Bill:
We have a ton of stuff to cover, and I want to give an opportunity to touch on all these interesting topics that you’ve covered in your book. But one of the things our listeners really like to hear about is your personal story. What got you into the industry? What excites you about it? And when we were doing some background research, we realized that you also attended one of the oldest schools in America, which has got to be an interesting story into itself. So let me start at the career beginning. When did you first realize that energy and resources was a field that you wanted to pursue?

Greg:
Yeah, well, I took a course in undergrad in energy and I took another course in climate change. I did an undergrad degree in geography, and that really had a lot of breadth to it, which I found really interesting, but I didn’t really pursue that further. I did a job in management consulting for four years after undergrad. I worked at a startup during the dot-com days in the late 1990s in San Francisco and Silicon Valley, and then worked at a think tank on Sand Hill Road. And one of the things that was starting to emerge around that time in my mind was that there was so much effort and success going into things like IT and biotech, consumer products at the time, and we did a study at that think tank of comparing those sectors to energy, looking at things like R&D, patenting, number of scientists and engineers, revenues, and all of them were smaller in energy on the innovation side by like an order of magnitude.

And it just seemed kind of crazy just with some familiarity of the challenges that are associated with energy, but then the potential to do something with all the talent that existed in Silicon Valley and other places. And so that’s what I decided to go to grad school for, which was really how do we create incentives for innovation? How do we get people as excited about devoting their careers to things like software and IT and consumer products and healthcare, how do we get people excited about working in energy that way? And that’s really what I’m still working on today. And the solar book was kind of a deep dive along those lines as well.

Bill:
Well, I recently read your book and immediately realized that our podcast listeners would really, really enjoy the stories that you’ve uncovered. I can’t even imagine all the people that you interviewed. It’s a really fascinating. It’s probably the most well-researched book I’ve certainly read and certainly heard of for how we ended up in the modern solar industry today. And it’s a must read for anyone, particularly in solar, but really anybody that wants to understand how the solar industry evolved, because it’s a confluence of technology, which most people think about, but also a policy and of heroes of individuals that you have interviewed that actually took great risks and had a great vision and convinced a lot of people to jump on board. And it’s all part of what the people in the industry called the solar coaster, which I think is pretty funny. So why did you decide to write a book? There’s a lot of ways to express this and a book’s a big project. I know. Personally, I’m trying to write a book. So what made you want to write a book about it?

Greg:
I’d never written a book before. I never really thought seriously about writing a book before, but I guess there were two things that were coming as motivation for doing this. One, you mentioned that a high school I went to was really old school. It emphasized history a lot. And another graduate of that little school is named Jared Diamond who wrote a book called Guns, Germs, and Steel. And I remember talking to him about that and he has this big sweeping view of history and makes conclusions and insights about the future based on looking away far back. And I think in a way, I was trained to look at things the same way, of taking a big picture view, of thinking that history matters a lot, and that’s the perspective I took in going into the solar industry.

The other part, which is kind of much more tactical is that I’ve been working on looking at data and analysis and doing econometric models since 2002 on solar and trying to make some progress in terms of understanding where the cost changes came from and what to attribute those to, but I got the sense along the way that I was just missing part of the picture. There were things, variables, factors that were just hard to measure, hard to see, hard to put into a model. And so I wanted to take a break from that kind of analytical perspective and use more of a qualitative approach and see if there was other information, other insights that were really stuck inside of people’s heads. And that’s really what I wanted to do in this book is to interview as many people as I could that had some perspective to add and get some of those insights out of their heads and put them together and do some kind of comprehensive framework.

Bill:
As one of your readers and hopefully, one of the many, many, many who ended up reading it, you did a really great job. I’m a huge fan of Jared Diamond’s, and that’s quite an inspiration. And he does a remarkable job of taking history and putting it into context. And honestly, his book was probably one of the ones that got me interested in history earlier in my life, because it made it relevant to what we do today, as your book has done a great job for me and my role in the solar industry. So we don’t want to tease the whole book and we don’t want to cover all the topics, but I do want to do a high level overview so everyone knows what it’s about and they understand why it’s worth picking up to read. So at a very high level, what’s the one paragraph overview of what the book is about?

