The Global Shift From Fossil Fuels to Solar Power Grids
In the aftermath of the power grid collapse in the Iberian Peninsula (Portugal and Spain), many questioned the root cause of what happened. And, like many things today, the discussion quickly became politicized, with solar power accused of being the reason for the crash.
Source: RNZ
And it might be partially true, at least to some extent. The power grid was designed decades ago, with a centralized, fossil-fuel-centric design built around a few massive power plants able to generate power on demand.
In comparison, a decentralized and renewable energy supply functions in many different ways. As solar power gets cheaper, it will likely take over more and more of total energy generation. Currently, solar represents 80% of new power generation added to the grid, and wind another 10%.
With 585 GW of capacity additions, renewables accounted for over 90% of total power expansion globally in 2024.
Solar and wind energy continued to expand the most, jointly accounting for 96.6% of all net renewable additions in 2024. Over three-quarters of the capacity expansion was in solar energy which increased by 32.2%, reaching 1 865 GW, followed by wind energy which grew by 11.1%.
Source: Irena
So while a green, renewable-based power supply seems imminent, making the power grid able to handle it will be vital. Especially as any power grid failure like the recent one, if it was really caused by solar energy supply, will slow down solar energy adoption and indirectly cause carbon emissions to stay high for longer.
How Electrical Power Grids Work and Why They Fail
A key element to understand about the importance of the power grid and the difficulties in keeping it running is that electricity is very hard to store.
In theory, this is what batteries are doing, but the power grid of a country is running power levels several orders of magnitude over what even the largest battery facilities can store.
So for now, power has to be produced in exactly the same quantity as it is consumed, in real time.
To add to this difficult task, power also needs to be delivered to the right place and at the right time. For example, solar power generated in Nevada will not help the Kansas grid if it is not connected to it with enough power lines it. In the case of Spain, the interconnections with the French power grid system were not large enough to save it from its localized problems.
Source: ResearchGate
Finally, changes in voltage need to be made. Long transmission of power can only be done efficiently at high voltage, requiring transformers to step up the voltage before pushing the electricity into the power lines. Consumption needs to be done at a lower voltage, which is also done with transformers.
Source: EIA
Spain Power Grid Failure: What Went Wrong?
Frequency Troubles
While it is likely that the Iberian grid collapse root causes will be hotly debated, potentially for months and years to come, we have a few data points that can partly indicate what happened.
The first is that the actual failure point was not about excessive or insufficient power generation, but the electric frequency of the power grid.
Utility frequency is a technical characteristic of the grid, determined by the oscillation of alternating current.
Source: Wikipedia
Different power grids have different standard frequencies, making them incompatible with each other. For example, the Baltic states have only recently switched to the European frequency, after decades of keeping the frequency inherited from the USSR.
If frequency goes too far out of standards, it can literally destroy transformers and other high-power equipment, as well as devices of regular users. There are numerous built-in mechanisms in electric power devices to automatically disconnect if the frequency fluctuates excessively.
Did Solar Power Cause the Spanish Grid Failure?
The grid frequency used to be generated and stabilized by the physical rotation of massive generators, usually powered by fossil fuels, but also hydropower and nuclear plants. This gave the grid a lot of inertia, making it very hard for the frequency to deviate much from the intended levels. However, solar power does not generate such inertia.
Source: SmartGrid
So it is not so much that solar power generation created the crash, but that its lack of inertia did not help stabilize the grid frequency, which was a key factor in the crash.
With the continual increase of the integration of renewable sources which is reflected by many countries, such as India, that are planning on harvesting the abundantly available renewable resources, the reduced grid inertia is going to be a continual problem and raises the issue of management in the grid which also contains conventional generation.
Still, it does not explain why the frequency fluctuated in the first place. In addition to a lack of inertia, which can be linked to solar power, it seems that some bad practices and old designs also contributed to the Iberian grid crash by making it vulnerable to what the grid operator described as an “extremely rare weather phenomenon”.
Upgrading Power Grids for a Renewable Energy Future
As older designs of transformers, power lines, and other infrastructure are the most common cause of outages, it makes sense that the first step to improve the power grid is to upgrade the equipment.
