In the 1980s, AT&T hired top consulting firm McKinsey to estimate how big the market for cell phones would be in 2000.
Cell phones were as heavy as bricks. They didn’t work half the time. And they cost $10,000 in today’s dollars.
So, McKinsey concluded the market was limited to just 900,000. Off by 108 million. Whoops!
As a Rational Optimist, you know where the consultants went wrong. They failed to realize phones would get smaller, cheaper, and 1 million times more powerful. They underestimated innovation.
Today, people are vastly underestimating the stunning pace of innovation in solar. Technologies that grow this fast don’t come along often. But when they do, they change the world.
There’s a myth that solar is already the cheapest form of energy. It is not. If it were, California’s energy prices wouldn’t be among the highest in the nation, with one-third of its power coming from solar.
I wish this myth would die.
“What else are they lying about?” the skeptics ask. Then they write off solar forever as wishful thinking that wouldn’t exist without government subsidies. Big mistake.
Solar power is surprisingly simple. We take ordinary sand, melt it into ultra-pure silicon, and create panels. These panels sit on our roofs and turn sunshine into electricity. This process hasn’t changed much since the invention of the solar cell in 1956. But it’s gotten a whole lot cheaper and more efficient.
In the last 50 years, the price of solar modules declined from $106 to $0.38 per watt—a 99.6% decline!
Source: Our World in Data
The plunge in costs continues to accelerate. In 2023 alone, prices nearly halved.
As a result of plunging costs, solar is the No. 1 fastest-growing energy source in human history, as you can see here:
Source: Ember
Last year, more solar power was installed worldwide than was installed from 1956 to 2017. In 2004, it took a whole year to install 1 gigawatt of solar power. Now we’re deploying that much every 12 hours!
Solar cells have gotten so cheap we’re slapping them on everything. There are solar-powered garden lights and security cameras. The international space station runs on solar, as do Starlink’s satellites.
Imagine getting paid to use electricity.
Believe it or not, this is starting to happen already. Electricity prices in Europe went negative for 7,841 hours this year. Negative energy prices were also a regular phenomenon in Texas and California this summer.
In the simplest terms, solar panels soaked up too much energy when the sun shined brightest. The batteries available to store the energy were all full. So energy companies paid wholesalers to take the energy to avoid overloading the grid.
Bigger, better batteries are the answer. They let us soak up rays during the day… then store leftover energy to use when it’s dark or cloudy. It's like a piggy bank you fill up during the day and break open at night.
Worldwide battery capacity is growing even faster than solar:
Source: IEA
This year, America will add more battery capacity than the previous six years combined.
In California, batteries are already keeping the lights on after the sun goes down.
Look at this chart, published in The New York Times. You can see solar provides a large share of California's energy needs during the day.
Then, when the sun clocks out, the batteries clock in, powering 1 in 5 Californian homes for several hours in the evening:
Source: NYT
These batteries—the orange slice on the chart—didn’t exist 3 years ago. Think about what this chart will look like in 2030.
It’s possible California could power itself through the night from that day’s sun.
And California is only in second place in solar capacity in the US. Texas is No. 1.
Batteries are expensive as hell. Although turning the sun’s energy into electricity for use on the spot is incredibly cheap, storing the excess energy is where things get pricey.
Those “Solar Is the Cheapest Energy” headlines don’t factor in the price of batteries. Nor do they factor in the gas-fired "peaking plants" which must kick in when batteries run out.
When you add up ALL the costs, solar is still more expensive than old-school energy sources:
… for now.
Author F. Scott Fitzgerald wrote: “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”
Let's try it:
Calculated correctly, solar is still expensive. It’s a terrible idea to try to power everything with just solar today. Our electricity bills would skyrocket and blackouts would happen all the time.
Solar and battery costs have plunged 99% in 30 years. It's looking more likely every day that solar could truly be one of the cheapest forms of energy in a decade.
Here’s a little secret: You don’t need to choose sides when it comes to energy. Do we need more solar? Yes. Nuclear? Yes, please. Let’s build more natural gas while we’re at it.
The real issue is we need a lot more energy.
Energy is the key ingredient that makes modern life possible. This chart shows the growth of the world economy over the past 2,000 years. Nothing for centuries and then swoosh!
Source: Our World in Data
For the flat part of that line, we relied on muscle power along with basic machines like windmills. It was the discovery and usage of coal that first unleashed unprecedented economic growth.
Suddenly, we had machines that could do the work of hundreds of people. Energy is Miracle-Gro for human progress.
Energy abundance is the secret to building a world so awesome our grandkids will think we were real-life superheroes.
There are a lot of incredible things we could do but don’t because there’s not enough cheap energy.
