The dawn of 24/7 solar power

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The plunging cost of large-scale battery storage is a potentially game-changing development for the electricity sector — one that is just starting to get the attention it merits.

Could this usher in a new wave of 24-hour solar and wind power?

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Solar power when the sun don’t shine

The trouble with solar and wind power plants, as everyone knows, is that they don’t provide electricity when the sun doesn’t shine or the wind’s not blowing.

No longer, argues Francesco La Camera, director-general of the International Renewable Energy Agency (Irena). “This question of intermittency has been played against renewables for a long time, by lobbyists that are looking for the eternal life of an energy system based on fossil fuels,” he told me yesterday at the FT-Kathimerini Energy Transition Summit in Athens.

Our conversation came soon after Irena published a report hailing the arrival of “24/7 renewables”. The study portrayed as obsolete the conventional wisdom which holds that, despite the emergence of solar and wind power as the cheapest form of energy, you’ll always need more reliable “baseload” sources such as gas or nuclear plants as the core of your electricity system.

That thesis had now been disproved by a “dramatic decrease” in the costs of large-scale battery storage, La Camera told me. The cost of a typical utility-scale battery installation has fallen by well over half since 2022, and by 27 per cent last year alone, according to BloombergNEF. The price drops have come chiefly from technological and manufacturing process advances by Chinese battery producers, including in the use of lower-cost lithium-iron phosphate chemistry.

This means, Irena says, that projects combining solar and wind generation with battery storage can now provide 24-hour power at prices that are competitive with gas-fired power plants.

A new model

Sceptics might suspect mere boosterism from Irena, an intergovernmental organisation formed in 2009 to support the growth of renewable energy, which counts 170 national governments as members. But the first large-scale projects following this model are already taking shape.

The biggest of those is a plant in Abu Dhabi’s desert Al Dhafra region, scheduled to start full operations next year. This will use solar panels with peak generation capacity of 5 gigawatts, alongside a huge battery storage system, to provide a round-the-clock power supply of 1GW, according to its state-owned developer Masdar. (For context, Great Britain’s peak electricity demand is about 46GW.)

The Abu Dhabi plant will provide power at an overall cost of $70 per megawatt-hour, Irena estimates. That compares with a typical cost range for new gas-fired power plants of between $48 and $109 per megawatt-hour, according to an influential annual report by investment bank Lazard.

Another noteworthy project is under way in Australia’s Pilbara region, where Andrew Forrest’s Fortescue Metals Group says it will complete by the end of 2028 a fully self-contained fossil-free energy system for its iron ore mining operations, using 1.8GW of solar and wind power with battery storage and 620km of transmission lines.

Clearly, few regions have solar power potential quite as good as the sun-baked plains of Abu Dhabi and Western Australia. But in huge swaths of the planet, systems using batteries with storage and wind can now provide 24-hour power at prices similar to, or cheaper than, fossil-fuelled power, according to Irena.

A separate study in March, by researchers at the University of California, Berkeley, found that solar-plus-storage plant costs in India have now fallen to the point that “coal-equivalent round-the-clock clean power is achievable at lower cost” than new coal-fired power plants. The latter continue to be built in India, where policymakers still deem them necessary for baseload power supply.

From baseload to back-up

There are some important caveats here. One is that it’s impossible to eliminate the risk of unusually cloudy or still periods.

To guarantee 100 per cent supply from these plants in every minute of every year would require the deployment, at vast expense, of huge amounts of additional battery capacity that might be used for just a few hours each year, or not at all.

So while these systems are set to provide 24-hour power on most days, there may be some days when they fall short.

That doesn’t undermine the fundamental argument, Irena insists. According to its data, renewable-plus-storage systems can now provide power for more than 95 per cent of the time at competitive cost in countries including China, India and Brazil. That means power system operators can already start moving towards a model where thermal plants are reduced to a limited backup role, rather than the core “baseload” service they provide today.

La Camera argued that the ongoing crisis around the Strait of Hormuz had strengthened this case, by underscoring that fossil fuel systems face their own “intermittent supply” risks. But a massive deployment of utility-scale storage systems will bring concerns about a different sort of import dependency, given China’s overwhelming dominance of battery manufacturing and supply chains.

And the perceived long-term need for fossil-fuelled “baseload” power remains deeply ingrained among policymakers — as was highlighted in remarks by Greek Prime Minister Kyriakos Mitsotakis at this week’s Athens conference. “We need baseload power, not just in the immediate future, but in the foreseeable future,” Mitsotakis said. “And in our case, baseload power is natural gas.”

But La Camera maintained that, thanks to the cost improvements in renewables and storage, a tipping point had now been reached. “The competition now is not between fossil fuels and renewables,” he said. “It’s about who’s going faster towards renewables.”

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