Greg:
I’d make maybe three parts of the book. So one is just to establish that solar is now cheap. And I realized that not everyone gets that. And if you look at data that are a few years old, it doesn’t look the way it actually is today in 2020. So the first point to make is that solar is cheap. And it probably is not only the cheapest way to make electricity in most places, but in sunny places, it’s the cheapest way that humans have ever been able to make electricity at scale. And so that’s the first point I make. The second point, which is the core of the book, is really about how did this happen? What’s the story? And I really go back to the 1800s even, but a lot of it happens in the last 20 years. But a lot of the choices that are made earlier affects and conditions some of the technology pathways that emerge much later. So that’s the second part of the book is how did this happen?

And then the third part is really what can we learn from solar as a model? How can we apply it to other technologies? What are some technologies that it might be applicable for? What other models might we need for technology needs some other type of model? And then crucially, how can we speed it up? Because that’s one of the main insights that was clarified for me in doing this book was that the story was long and slow, and we need a story that happens much faster. So even though solar was a success, if we’re going to apply it to other technologies and hope for the same success, we need to speed it up by quite a bit.

Bill:
I knew I needed to read this book when it was clearly an overview of the cost declines in solar. But I have to tell you, Greg, that the part that really attracted me was the title, right? So, How Solar Became Cheap. There’s no doubt at all about what this book is about and using, if I dare say a bit of a colloquial title, was really attractive. So I tip my hat to you for picking a title that really is exactly what the book’s about. And as a writer, I always debate whether I should use the word cheap as opposed to some fancy word like inexpensive or whatever, but it is. It’s cheap. So again, hat tip on that title. What were a couple of the things that really stood out about why solar became cheap?

The first thing I’d say, and this is really clear, is that no one country did it. No single country ever persisted in taking the technology from an idea or an R&D project to a commercial technology, to widespread adoption. It was really a passing of the torch. And it goes in a sequence of five key countries. It starts with the US, then Japan, then Germany, then Australia, then China. And similarly, no company that was ever the biggest company in the world producing solar ever held that lead for more than a couple of years. They always relinquished to some new competitor, often from another country. And so there’s such a passing of the torch that way. So that’s the first idea is that it was this kind of combination and really a relay race of different countries, each contributing something distinct.

And I think that’s another part of it too is that it wasn’t too bad that one country stopped and the other country started. In a way, it allowed countries to provide some kind of distinct capability that they have. And I use the theoretical framework called National Innovation Systems. It really has to say that based on countries’ education systems, culture, sides of the market, the types of products, their customers, conditions the type of innovation that they work on. And so, we were able to get the best of each of these five countries contributing something with this framework. So that was an important part of it.

A second important part of it are these strong capability for international flows of knowledge. And sometimes it’s called globalization, but I think it helps to think about specifically, what was happening. It was often just people, sometimes individuals, moving from one country to another, taking a visit to another place, seeing what was happening there, picking up some ideas, bringing them back. Sometimes those were policy ideas, sometimes they were technologies, often they were applications like niche applications and early markets. So those international flows of people, knowledge, and later, machines, and ultimately, capital in a big way were crucial for this.

And then finally, the third big outcome of this is how slowly this process happened and that what we really need is something to happen on the order of, say, a factor of four faster in terms of getting a technology to be commercial, thinking that commercial technology to work in markets and get those markets to expand to widespread adoption.

Bill:
A lot of the folks in solar that you talk to, especially the veterans that have been doing this for decades, will talk about the solar circus, where you go to one region or one country and you set up tents and then the market evaporates and you have to go and move elsewhere. And so a lot of the folks, as you said earlier, Greg, have lived across the world. Can you tell us a little bit about that really unique part of solar’s history? About the people that moved around and the countries they were in and how that story evolved to give us this amazing industry today?