Forget “team renewables” or “team fossil fuel.” Join Team Energy Abundance! Be part of the next big swoosh in human progress.
What could we do with abundant cheap energy? Glad you asked.
Of course, we need lots more energy to power the exponential growth in AI. Here are some fun “out there” things we could do with abundant energy:
1: End droughts. How about flooding every dried-up riverbed in California with water sucked from the Pacific Ocean? It’s doable with desalinization technology, which already works, but consumes a ton of energy.
The year is 2050. California is laughing that it ever had water shortages.
2: Weather wizardry. Picture giant underwater fans cooling hurricane-prone waters. And huge air conditioners in the sky, sucking heat out of brewing storms.
Norway’s OceanTherm and others are already working on ways to help us tame destructive hurricanes.
Don’t roll your eyes. Humans already control the weather in some ways. Dubai, a barren desert, invented cloud seeding that literally makes it rain on demand. It involves using aircraft to shoot salt crystals into clouds.
Samo Burja of Bismarck Brief pitched me an idea last weekend: Saudi Arabia should transform itself into “Florida for Europe,” the preferred retirement destination for Europeans. It could turn its scorching hot deserts into lush golf courses with desalinization plants.
3: Supersonic flight for all. Supersonic jets are awesome, but they guzzle roughly 6X the fuel of regular planes. With cheap energy, we could brew synthetic fuels and zip around the world at 2X speed for the price that any middle-class family could afford.
I recently chatted with an ex-NASA entrepreneur who’s solving this problem. More soon!
4: Subterranean vehicles. The mining industry is stuck in the Stone Age. Man digs hole in ground, like the Flintstones.
Let’s bring in nuclear-powered “robo moles” tunneling deep into the Earth’s crust (with synthetic diamond-tipped drills, of course). They’ll slurp up minerals and send them up through tiny, narrow wells no wider than 5 feet.
Mining without destroying the nearby environment? Yes, we can.
What else could we do with cheap, abundant energy? Tell me, Stephen@rationaloptimistsociety.com.
The end of superbugs?
A team of MIT and Harvard researchers have discovered a whole new class of antibiotics using a ChatGPT-like AI model.
The first batch they tested was effective against antibiotic-resistant “superbugs.”
This is a HUGE deal given antibiotic resistance kills 1.2 million people each year. That's like losing the entire population of Dallas. Every. Single. Year. And we haven’t invented new antibiotics in 60 years.
The researchers used AI as a digital detective to sift through millions of chemical compounds and identify the ones with the greatest potential to be antibiotics. The AI even gave the researchers the recipes to make those drugs.
We’ve barely scratched the surface of AI’s potential to transform medicine and save millions of lives. For example, AI has already begun to turbocharge the drug discovery process. A startup incubated by Google aims to halve the time it takes to find new medicines.
Coming soon: AI-powered robolabs churning out lifesaving drugs at warp speed.
My first Waymo ride
Waymo (Google’s robotaxi wing) works like Uber. You download an app and request a ride. Except when the car pulls up, nobody’s behind the steering wheel.
I had my first Waymo experience in San Francisco last week. A white Jaguar pulled up with a spinning sensor on its roof that looked like a high-tech crown.
I sat down and the screen welcomed me by name: “Good afternoon, Stephen. Heading to The Interval at Long Now… This experience may feel futuristic… We’ll do all the driving.”
One press of the "start ride" button, and we were off.
It’s a surreal experience to see the steering wheel turn itself. The strangest part was the silence. No chitchat. Just the soft hum of the electric engine.
Robotaxis are supercomputers on wheels. They’re fitted with dozens of cameras and sensors that feed mindboggling amounts of data into a computer in the trunk. This “brain” processes the data to make split-second driving decisions.
My Waymo drove flawlessly like it was trying to make a driving instructor proud. The technology only gets better from here. I bet there will be more robotaxis than human-driven taxis in San Francisco five years from now. Parents in the city are already using Waymo to ferry their kids to soccer practice.
Last Summer, Waymo was doing 10,000 paid rides a week. Now, it’s completing more than 100,000 trips across Los Angeles, Phoenix, and San Francisco.
My first Waymo ride marked a clear before and after. A world where most driving is done by computers is coming fast.
One day I’ll tell my grandkids about my first ride in a self-driving car. They'll probably look at me funny: People used to drive cars??
See you next week.
Hey, you don’t have to wait until the end of the week to hear about the incredible stuff happening. Follow us on X for regular updates:
Writer: Stephen McBride: https://x.com/DisruptionHedge
Editor: Dan Steinhart: https://x.com/dan_steinhart
Rational Optimist Society: https://x.com/RationalOptSoc