Empire of the sun: a solar power revolution

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The Economist.

Hello and welcome to the intelligence from the Economist. I'm your host, Rosie Bloor. Every weekday we provide a fresh perspective on the event shaping your world. Champagne may be the drink of celebration, but wine collectors have long stayed sniffed at the bubbly stuff. Now the global market is growing and Sotheby's is staging its first champagne only auction. The market is looking rather sparkly and are you an early bird or a night owl? I'm sure you know which of those you are, but you might not know how that affects your career prospects. Our correspondent got up with the larks to share his conclusion. But first, This evening, thousands of people will descend on Stonehenge at sunset. Druids, pagans, tourists are all united by one thing. The desire to see the solstice, the longest day in the northern hemisphere. And the event this prehistoric monument was built for. When the sun's rays shine into the heart of the ancient stone circle. But you don't have to be dressed in druids robes to appreciate the awesome power of the sun. And I really do mean power. These days we channel the sun's rays less through stone formations than via silicon panels. These solar cells increasingly help to power our greedy planet. Solar accounted for about 6% of electricity consumption worldwide last year. A humble but important share, and one that is Growing extremely fast. The ancients really were onto something. A revolution in solar energy is just on the horizon.

The rate at which we use an energy source and the cost of that energy source are coupled with. And what that means is that as we use more solar power, the cost of it is going down incredibly quickly.

Hal Hodson is the Economists America's editor and also writes about technology.

What this ultimately means is that humanity has a whole new relationship with energy. And the way that we use energy is going to be completely transformed in the next few decades.

Hal, you say we've got a whole new relationship with energy. It sounds incredible. Just how fast has the increase been?

So, in 2004, the world installed about two and a half million solar panels. These are the black panels you see on roofs increasingly around you. And this year, the world is on course to install 1.4 billion solar panels. Solar is growing so fast now that it's on track to generate more electricity than the world's nuclear power plants by 2026, its wind turbines by 2027, all of the hydroelectric dams by 2028. Then it'll overtake electricity generated by gas in 2030 and coal in 2032. And at that point, it'll be the biggest source of electricity on the planet.

The biggest source of electricity on the planet. That's just stunning. What's powering this solar revolution?

So the thing that is making all of this happen, in truth, is a giant manufacturing ecosystem in the heart of industrial China. But there's slightly more to it than that. The real thing that's making solar go so fast is the nature of the technology itself. Solar cells, those are the chunks of silicon that make up a solar panel, are essentially identical. And Whether you need 10 solar cells or 10 billion solar cells, you're going to use the same manufacturing ecosystem. And what that means is that solar, much more than any other technology, can benefit from returns to scale. If you know that the world is going to use more and more of these things, you can build really, really gigantic factories to make the solar cells, to make the inputs to those solar cells. And, and you build this feedback loop between supply and demand that keeps driving the price down. And to date, the price has come down since 1974 by 99.9%. It used to be $100 a watt, now it's 11 cents per watt. And it is still going.

Hal, I keep expecting you to come in with a. But here you're telling me that prices are going down and rates are going up. Can this extraordinary rate of growth really Continue.

Well, there is a big but that should be familiar to most humans on the planet, which is that the sun only shines during the day, and solar panels only generate electricity when the sun is shining on them. So that seems like an absolutely enormous but but to that but there are numerous ways around it. And the key thing to bear in mind is that all that matters is that you keep expanding the amount of solar panels installed on the planet and keep growing the rate at which they are produced. And that's going to keep driving your costs down. So, yes, the sun only shines during the day, but the vast majority of countries have not installed a large amount of solar panels yet. And even though the sun only shines during the day, we have other technologies which allow you to take the energy generated from the panels when the sun shines during the day and use it later in the evening. These are batteries. And very fortunately for solar panels and for humans really in general, the rate at which batteries are getting cheaper looks very similar to the rate at which solar panels are getting cheaper.

So if we're finding ways to make sunshine power us even through the night, what could this explosion of renewable energy mean for climate change?