Greg:
Yeah, sure. The international part is such a big part of it. And I have to imagine that part of the reason it happened this way is because of the modular scale of the technology. It was so small that individuals could actually do enough to make a difference. And so individuals moving around really affected the industry. I’ll start with one story. So there’s a scientist, he’s an undergrad in Australia, interested in microelectronics. Then the oil crisis happens in ’70s, gets interested in solar, wants to go to the US but he’s in Australia and so he can’t get a fellowship to go somewhere else in the British Commonwealth, so ends up in Canada, does a PhD at McMaster University in Canada, goes back to Australia to set up a PV lab after that, and then starts going to the US. And this person’s name is Martin Green, and he makes a big difference to the solar industry, especially in these international dimensions.

One of the things he did in the ’70s was went to visit 12 different companies in the US. Those are really the only companies that were producing commercial PV in the ’70s, talked to them, got to know them, scouted out what kind of equipment they were using, what they were using for furnaces, found some places that had some second hand or some used stuff that they weren’t using anymore, and found ways to bring some of that back to Australia, really scrappy setting up production.

Then in the early 1980s, Xi Jinping in China is the first premier to start opening up China and has the idea for 1,000 students to leave China to go get trained in the US and come back to China. And one of those students goes to the University of New South Wales in Australia, and starts working on some of these PV projects. A couple of decades later, we get another student coming from China in that same program, the fourth one that Martin Green had, and he becomes a translator for Martin Green’s group that is interested, they’re producing some of the highest efficiency cells in the world, thinking about doing production somewhere else, maybe in China.

So in 1994, they go to China. There were three of them, and they came away disgusted. They said, “There’s no way you could ever set up production here if there’s no infrastructure. There’s no interest in having a foreign company come here.” And so they left and tried to set up production in India. And that didn’t work either, so they went back to Australia and set up a small company called Pacific Solar there.

But over time, they appeal the Chinese market grew and that translator, who was a grad student at the time from 1994, starts getting interested in his own on setting up production in China. And his name was Zhengrong Shi. And in 2000, he goes to China, made a deal with a local government. They raised $5 million from some local appliance manufacturers and set up a production line. And within four years after that, his company went public on the New York Stock Exchange. They started supplying, became the biggest producer in the world, and he became the richest person in China for about three years.

When that’s always happening in the mid 2000, which is when a lot of these supply chains in China get set in place, here’s the flow of money that was happening for example. We had this person that was trained in Australia, went to China to set up production, wants to sell to the German market because they have a subsidy program there. To do that, they need equipment that they buy from Switzerland and from the US. To get money for that equipment, they go public on the New York Stock Exchange. So it’s really US pension funds that are funding this Chinese entrepreneur to buy equipment from Switzerland and the US to produce panels in China and then ship them to Germany where they’re installed under the big subsidy program there. So that constellation of international drivers is such a core part of the development of solar PV and a lot of what made it happen.

Bill:
I love that story. That’s well told and how it all came together. Was the company Suntech?

Greg:
Yes, the company was Suntech. Yeah.

Bill:
Yeah, and so for folks who listen to this that haven’t been in the industry for decades, Martin Green could be thought of as a Bill Gates or a Steven Jobs of the software industry. And when I meet people in solar today, one of the qualifiers of whether or not they’re a serious bad-ass solar person is whether they actually studied under Martin Green, whether they’re a business person or a scientist. But if you’ve been in Martin Green’s orbit, then you are clearly at the center of the solar industry. And, Greg, I was at the Hawaiian Solar Conference a year or two ago, and Martin Green won the Lifetime Achievement Award. And just an amazing story of listening to people there talk about the influence he’s had on the industry. There was a single individual whose name is, short of your book and a few people that know the industry, his name is not somebody that is a household name, but to whom we owe an amazing debt of gratitude the world in the future. So thank you for bringing that story out.

The core idea behind Freeing Energy is really about the local nature of energy. So, rather than a world, which works pretty well and has been pretty successful that we have the day where we have gigantic power plants and thousands of miles of the transmission towers and millions of miles of distribution, the local energy notion is that we can generate a lot of the energy near where we use it. And the most obvious example of that is rooftop solar. And this has the benefit of opening up markets and democratizing energy in a way that simply hasn’t existed, at least not since we were burning firewood in fire and fireplaces 200 years ago. What really is exciting about the low cost of solar, and frankly, the success story of solar, is that of all the ways to generate electricity, it may be the only one that works really well at small scale, as well as large scale.