One step forward is the so-called smart grids, which monitor much closer what is happening at every level of the power grid in real-time, instead of a more general analysis. This also includes plenty of individual automatic systems.
This way, a fluctuation in the frequency localized in one specific area, due to a weather event, for example, could be isolated from the rest of the grid immediately before it spreads the problem any further.
Improvements to the power lines can also help. A denser power network allows for rerouting power from one region to another and reduces the sensitivity to a single failure point. Better insulation or burying power lines can also protect them against storms, snow & frost, wildfire, etc.
More connections between distant regions can also help average fluctuations in power generation from one sunny area to another. This generally requires dedicated infrastructure for ultra-long distance power transportation, something that China is the global leader in, with its “super grid” using ultrahigh-voltage (UHV) AC and DC power lines, with already 30,000 km of UHV lines (18,600 miles).
Source: IEEE
It is likely that similar transcontinental connections will need to be built in Europe and North America as well, for example, between Spain and North Europe, or East and West of the USA, with many independent grids not so connected yet.
In that respect, it is likely not an accident that the worst grid failure of the past years occurred in Texas and Spain, both relatively small and isolated grids.
Source: ASME
Finally, as electrification becomes the dominant trend in transportation, heating, and industrial processes, more power transmission capacity is needed overall to handle the growing demand moving away from coal, oil, and gas. This does not require a change in design or new technology, but more investment to build more power lines.
Grid Frequency Stabilization in Renewable Energy Systems
Battery Storage and Virtual Inertia in Power Grids
While smart grids are part of the answer, they are mostly going to reduce exposure to environmental effects and contain failures in smaller, more manageable areas than a country-wide crash.
To avoid crashes in the first place, especially as inertia-less solar power becomes the primary source of electricity, other solutions are needed.
Large-Scale Battery Storage (LSBS) could provide some help. These batteries are, anyway, going to be needed for a mostly renewable-based energy system, as solar panels are not producing energy in the evening at peak consumption time.
They can also provide frequency inertia, although in a different way than traditional large spinning generators. Inertia from batteries is called virtual inertia, or synthetic, simulated, or digital inertia.
When disturbances outside the normal frequency are detected, FFR pushes the grid frequency back into its normal operating range by rapidly injecting or drawing power from the grid.
Virtual inertia can respond even quicker than traditional generators to instability in the frequency, in less than 2 seconds.
This is a service that was first offered commercially in 2022 by battery facilities built by Tesla (TSLA +0.29%).
The Big Battery is able to provide ~2,000 “megawatt seconds” (MWs) of an inertia equivalency to help keep the grid stable. It does so via Tesla’s Virtual Machine Mode service. It will be able to provide ~15% of South Australia’s inertia shortfall.
Can Solar Panels Help Stabilize Grid Frequency?
By themselves, solar panels do not provide inertia, as there is no physical spin and kinetic energy to create it. But they could be used in ways to provide support to the grid as well.
For example, solar projects have been traditionally designed and incentivized to maximize production at all times. But by maintaining some spare generation capability, they could provide it in case of a drop in frequency.
This is very easy to do technically and has more to do with how solar plants are compensated by utility companies and grid operators.
Smaller scale of energy storage at the solar plant level could be similarly used to absorb small spikes in power and a rise in frequency. The grid operator could dedicate a specific amount of generation to be stored and made available for immediate dispatch if the frequency drops.
The same method could be used with the inverters linked to the solar panels. A plant controller could theoretically override the inverter controls for a short time frame to arrest a frequency drop, “running it hot,” but below the level where physical damage would be caused to the inverters.
In that scenario, every solar panel inverter would act as a mini stabilizer, providing additional virtual inertia.
Restoring Grid Inertia With Mechanical Spinning Solutions
If inertia is needed, and traditionally provided by spinning hundreds of tons of metal at high speed, maybe the solution to too little inertia is doing just that.
Some devices and energy storage forms are of the spinning type: synchronous condensers and flywheels.
Synchronous Condensers: Adding Inertia to Power Grids
Synchronous condensers are DC motors whose shafts are not connected to anything but spin freely. They are not generating or consuming power, but adjusting conditions on the electric power transmission grid.
