Solar maybe the next game changer to electricity markets like the shale oil boom was to the oil and gas industry.
In a new study published by research firm Wood Mackenzie, the company analyzed the likely hood of this happening.
According to Wood Mackenzie energy analyst Prajit Ghosh, “Just as shale extraction reconfigured oil and gas, no other technology is closer to transforming power markets than distributed and utility scale solar.”
Politics may also play a part in how big of an impact solar technology will have on electricity markets. Unlike the shale oil revolution, political influence mostly occurred post advancement of extraction technologies.
The study by Wood MacKenzie builds a good argument as to why solar innovation may change wholesale power markets.
Here is a chart from the study illustrating the net cost for utility-scale power plants constructed in California. According to the study, it projects a negative net cost for new generators by 2030.
The chart emphasizes that the declining cost of solar generators makes it a profitable investment. “The more solar you build, the less attractive natural gas becomes,” Ghosh states. “This is not a forecast. It is already happening in California.”
On the flip side of the equation, with solar capturing more market share, this means less revenue accrued by traditional natural gas generators.
In the big scheme of things, with so many companies heavily invested in natural gas technologies and projects, it will be hard pressed for solar to make a significant impact anytime soon.