And you talk about that in the book, the fact that it’s unique in its ability to scale small and the ability to live in niches before it became a ginormous centralized power plant, the kind of thing we see you driving down the highway with all these solar cells up to the site. So can you help us explore a little bit about why solar is unique ability to scale, to be manufactured at large and small scale, blah, blah, blah, how that actually has helped it get as successful and what that might tell us about other technologies we want to be as successful in the future?

Greg:
This modularity part of solar is such an intrinsic part of its success, and there’s multiple mechanisms that modularity allows it to be successful. I think the one I would start with though is its ability to serve a sequence of different niche markets over time. So you didn’t need to have a policy. It didn’t need to have solar being cheaper than coal or natural gas for it to be successful. 70 years ago, it just had to be better than lead acid batteries or tiny nuclear reactors that might go into satellites up in space, and solar won that as its real first application. That wasn’t a gigantic market and that’s not going to take care of energy problems or climate change problems, but it is a way to get serious manufacturing started to work out the technology, to prove that’s reliable, to have customers come. Like in this case, it was the US Navy in the 1950s and be kind of asking for more solar.

And then there was just a sequence of markets from that early small satellite application over the next 60 years that had higher willingness to pay than we would for grid electricity and increasing size over time. And at one point, I did a short, I think, back of the envelope calculation. And if you look at the smallest commercial solar cell, which is probably that in a watch, and the largest, which is probably in that power plant being constructed in Egypt right now, there’s about a factor of a billion in scale, and almost every scale in between has been tried in some form or other. So this ability to work in different markets have different applications, not all of which had to compete with grid electricity and not all of which needed the policy to put them into money has been huge for solar. And having a sequence of those and not just one or two, that’s been huge.

So that small scale and the ability to work at different scales has been huge for markets. It’s also been important on the technology side and the R&D side. So you can make a lot of different bets on solar and they don’t have to be giant bets, but actually get somewhere with them. I talked earlier about individuals really making a difference in terms of their pathways. That’s really different from a large scale nuclear power plant or a carbon capture plant. We’re talking about billions to get started with the first commercial plant. And so that makes a big difference too in terms of making progress.

If you think of support for technology, support for solar, there is something about having this local ability to produce energy locally, to deal with problems that people really care about, whether it’s air pollution or climate change or dependence on foreign oil or other toxic issues or local employments, solar can check all those boxes. And in contrast to other technologies where we talk about public acceptance or trying to deal with people having a not in my backyard syndrome, it’s the opposite with solar. It’s kind of more of a contagion effect where when people see that a neighbor has solar, they get interested, they ask how it’s working, they ask who installed it, and you start to see these patterns emerge. And we’ve looked at that in geographic data where you can see these clusters emerge because people see their neighbors with it. And that’s a really trusted source of information. There’s an appealing aspect of it that I think has to do with it’s small scale as well.

Bill:
The phenomenon you’re describing about living in niche markets as it became a larger, more global market, it echoes one of my favorite business books, which is called The Innovator’s Dilemma. It describes the fact that these large industries, whether it’s computing or steam shovels or hard drive manufacturers, and I think solar now, incumbent struggle to compete and even get interested in these emerging markets. And so what happens is a bunch of entrepreneurs play with that early technology in niche markets.

The steam shovel industry was undermined and ultimately, overturned to the point that all the companies that provided steam shovels except for one, went out of business because of hydraulics. But hydraulics couldn’t scale up and they were too expensive even to scale. Steam shovels, they started in farm tractors and tiny little personal tractors, and then it became mainstream. And solar follows that same pattern.

And I think that is a key to the success of any emerging technology. It can be adopted, created, manufactured in small scales for niche applications, where it does make sense, satellites for solar, hydraulics for farm tractors. And then it has a chance to grow and mature, get it less expensive and maybe go mainstream. And I think the future of energy is going to be defined entirely by solar and other technologies like batteries, which we’ll talk about, that have the ability to start small, solve local, small problems and grow larger and larger more and cost effective.

