The sun transfers 430 quintillion Joules of energy to the Earth every hour. I don’t know exactly how much that is, but I’m fairly confident it’s much more than Steph and Tom lost in their FTX investments. It explains a lot about why so many entrepreneurs see solar energy (and solar farms) as a critical resource.
Yes, solar energy is abundant and unimaginably renewable—there is literally no end to the supply. I mean, you could go down the dystopian road to aliens redirecting the sun, but let’s hang up the tinfoil and save that for Tuesday morning’s on @DigitalWildcatters #BDE show.
The reality is that solar panels capture a tiny fraction of the sun’s energy and convert it into clean electricity. Sounds like a win/win, right?
Actually, no. Solar is one of the best alternatives for renewable energy. But there are drawbacks to large-scale solar farms (as a side note, while I applaud your commitment to clean energy if you have panels on the roof, you’re not exactly generating power at scale) that are both financial and environmental. It’s true that solar has gotten a lot cheaper to save and store lately (commercial standalone storage dropped 13% from 2020 to 2021). But external factors may make those savings unsustainable in the long run.
Distributing Solar Energy
Solar energy is collected, stored, and distributed a lot like hydroelectric or coal power. When the sun hits the photovoltaic (PV) cell, photons of light energy disturb free electrons. Those then move through a conductor to an external load, producing electricity in the circuit. It’s converted to alternating current (AC) electricity in the power grid before it’s distributed.
So one drawback is that at scale, solar power is limited to areas where the local grid has been retrofitted for solar. In rural areas, there are wide open spaces for the farms. But the infrastructure is not yet in place to make solar a truly viable option.
Climate Challenges
A spotty grid isn’t the only problem with solar. It’s a total Goldilocks scenario—you’ve got to have exactly the right location and climate for the panels.
Conventional wisdom would have you believe that solar panels generate more electricity when it’s hot out. But this is why you shouldn’t believe everything you read or hear. Panels are more efficient in cold temps—77°F in the sun is the ideal temperature. Every degree above 77 equals 1% less efficiency for the panels while dropping temps have the same calculation in reverse.
When the panels warm up to 149°, they are pretty much useless.
Temperatures aren’t the only challenges solar farms face. Obviously, they need to be in full sun for as many hours of the day as possible. So, many solar nay-sayers complain that when it’s raining or there’s a heavy cloud cover, the solar panels can’t generate any electricity. But when you consider the ridiculous amount of energy that the sun provides in an hour, losing production when the sun doesn’t shine isn’t really a deal breaker. This theory only really works when the panels are in that Goldilocks location with optimal panel maintenance and storage.
Intentional Global Warming
There is another downside to solar farms at scale in open sunny places—the Sahara, to be specific. After all, there’s plenty of silicon right there to manufacture the panels. So what’s the problem? Well, to make it scale, you’d have to cover thousands of square miles with panels. Researchers estimate this size project could supply quadruple the demand for global energy (remember oil from algae?).
This is where the serious problems start. Let’s assume you have a bazillion panels installed in the desert. Keep in mind that even the most sophisticated panels are only capable of processing about 15% of the incoming solar energy. The remaining 85% stays in the environment as heat—only hotter, because the panels are generally darker than the sand surrounding the farm, and darker materials absorb that heat.
Unintended Consequences
Well, it’s already hot as hades in the desert, so what’s the big deal? So glad you asked. Rising temps in the Sahara, in particular, can create a feedback loop where the increased temperature difference between the land and the oceans could create more extreme weather anomalies (maybe this is normal part of the earth doing what it does, but don’t want to upset the emotional ones).
The temperature variance will lower surface air pressure, so moist air rises and turns into rain. In Africa, this has the serious consequence of extended monsoons, which may not be all bad for residents. More rain equals more vegetation, so the desert reflects less energy—cooling the temperatures. More plants mean more humidity, so that’s kind of a win in an area where famine is always a threat.
Still waiting for the “possible” bad news as some experts have written (don’t shoot the messenger)? Here you go.
