Solar and wind energy are intermittent resources because the sun does not shine and the wind does not blow all of the time or with predictability. On average, both solar and wind are available 30% of the time. This is called a capacity factor. Because of this unpredictable nature, utilities must back up these resources with an equivalent amount of energy from additional resources. This effectively doubles the cost of solar and wind energy for utilities. Other types of renewable energy are more predictable, e.g. geothermal (the earth’s steam heat), biomass (from decaying organic matter), or wave energy, which can be predicted with great accuracy 3-5 days out enough to schedule it to the grid.
With a rapidly changing industry, technological advances, regulatory and policy demands and changing customer preferences, electric utilities will need to consider regulatory issues, rate design and utility business models to respond to changes in the electric sector. Primary policy issues that will affect solar energy’s future include:
- The evolution of electric systems in the developing and the developed world and a shift from business-as-usual (e.g. Germany).
- Envisioning what a country’s electric system will look like after this shift (e.g. Australia).
- The growth of distributed energy resources and the effect on traditional utility business models including the grid and load defection (i.e. declining costs and widespread adoption of distributed generation).
- Investigating technological barriers and opportunities for integrating large amounts of variable renewable energy onto the grid while reducing carbon from the electric sector in response to climate change.
- New regulations on the electric sector in response to these changes (e.g. Hawaii’s 100% RPS by 2045).