Wind vs. Solar Power

Disruptive Technologies

Course, Section No.

Disruptive technologies are more than simple technological advances that might tweak or optimize an existing product. Disruptive technologies change "the status quo, alter the way people live and work, and rearrange value pools" (Manyika et al., 2013). In other words, disruptive technologies have the power to change the world. Of course, not all potentially disruptive technologies result in paradigm-shifting change. Some of them fail to become popular, despite seeming to have significant advantages, and they may even fall into disuse. The reasons behind disruptive technology failure are complex and may depend upon many factors. In this paper, the author will examine two potentially disruptive technologies: wind energy and solar energy. While the applications of solar energy, which utilizes a free, renewable, non-polluting resource to create electricity, seem tremendous, the reality is that solar technology has not yet become disruptive, and solar energy has not come close to replacing fossil fuels, despite its relative advantages. In contrast, wind energy is gaining tremendous acceptance in modern society and appears poised to become a disruptive technology. Given that both wind and solar power represent alternative fuel sources, challenging the energy status quo, it is interesting to look at why wind is poised to be disruptive, while solar is not. An examination of these two types of potentially disruptive technologies can help highlight what firms need to do to ensure technologies are disruptive.

Why Solar Energy has Failed to Shine

To understand why solar energy has the potential to be incredibly disruptive, it is important to look at the advantages of solar energy over traditional fossil fuel energy sources. First, solar energy uses a free renewable resources that is non-polluting, and whose use does not otherwise alter the environment. The use of solar energy to power electricity does not create pollution and does not require altering existing terrain in the same way that the use of water or wind energy does. Second, solar energy has significant potential to run entire small homes or businesses and residential solar panels can even produce enough energy to supply energy to the electric grid (Walsh, 2014). Third, because solar energy installations can be localized, they do not require a grid to transport the energy, making it possible to provide energy in locations that are not serviced by traditional energy lines. These advantages seem to make solar energy a clear solution.

However, solar power has some disadvantages for users that have served as barriers to widespread adoption. The first and most significant barrier is the high upfront cost associated with a transition to solar power. Solar panels are expensive to install and it can literally be decades before a homeowner sees a return on investment from the upfront initial investment. Although costs for these installations has declined in recent years, the systems still remain expensive. There have been some state and federal efforts aimed at encouraging adoption of solar energy. "Current initiatives promoting deployment of solar technology to homeowners, however, are insufficient to motivate large numbers of consumers to adopt the technology" (Eisen, 2011).

In some ways, one may be able to mitigate these disadvantages. For example, adoption of solar technology can actually enable homeowners to create enough energy to have no monthly electrical bills and to make money from selling their electricity back to the grid. However, this ability is complicated and faces some resistance from utility companies. At this point in time, utility companies are responsible for the maintenance of power supply lines in what is referred to as the grid. While there may be some public, taxpayer responsibility for maintaining the lines, the reality is that maintenance has been a business investment for utility companies. They maintain the lines because they are the ones who reap profits from the lines. Therefore, they have no incentive to make the process easier for homeowners who want to sell excess electricity to the grid; the homeowners become, in essence, unwanted free-riders.

Moreover, there is an issue with the actual environmental friendliness of solar technology, which is frequently ignored. The creation of solar cells results in a significant amount of pollution, which may be as damaging as the pollution from the fossil fuel energy that the solar cells are designed to replace. This can make green customers hesitant to embrace solar technology, and, given the costs of the technology, can make it appear less appealing despite the inescapable fact that society must develop alternative fuels because the supply of fossil fuels is finite.

Furthermore, the profit issue is critical to examine because it has resulted in other barriers to adoption that have not been adequately addressed. For example, not all localities allow their citizens to use solar panels. Some homeowners associations refuse to allow installation of solar panels in their neighborhoods. While this may seem to be a question of local aesthetics, the reality is that there is significant lobbying pressure by fossil fuel industries to make it more difficult for homeowners to individually adopt local power. These same companies may be heavily invested in researching alternative fuel resources, but they are not interested in doing so in a way that cuts them out of the profit-making process.