These shifts in the atmosphere and oceans will increase the Earth’s temperature by 0.16° at 20% farm coverage in the Sahara. Antarctica and the North Pole will get warm faster than the Caribbean, melting even more ice. This melting ice creates more dark seawater, which in turn absorbs more solar energy.
Precipitation patterns will shift. Centuries of agricultural tradition will be hammered when the rainfall in the tropics moves north and there’s drought in the Amazon and Congo basins. Also, expect previously generational cyclones every week in Southeast Asia and tornadoes in North America.
The moral of this story? Producing and distributing solar power at real scale brings real catastrophe. Like that? Yes, I made the leap.
Whoever Thought That Actuarial Tables Would Hinder Something as Sexy as Solar?
Then there are the rising costs of harnessing solar energy. Solar has never exactly been the darling of Washington lobbyists. Consider the subsidies and grants that the oil and gas industry has benefited (will write about this soon). Early solar investors had to bootstrap a lot, but the costs of doing business were relatively cheap—including insurance.
Property premiums for solar farms blew up between 2019 and early 2020—between 10 and 60%, per the Insurance Information Institute. Natural disasters—hurricanes in the South, wildfires in the West, and a myriad of other weather events all over the country—have made insurers rethink their risk analysis for solar farms. Now, they often land at the conclusion that premiums were underpriced for years.
Underestimated Risk
For decades, property insurers looked at solar insurance policies as a basic property deal. They didn’t realize that the equipment on the farms was at high risk for damage during flooding, fires, and storms. A surfeit of claims has hardened the market for solar projects. Premiums have increased to the point that they are prohibitive for startups.
This hard market has also placed lots of restrictions on solar, making it harder for both developers and financiers to make deals work. For one thing, they have slashed natural catastrophe sub-limits (coverage on specific losses), leading developers to ask lenders for waivers on coverage.
Another issue for insuring solar farms is that there’s no real track record for claims beyond the past few years, when there was little oversight on the location and sustainability of the farms. But since underwriters didn’t understand the risks they were insuring, the current move to exorbitant premiums may just be a knee-jerk reaction to across-the-board payouts for energy claims. …Here’s looking at you, Texas, and the astronomical business insurance claims filed after the weather and power debacle last winter.
The contradiction here is that clean energy is a government and (mostly) political priority, but there’s not a lot in the pipeline to ease the pressure on insurance premiums. So the cost of doing business is prohibiting innovation and development in this sector.
Environmental Concerns for Solar Panels
Solar panels, whether they’re manufactured for giant farms in India or for your backyard greenhouse, are mostly made from a silicon composite. This is abundant and somewhat sustainable. It’s cadmium telluride (CdTe) and copper indium gallium selenide (CIS/CIGS). But these are heavy metals that can leach into groundwater near the panels.
As if that’s not toxic enough, panel production usually includes two of the most noxious greenhouse gases in the atmosphere: nitrogen trifluoride and sulfur hexafluoride. Why doesn’t anyone talk about these downsides?
There’s No Great Solution for Panel Disposal
Sure, you can recycle solar panels—but it’s expensive and, frankly, not worth the squeeze to extract heavy metals and other contaminated materials from the silicon. Another solution is to remove valuable elements—copper and silver—from the silicon and then incinerate the casing in cement ovens. This isn’t cheap either, so the default method is to ship the hazardous panels to a landfill or third-world countries. Nice, huh?
Supply Chain Woes
As if all this isn’t enough to turn you off solar, there are always supply chain problems that can pop up at any time. Trade tensions with China (where lots of the metals for panels are mined) are never going away, so getting raw materials could prove to be a bigger challenge than anything else. If you can’t build it, the sun won’t come.
I’m Still Bullish on Solar Energy (And Solar Farms Might Still Happen)
Even with all these downsides, I’m pretty sold on solar. For one thing, renewable energy is a hard given, and this is one of the best options we have. Solar is a “relatively” new technology, and there are tons of exciting innovations on the horizon that will improve the manufacturing processes and mitigate the storage and distribution shortfalls. Do you agree?