This is definitely good news for climate change. There's no way to cautiously say that it's not good news. If you look at European emissions, even just since the Ukraine war, they're down. And the reason they're down is largely because a massive amount of solar panels have been installed on the grid. The but here is because solar doesn't directly provide energy during the night, and because you need batteries and other things to, to help you do that, that becomes a bit more expensive. If you are a poor country looking at this, you're just going to say, oh, well, I'm going to run a bunch of coal power plants and a bunch of solar plants. And so it comes down to the cost, right? The two cheapest forms of energy on the planet are solar and coal. And only one of them can go through the night without adding on other bits of technology that make the whole thing more expensive. Now, it's possible that solar and batteries as a combination get so cheap so fast that even countries that are thinking we're going to build massive coal plants say, oh no, actually it doesn't make any sense anymore. It's just cheaper to do it using these technologies. But that's not guaranteed at all. You've also got to consider just the political implications of shutting down your coal mining industry, which probably employs a couple million people. If you're a large country like India. So there are both technological and political considerations that mitigate against solar sort of miraculous price declines, completely solving climate change, it's almost certainly going to remain a problem over the next few decades.

Hal, it's incredibly rare to hear such a good news story that continues all the way through to the end. To be a good news story, just tell me what does very cheap solar energy mean for the global economy as a whole?

If you think about it, energy is probably one of the only things that is an input into all products. The entire economy runs on energy, even to a much greater extent than it runs on, say, information processing. So. So the first way to answer your question is just everything gets cheaper. A more speculative way of thinking about what does this do, what does it mean to have such cheap energy coming from solar is what could you do with how much solar panel? And the scale of this energy source and the fact that you can just buy a bunch of them and put them in a field and do something with them, makes you start to think rather wackily. You think about doing things like using solar panels to treat all of the drinking water in the world so that you would eliminate waterborne diseases. That's going to require an amount of solar, roughly that the Chinese ecosystem makes in a year. Yeah, you've got to install it and all of these finicky things. But just thinking about how much energy is required to do what job. We're now in a world where a single country produces a machine that makes enough energy to do that job every year, to give humans drinking water that doesn't kill them. You could also think about just making all of the fuels that we need instead of digging them out of the ground, sucking them out of the ground, you could just make them using water and carbon dioxide. Again, energy needs to be very, very, very cheap for that to make any sen. That's the whole point of this story. Energy's getting very, very, very cheap.

And the geopolitical impact of all of.

This, I think it's quite clear that it's going to be geopolitically stabilising to have a machine thousands, millions, billions of which exist in every country that just produces energy by being pointed at the sky. That's completely different. The flows of oil and gas that currently cause so much geopolitical strife. But there is another consideration, which is that everyone's a bit worried about the Chinese producing so many of these machines, these solar panels, that to provide all of this energy, the way that the world responds to that, it matters quite a lot. Because if the world responds in such a way that it says, we're not going to even allow Chinese companies to set up factories in our country, we're going to completely ignore everything they've done and we're going to try and build our own versions of this, then you might break this wonderful scaling effect whereby you make more, you learn to make it more cheaply and the cost of solar goes down. If the west tries to go its own way and doesn't learn from China, it might have to start at the top of that process again, and that would be really bad for the world. Then you'd have much higher priced solar panels and you would break the whole cycle of deploying more, having more demand, producing more, reducing the cost of the solar energy. So that's a sort of geopolitical worry that I have. But even if that does happen and the west totally turns its back on China and forges its own path, there's no reason to think that the same exact process can't happen. Because what we're really talking about here is a very simple, very easy to make machine that produces 30 years of energy just by being pointed at the sun. The world really has not woken up to the consequences of having thousands, millions, billions of those machines all over the world, on every house, on every business in the field behind your house.

Hal, thank you so much for bringing some sun to our lives.

Thanks, Rosie. Thank you very much for having me.

And if you want to know more about the solar revolution, keep an ear out for next week's episode of Babbage, where we'll also be exploring space based solar power. For those enlightened enough already to be subscribers to Economist podcast. Plus, thank you. For everyone else, you'll need to buy a subscription to listen. Find out more in the link in the show. Notes.

This is the first time that anyone has ever offered a single owner wine auction focused entirely on champagne.

I'm not sure that this will ever come up again. Today in Paris, Sotheby's is holding the first ever champagne only auction, expected to raise around $2 million. Given how famous the French wine is, some may wonder why it's taken the auction house so long to come round to the fizzy stuff. Well, it's all about reputation. For decades, connoisseurs have been rather sniffy about bubbles, preferring reds and whites from places like Burgundy or Bordeaux. But last year, global champagne sales hit a record high of $7 billion. Now even wine collectors are waking up to the joy of celebratory sparkles.

Champagne has been Having a moment. But one of the interesting things is how differently people see champagne.

Alexandra Sewick Bass is culture editor of the Economist.