Greg:
Yeah, absolutely.

[INTERSTITIAL BEGINS]

Sam:
Here’s a question for you. Ever asked yourself just what is a megawatt and what is a megawatt-hour? While a megawatt measures the power or capacity of an electric system, a megawatt-hour represents how much electricity is delivered through that system in an hour. Think of a megawatt as a big rock resting on the edge of a hill, and a megawatt-hour as the energy released as that rock rolls down the hill. Here’s an example. If a one megawatt solar array runs in the full sun for an hour, it will theoretically produce one megawatt-hour of electricity. Most people are used to seeing electricity measured in kilowatt-hours on their electric bills. A megawatt-hour is simply 1,000 kilowatt-hours. Other common measurements are gigawatt-hours, and that’s 1,000 megawatt-hours, terawatt-hours, and that’s 1,000 gigawatt-hours, and petawatt-hours, and that’s 1,000 terawatt-hours.

To put these massive numbers in perspective, the United States uses about four petawatt-hours of electricity each year, while the sun delivers around 192,000 petawatt-hours to the Earth’s seven continents every year. So what resources are needed to produce a megawatt-hour of electricity? Here are some examples. It takes approximately 960 pounds of coal to produce a megawatt-hour of electricity or 7,600 cubic feet of natural gas. But with solar, just one twentieth of a solar panel will produce a megawatt-hour of electricity over a 20 year lifetime. And the fuel is provided free from the sun. Learn more about clean local energy by exploring freeingenergy.com. Now back to Bill and Greg.

[INTERSTITIAL ENDS]

Bill:
When we talk about local energy, one of the concerns that a lot of the US folks have about solar is that it’s by and large manufactured outside the United States, largely in China. And so therefore, China’s becoming the Saudi Arabia of solar, and this is geopolitical national security dimensions. And one thing I really liked from your book was that you repainted my perspective of local energy’s value. And while these panels may be made in China or elsewhere, so much of the value they create is local. Can you talk a little bit about that?

Greg:
Yeah, one consequence of the price of panels continuing to go down is that they’re accounting for a smaller and smaller share of the overall cost of a solar installation. And in the US, for a residential solar installation, the panels are something like 25% of the total cost, and the rest of it a little bit is inverters, but most of it is local human capital. It’s electrician type of skills, it’s roofing type of skills, and there’s some administrative and marketing type of skills. And all those, which are sometimes called soft costs, that’s like two thirds to three quarters of the cost of installing solar. In a sense, you could say that’s where two thirds of the value of solar really resides, and that’s local. That’s not getting outsourced to China. And those are 300,000 plus new jobs that weren’t in the US 10 years ago.

And so it’s really that the panels create a platform for all this extra value to be added to it. And that’s not counting the value that comes from having access to this cheap, clean, reliable electricity, and then what you can do with it. And I think that’s really the frontier now is what do you do with this resource? It’s different from what we’ve had in the past. It might be regulated differently because you can produce it on your own. It has some geographic aspects that are different from in terms of where power lines are or where coal mines are or where railroads are. And so there’s a lot of maybe geographical configuration and energy intensive activities, either existing ones, it could move to solar or new ones that we haven’t developed yet have the opportunity to grow in this era.

And so, China certainly has played a huge role in reducing the cost of solar, and it’s the dominant producer of solar panels for sure. 70% of production. So there’s no getting around the fact that China has a very dominant position in the panels, but there’s so much other aspects of solar that have to do with creating solar electricity. But then I think ultimately, it really have to do with how you use it and how to take advantage of it. That’s up to the local and other places to figure out how to do it.

Bill:
That’s one of the biggest reasons I love the local energy idea is that like farm to table and farmer’s markets. You have the community taking care of itself, generating its own and meeting its own needs. While solar is classified for a lot of good reasons as an energy producer, it is so fundamentally different than virtually every other kind of fuel-based power. If I need more oil for my car, for the most of American history, we had to go to another country to get the oil. So if I wanted to drive another mile, I had to have an ongoing relationship with another country to get the next gallon of gas from them.