Why Wind Energy is Becoming Viable

In contrast to solar energy, wind energy is growing tremendously and is expected to make up a significant portion of the United States' power supply within the next century. It already makes up a significant portion of the global energy supply and is actually the primary source of energy in some locations. "Wind is available virtually everywhere on earth, although there are wide variations in wind strengths. The total resource is vast; estimated to be around a million GW 'for total land coverage'. If only 1% of this area was utilised, and allowance made for the lower load factors of wind plants (15 -- 40%, compared with 75 -- 90% for thermal plants) that would still correspond, roughly, to the total worldwide capacity of all electricity-generating plants in operation today" (World Energy Council, 2013). What this means is that there is more than enough wind to create the energy to replace the existing fossil fuel energy supply.

Furthermore, like sunshine, wind is free. Of course, harvesting wind is not free. Like solar energy, harvesting wind requires an initial upfront investment. The land for the windmills and turbines must be leased or purchased, the wind turbines must be purchased, and processing plants that convert the wind energy to usable electric energy must be created. However, the primary difference from solar power is that wind turbine energy production is on a huge scale, making it much easier to monetize the process. The initial upfront investment may be large, but it is scalable to an industrial level, which makes it possible for utility companies to reap the benefits of energy production and keep the energy supply from that resources sufficiently affordable to consumers to keep consumers purchasing energy rather than looking into alternatives to generate their own energy. However, this possibility still must be realized through wind farms using windmills and wind turbines.

To understand how easily this translates into monetization for utility companies, one need only examine the production capabilities of a large onshore or offshore wind farm. One onshore wind farm, the Hadyard Hill project in Scotland has 52 2.3MW turbines, is rated at 120 MW, and produces 320,000 MW per year (World Energy Council, 2013). One offshore wind farm, the Alpha Ventus project in Germany has 12 5MW turbines, is rated at 60MW, and produces 220,000MW per year (World Energy Council, 2013). Given their production capabilities, the entire fossil-fuel supplied component of the United States electric grid could be replaced with somewhere between 150 to 450 large wind turbines, meaning that the lifelong profit potential for each wind turbine, even when one considers the huge startup costs associated with those machines, is tremendous.

Moreover, while adding significant amounts of wind energy to the current electrical supply would necessitate a change to the electric grid because wind generating areas are not necessarily the same as current generating stations. However, because the high entry costs means that energy companies are not going to face competition in wind-energy production on a commercial scale, they have incentives to help build out the electric grid in a way that makes it possible to utilize more and more wind resources. This is a critical transition; building the lines to transport green sources of energy is projected to cost somewhere near $100 billion (Joyce, 2009). If industry will not profit from this energy transmission, it is highly unlikely that they will provide any of the costs for these lines, which has the potential of pushing adoption of renewable energy sources so far into the future as to create a potential energy crisis. However, given the amount of profit available for energy in the United States, such an investment is not huge when compared to overall profit.

Furthermore, like other disruptive technologies, an increasing dependence on wind energy is going to promote change in other areas of technology. Currently, the storage capacity of the electric grid is almost non-existent; the grid transmits power as it is created. The grid is not designed to deal with changes in power supply, which are a necessary part of wind energy, since wind is not constant. Currently, "small upsets are completely covered by frequency-response reserve -- all that's needed is to increase fuel flows to turbines a little bit to get the grid frequency back to a nominal value. Larger upsets cause larger responses. At minimum, the grid is supposed to be able to handle 1 large power plant going offline without any service interruptions. But cascading failures can occasionally occur" (Carlyle, 2014). Obviously, this means that a larger-scale transition to wind power is going to require advances in technology that result in increased electric storage power. For example, many have suggested that industrial applications of lithium ion technology may create the storage power needed to hold power generated through renewable resources, like wind.

Another bonus of wind energy when compared to solar is that it is not seen as being as socially disruptive in terms of job loss. Like oil fields, wind farms require workers, not only in construction, but also in maintenance. Furthermore, some of the ideal locations for wind farms, such as West Texas, are currently areas with high employment in the oil fields. If alternative energy adoption is seen as job threatening, it will not get support from people in local areas. However, if there is a clear transition from one job possibility to the next, it can be easier to adopt the technology. Furthermore, the job creation associated with wind farms is expected to be both in-sector and out-of-sector, with the National Resources Defense Council projecting that "just one typical wind farm of 250-MW creates 1,079 direct jobs over the lifetime of the project. Already 25 projects of similar or greater size have already been built in the U.S., and another 100 wind projects sized from 150-MW to 250-MW are in operation" (2012).