So in some ways you have some of the most famous brands in the world, the Veuve Clicquots, Krug, Cristal, that are incredibly well known by people and are brands that one aspires to purchase during times of celebration. On the other hand, you have people who take wine very seriously and champagne has not been on the top of their list when it comes to their celebrations of fine wine. Recently, however, that started to change.

Alexandra, I'm amazed to hear that people haven't been paying enough attention to champagne. Why hasn't it captured the attention of connoisseurs before this?

I've been doing what is probably the next best thing to drinking champagne, which is reading histories of champagne. And Robert Walters, an Australian wine writer, makes the point that champagne has always been peddled as a bubbly drink for bubbly people. You see it in the marketing for people who are going to clubs or perhaps. So I think part of it is the marketing that it's kind of a mass luxury. Major champagne brands are owned by Louis Vuitton Moet Hennessy, one of the largest luxury conglomerates in the world. And so it's a brand to aspire to. But the wine connoisseurs see that and don't think it's as artisanal, unique and complex as some of the other wines from regions in France and elsewhere.

Alexandra, I hope you've been drinking some champagne as part of your research for this piece. Tell me why that started to change.

I of course take my job and research very seriously. So I did oblige. A few things have changed in terms of how wine collectors, investors, lovers have seen champagne. One was Covid and that left people with a lot of time on their hands, some extra cash for the well heeled who were not going out to dine in restaurants as much. People found themselves with a lot more time to study champagne producers methods of blending and adding dosage, which is a mixture that includes cane sugar and sweetens champagne before bottling.

I'm the third generation of Larmandier Bernier producer. I'm back in the estates since seven years ago taking over my parents who took from their parents and from my.

Dad parents, that's Arthur Larmandier of Larmandier Bernier Champagne House.

They get asked for wine. They understood that there is not only big brand and not only bobo, that there is wine behind the bobo.

At first he thought it would take five years for Champagne to bounce back from COVID but instead demand surged and it took about six months. There's another factor driving wine aficionados to look at their Champagne flutes a little bit differently. And that connects to l' Armandier Bernier, which is appreciation for smaller houses that produce limited quantities of high quality bubbly. They often have really strong and unique viticultural practices and really give a sense of terroir or the place that wine is grown. So it's site specific and very unique. We've seen prices for growers Champagne skyrocket on the secondary market. People who collect it have seen prices double, if not more for certain makers since the start of the pandemic.

Presumably it wasn't just Covid that was responsible for this interest and surge in prices for grower Champagnes. What else has been going on?

The fact that Champagne has been reviewed more often I think did drive interest as well. The fact that wine aficionados were taking it more seriously in places like the Wine Advocate and elsewhere drove people to give it a try themselves. But I would say it's really. Some call it a burgundification of Champagne, which is a clunky way of saying that just like people take wines from Burgundy very seriously and think about how the different plots give you a very different experience, people are starting to do that with Champagne. Historically, Champagne has been blended both from the grapes from different areas in Champagne, grown by different people and also blended across different years. It's probably the most processed wine that's produced in the world. But we've started to see that change with grower Champagne houses. And what they're doing is doing very site specific releases that really give a sense of place. And I think that piques the interest of wine enthusiasts.

And we have enough wines and grapes really to isolate, to choose, to select and only keep the very best. For Grandex, the very best is.

I visited the offices of Laurent Perrier on the roof of Bour Saint Honore to try their Grand Siac Prestige Cuvee. And they told me all about the Champagne making process and also invited me to taste some.

Can I have your glass?

Thank you. Consumers are looking to buy products that really connect to local communities. So we see that trend in gastronomy and cuisine. We are also seeing that in wine. And that has given grower Champagnes a real boost.

And how does that interest in local growth apply to the growing global market in Champagne?

It used to be that the French bought the majority of Champagne, but that changed in 2012 and it became the rest of the world. We've seen America buy more champagne, the Japanese who buy a lot of prestige cuvees, which are expensive bottles. Then we see growth in the rest of Europe as well. I do think that there is a question about pricing and how much the market will tolerate how much prices have risen in recent years for some of the best champagnes. I think it is worth watching the Sotheby's auction in Paris to see how much wine collectors are seeking out new bottles of classic vintages and it will be a really interesting test of champagne being taken more seriously.

Thank you so much, Alexandra. Next time over a glass of champagne, I hope.

Thank you Rosie. I look forward to it.