Similar to nuclear. 90% of the nuclear fuel is made outside the United States. So if I want to continue running my nuclear power plant for another couple of gigawatts, then I’ve got to go get some fuel from some other country. But if I want another couple of kilowatts out of my solar panel, well, I just let it sit there. And once it’s installed, it just generates energy. I control what happens to it, I own it. So it’s a completely different model and it really is one of the many reasons local energy is just a different business model than when you try to compare it to traditional energy sources.

Greg:
Yeah, that’s a big difference. And if you think about some people have concerns of 70% of production is happening in China. That’s really different for the reasons that you said about having oil coming from another country or natural gas or some other commodity we really care about, where when that gets cut off or reduced, the price goes way up. That can cripple the economy, it can lead to gas lines and leads to a lot of disruption that we’ve seen in the past. But with solar panels, there’s a buffering here. So that if you still have your solar panel for 20 years if China decides not to sell us solar panels anymore, and that gives us time to start to develop our own capabilities, to produce our own panels. And so the consequences of this industry being concentrated in one faraway country is really different than the consequences of depending on fuels that might be concentrated in other places.

Bill:
Greg, help us understand a little bit more about the role of government policy. A lot of people think about things like the investment tax break, but you really listed a much richer set of roles that the government can play. It leaves me very optimistic that maybe the policies we need aren’t necessarily as massively sweeping in industry changing as some people have been calling for.

Greg:
I’m very interested in policy. I work at a policy school and thinking about ways that policy can affect innovation. And I often think about it as policies that affect the supply of innovation. So it’s funding research and development, maybe funding demonstration projects, and then policies that affect the demand for an innovation. So a subsidy for a new technology or a tax on a dirty technology would enhance a demand and stimulate more private investment innovation as a consequence. So those are really important. And those sometimes are called technology push and demand pull. And so, I think those are really important going forward.

But one thing that stuck with me when I was in grad school, I was interviewing venture capitalists that were starting to get interested in the energy sector, and I had this idea that policy is uncertain. So maybe they’ve got these models of business plans where they risk adjust policy and think maybe you don’t value it completely because it could get changed or it could be an election, they could expire. And I was explaining this complicated understanding to see their impression of it and this VC guy said to me, “Stop right there. It’s way simpler than that. What the government giveth, it can taketh away. We only invest in technologies that make money regardless of policy. And if there’s a policy that creates some benefit to us, that’s great, but it’s a windfall, it’s extra, and we’ll take that, but we’re not going to make investment decisions based on that.”

And so it was a much cleaner view of policy than I had expected, but I think it really fits with the idea of why niche markets are so important is that early on when the technology’s risky and we don’t know how people are going to use it, you don’t want to be adding policy risks to that. You want to have some markets where they work on their own. And whether it’s putting solar on oil rigs or putting solar on telecom or petrol stations, those didn’t need policy. Those were just places that solar made sense when it’s better than anything else.

And so, that idea of policy uncertainty and that skepticism that some people have on it can be alleviated by having these niche markets that work. Even in the longterm, we probably do need some policy to make the markets big enough to affect a real change in the energy system or for climate change. And that probably includes some type of carbon pricing and maybe subsidies for deployment, but there’s a lot that can be done with niche markets in addition to those policy levers.

Bill:
I love it because that’s exactly the point I want to hear, which is that there’s an awful lot we can do, even before we get the policies that we want.

Greg:
Correct.

Bill:
And waiting on the ideal policies is not an excuse. And I do agree that to really address climate change, we’re probably going to need a carbon tax and things like that, but who knows? One of the reasons I love local energy is that in most of the world, and certainly, in most places in the United States, if you want to put solar on your parking lot or your office building or your home, it is outside of the regulated monopoly and you are free to do so. As that has become a less expensive option, I’m excited that we now see a market emerging that is somewhat independent of a century of heavy policy around electricity production.

The next question and the final one before we get to the lightning round is one that we could probably do four or five hours of podcast recordings on. And I just want to get a very high-level taste of your perspective on these things, but in the final part of your book, you talk about the lessons from solar and how it might apply to new and important emerging technologies that can help remake the energy industry. Give me your quick thoughts on a couple of the areas you’ve touched on. Small nuclear reactors. What did you learn? What does that mean?

Greg:
I wanted to look at technologies that had some of the attributes of solar, and one of the important attributes of solar is this how iterative it’s been. So calculated that in the history of solar, we’ve produced 2 billion solar panels.

Bill:
Wow.

Greg:
And if you look at the history of nuclear power, which spans almost the same timeline, a little bit longer, we’ve produced less than 1,000 nuclear reactors. And so there are a million times more chances to improve, to change processes, to do something better, to fix something that doesn’t work. And so I’ve been interested in other technologies that have that iterative component, where you have lots and lots of chances to improve. Small scale nuclear reactors could potentially be different than traditional nuclear reactors in that you could be making hundreds of them, maybe thousands of them, maybe more than that. And so that was one thing I wanted to look at in detail.

And it does seem like some of the things that have worked for solar, niche markets where they work well. So we’ve actually been looking at remote communities that could use small nuclear power plants or forward operating bases in the military could value having a reliable source of power without needing to supply fuel. And so there are these niche markets, so that looks appealing. One of the attributes of solar that’s been crucial that the Chinese have done a really good job at, is it sometimes fits under this notion of disruptive innovation. That you compromise on attributes that customers don’t care that much about in order to give them something that they care a lot about.

And so maybe with telephony, it was maybe reducing the quality of the signal to make it more convenient and cheaper, and with solar, it was reducing efficiency by a couple of percentage points, but getting the costs a lot cheaper. And the Chinese are really good at that. You can do that with some technologies like solar, but you can’t really do that with nuclear because you don’t want a nuclear power plant that’s 90% safe. You want one that’s much higher than that. And so, that’s where I start to say maybe we do need a little bit of a different model for nuclear to account for that aspect.

The other part of nuclear that has a problem is there are international flows that I talked about were so important with solar, and yet, if you look at nuclear, we’re really trying to slow down those flows. So even in our university here, we’re having restrictions on who can work on nuclear power if you’re coming from a different country, or if you’re going to a national laboratory where there are advanced nuclear designs and you’re from a different country, you have to wear a special badge. And those are all dampening this flow of ideas. And there are good reasons for that, but it’s different than the way solar has worked. I think there’s a limit to how far nuclear can go with the solar model.

Bill:
I think that’s a real issue. And I hadn’t thought about that from nuclear. It’s inability to have information flow as readily and as easily.

Greg:
Yeah.

Bill:
I think part of what helps solar and other technologies was that nobody really cared about it when it was coming into early maturity.

Greg:
That’s true.

Bill:
And so, there wasn’t anyone worried about it or anyone that had a lot to lose if it was successful. So the powers that be, whether they are political national or business-wise, just weren’t threatened.

Greg:
Yeah, that’s a good point.

Bill:
But now we have solar. And I think a lot of folks were thinking twice about the next set of technologies that are also transformative, and what I wanted to ask you about, which when in our previous conversation I mentioned you didn’t really talk about in the book, I loved your answer, was so what about batteries?

Greg:
Yeah, I wanted to look at batteries because they seem like they’ve got some very similar attributes and could make a huge difference and also help solar in terms of dealing with some of the intermittency that comes from it. The issue I have with batteries is just the timeline. I just feel like things are moving so fast with batteries that a couple of years of doing research and I’d be out of date pretty quickly. So I had to pick my spots a little bit and leave it to someone else to maybe in a few years, once the battery story has really evolved into something that’s very mainstream and has lots of applications, to take a look back and see how that all happened and see if it followed a similar path.

So I think batteries are well along with the solar story in terms of one aspect that’s similar is surprising people so that the cost of batteries is below where experts thought they would be by 2030, we’re already there. And so it’s the opposite of what I sometimes call the technology hype cycle, where people are disappointed in the near term. With solar and batteries, we’re actually surpassing where people thought they would be in terms of costs and performance. So, yeah, those are coming along very quickly.