My mother famously said that she pitied whoever married me. That wasn't a general comment on my character. It was because I was so horrible in the morning. Every morning. When it comes to hitting the snooze button, I'm a repeat offender. For me, the morning of getting the kids up, bags packed and off to school, getting myself to the office and starting work is all done through bleary eyes and with the help of at least, least one extremely large mug of coffee. Only when the day is nearly done do I feel productive and full of energy. So as a night owl, I've got a vested interest in the following question. Are the early birds who get half of their to do list done before breakfast actually going to do better in life? Does it really pay to be up with the lark instead of burning the midnight oil?

You won't find many CEOs that extol the virtues of a lion.

Tom Lee Devlin is a global business correspondent and host of our sister podcast, Money Talks.

If you look at people like Tim Cook of Apple or Bob Iger of Disney, they're up between 4 and 5 in the morning exercising, sending off emails, getting ready for their day. Actually, two thirds of American CEOs are up by 6 in the morning, which is about twice the share of average Americans. So it certainly seems like if you are aspiring to corporate great, hitting the snooze button might not be the way to success.

So Tom, I need to ask you a very personal question here. I'm not gonna ask you if you aspire to corporate greatness, but I do want to know, are you an early bird, Are you a lark or are you an owl?

I am certainly not an early bird. I have experimented with waking up early in the past and I mean, I think that the benefits are certainly real. You know, you can get ahead of all of your emails. You can squeeze in a workout and you kind of, you know, get the smug satisfaction of arriving at your desk before all your other colleagues are in. And one thing that I found really funny whilst I was reporting for this piece is all the crazy videos out there on TikTok of people describing their incredibly elaborate morning rituals. You have people submerging themselves in ice baths and reciting affirmations and making all sorts of weird beverages in the morning. One of the most bizarre ones I came across was this guy named Kris Krohn who's a business coach in America.

My destiny is formed before 9am, so I'm up at 4am from 4 to 4:20 I do a book on double speed. So I'm listening. At 4:20 I'm on the treadmill with my wife and we're doing an active meditation together for 40 minutes. It includes a reverie where we're basically aligning the pharmacy of the body to over dopamine the mind by gratitude, serotonin in the brain. And then we shift into mind palace, which is 20 minutes of co creating our best bodies.

5 o'.

Clock.

We then hit the weights over dopamine ing the mind. Sounds intriguing, but on slightly firmer ground. Is there actually any solid evidence that getting up earlier is better for you?

There is a number of studies that suggest it and might be. One piece of research from the University of Toronto in 2012 showed that early birds reported feeling happier and healthier. Night owls tend to get less sleep, which can affect their mood and their health and also their productivity. Another study from researchers in Finland found that men who get up later make 4% less money than those who are up earlier. Night owls also tend to be fatter too, according to some research from the Chinese University of Hong Kong. And there's also a kind of general social stigma that I think night owls have to grapple with. One more piece of research by Jessica Deitch and her colleagues showed that night owls tend to be perceived as lazy, undisciplined and immature, which is not a particularly flattering description.

I ask you the next question as a lazy, undisciplined and immature person. Surely the early birds don't have it all their own way. Surely it can't be all good?

No, I don't think so. I think there's certainly downsides to this. I mean, one of the very obvious ones is that if you're in the office early, you may just get given more work to do. Urgent tasks come up over the course of the day, which means there's a reasonably high chance that you'll just end up working as late as everyone else. It's often said that the early bird gets the worm, but I think if you're the worm, maybe the best thing to do is just stay in bed. But also a bigger problem, I think, is that being an early bird can turn you into a bit of a boar. I think we've all had the experience of a lark describing their morning routine to us and droning on about how much they got done whilst we were slumbering away, which I don't think is a particularly good way to make friends. And another downside of being an early bird is it often means you're pretty sleepy by the time it gets to the evening. And we do find evidence that night owls not only drink more alcohol and take more drugs, but even have more sex.

Not quite sure how to follow up that last one, but, you know, I think that larks and owls obviously like to slug insults at each other, but I'm guessing that we're kind of stuck with how we are, aren't we?

Yeah, I mean, certainly my experience of this is that it is very difficult to pretend to be a morning person if that's not the way you're wired. So people have a genetic chronotype, as Scient call it, which is the natural inclination of your body to sleep at a certain time. And people talk about dimming your lights at night and buying special daylight alarm clocks to wake you up in the morning, but really that's not going to make that much of a difference. And frankly, if you're going to wake up early and just spend hours staring blankly at your screen, it's not going to help you all that much.

Thanks so much for coming on the show, Tom.

Thanks for having me.

That's all for this episode of the Intelligence. Let us know what you think of the show. You can get in touch@podcastconomist.com we'll see you back here tomorrow, Sam.