Bill:
Yeah, Bloomberg said that the price of batteries between 2017 throughout 2018 dropped 37%, 38%. Some stunning numbers. And it’s already hitting the magic $100 a kilowatt-hour where electric vehicles become cost-competitive with gasoline vehicles. And obviously, all that research plays wonderfully to the market I’m interested in, which is electricity and the ability to help address the intermittency of solar and other things. So, I’m very bullish that batteries will follow the same trajectory. And my book will wed those two trajectories together and talk about the markets that emerge, particularly in local side obviously.

Greg:
Yeah, that’s a really powerful combination.

Bill:
This has been an absolutely great set of conversations. You really have a wonderful perspective. And for anybody that’s in the solar industry, particularly someone that hasn’t been in it for 30 years, your book is the single best resource I’ve found. Even listening to old guys talk over beers, the single best resource I found about how we got here. And in fact, next time I find myself sitting with a bunch of these old solar veterans telling me about the industry, I’m going to be able to say some pretty good facts, drop a few of my own, thanks to your education.

Greg:
Great.

Bill:
One of the fun things we do with all of our guests is to ask them some lightning round questions. We ask everybody the same four questions. So the first one is share something that you think non-industry folks would find most surprising about the work you’re doing in this new world of energy.

Greg:
The technology is changing so fast. I think energy has been considered a stagnant area where things are slow. We have the regulation mostly from the 1930s, but what we’re seeing with solar, with batteries, with wind power, potentially with other technologies like electrolyzers and direct air capture and other technologies like heat pumps that we might need, really opens up new opportunities. So just it’s a dynamic area. It’s not a slow-moving one.

Bill:
If you could wave a magic wand and see one thing changed on the transition to clean energy, what would it be?

Greg:
So the pathway that I looked at, which starts in the ’50s and goes to now, had this low period in the 1980s and 1990s where not much happened. And the Japanese made some important moves that kept things going, but it was mostly about treading water. And I really think that if we had started to deploy solar in niche markets more aggressively in the early 1980s, we could have sped up this process so that we’d have cheap solar 10, maybe 15 years ago, instead of one or two years ago. So that I think was a key point that they could have sped things up that we missed. So we’re in a good shape now, but it would have been nice to have these technologies available 10 or 15 years ago. And I think that would have been entirely feasible.

Bill:
Looking forward, what do you think the single most important change in how we generate, store, and distribute electricity will be in the next say five years?

Greg:
I think what you’re working on the storage part and integrating that with intermittent renewables like solar and wind and being able to link electricity with transportation, those are just renewables that were concerned not serious for a long time because they’re too expensive. And then once they got cheaper, people said, “Well, they’re intermittent.” So just we’re getting rid of all the excuses that people have for deploying these technologies, and then to think of, well, electricity is easy to decarbonize and modernize, but transportation is stubborn. It’s still 90% plus from fossil fuels and oil, and that’s changing too with energy storage and batteries. And so linking transportation and electricity really opens up things. And I think in a way, that’s going to be hard to predict entirely, but creating new opportunities and possibilities for sure.

Bill:
And the people that listen to our podcast are often people that want to do something. And so when people ask you, “What can I do, Greg, personally, to help push this clean energy transition forward faster?” What do you say?

Greg:
I say, “Use your talents.” I work in education, so I’m training students, but I’ve also gone through a career transition where I was working in a really different area and got interested in energy. And I think there are a lot of people that have talents. Things you’re good at. Maybe they’re entrepreneurs, maybe they’re marketers, maybe they’re educators, maybe they’re activists, maybe they’re artists, people that can communicate. Being able to activate your talents and devote them to this area of energy, of climate, of sustainability, it’s pretty satisfying to do that and it’s desperately needed in terms of dealing with these problems. And so I think people being able to use what they’re good at in this area would be really helpful.

Bill:
Those are some great answers, Greg. I love it. Thank you. More importantly, thank you so much for investing all that time to write such a great book. And I really appreciate you spending a few minutes with us today to share a synopsis of your journey and the things that you’ve learned because I do believe that your insights and others are going to be guideposts, TRO guides, for us to get to the clean energy future much sooner. So thank you very much for your time today.

Greg:
Yeah, it’s great to be on your podcast. I enjoy listening to it, and so it’s fun to be involved in it. And I really appreciate your questions.

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