They are actually a very good option for adding inertia to the grid, but provide very few other services. So if a lot of them need to be added, this will come as an extra cost, partially negating the progress made in reducing the price of renewable energy.
Condensers are also very important for restarting a crashed grid, as they provide the inertia needed when little power is present in the grid. They can also help absorb overcharge in the network for several seconds, reducing the risks of a short circuit.
Flywheel Energy Storage for Grid Stability
Flywheels are another interesting option. These rotating disks are essentially spinning batteries, storing energy in a mechanical form instead of a chemical one.
They rotate in a vacuum on a magnetic bearing, rotating at speeds as high as 20,000 to 50,000 rotations per minute. The system stores or gives back energy by accelerating or slowing the flywheel.
Source: Stornetic
By naturally providing “real” inertia, instead of virtual inertia, a flywheel might be a good option to add to the mix of “batteries” needed for green grids, providing simultaneously frequency inertia and energy storage. This puts them above simpler synchronous condensers that cannot store and send back energy.
Alternative Rotational Energy Storage Solutions
Any energy storage that spins could add inertia to the grid system. So, beyond flywheels, other options are possible as well.
For example, the startup Cheesecake Energy offers a modular, containerized package of compressed air energy storage. The heat generated by the compression is stored in cheap gravel in heat batteries, and compression is done with repurposed old truck engines. The storage and regeneration of power also involves spinning metal shafts, similar to a conventional generator.
Other non-chemical energy storage exists, like gravity batteries, pumped hydro, concrete storage, heat batteries, or thermal solar energy, which we explored in the dedicated article “Non-Chemical Alternatives To Batteries For The Energy Transition”.
Creating a Market for Grid Inertia and Frequency Control
So far, inertia was somewhat of a “free service” provided by operators of power plants with spinning generators. Or more precisely, it was assumed that this was part of the service paid for when utilities bought megawatts from them.
Changes in energy generation mean that a more explicit market for frequency stabilization should be created in order to incentivize the provision of inertia.
This is something being pioneered by countries with small isolated grids, like the Baltic states.
With the launching of the frequency market by Litgrid (Lithuania), Augstsprieguma tīkls (Latvia), and Elering (Estonia) electricity producers can submit bids every morning for the following day, indicating how much energy they are willing to hold in reserve.
The price is about 0.5 cents per kilowatt-hour, which means approximately €1 per month for a household consumer.
Top Challenges Slowing Global Power Grid Upgrades
Transformer Shortages Threaten Grid Modernization
One of the most prominent issues in improving the grid today is transformer shortages. Decades of underinvestment in grid infrastructure led to the situation where not only is new equipment needed to deal with more consumption, but also to replace aging transformers.
Source: Utility Dive
An increase in damages from hurricanes and wildfires did not help either.
The extra demand also meets supply issues, as special electrical steel, vital to transformer power loss reductions, remains expensive and difficult to obtain.
“Delivery of a new transformer ordered today could take up to three years. Five years ago, that wait time was four to six weeks.”
Peter Ferrell – National Association of Electrical Manufacturers, or NEMA, Director of Government Relations
Copper Shortages May Hinder Renewable Energy Grids
Another issue that could slow down the upgrades of the grid is a shortage of natural resources. While lithium and other minerals for batteries might be in adequate supply, it is unclear if global copper production is high enough especially as EVs and other technologies important to electrification are increasing consumption as well.
And turning the direction of copper supply might be very slow, with the shortage expected to persist for years.
“Demand could be met by opening three ‘tier-one’ mines (each with an annual capacity of 300,000 metric tons) every year for the next 29 years, which would represent a historic expansion for the industry, coming in at a cost of over $500bn.
Regulatory approvals for new copper mines are on a downward trend, having fallen to the lowest level in 15 years. This is particularly concerning, given mines can take 10 to 20 years to approve and develop”
Source: International Energy Forum
Tariffs on Grid Components Could Delay U.S. Upgrades
For the USA specifically, it is possible that trade wars and tariffs might get in the way of supplying the equipment it needs.
In 2024, China exported $46.5B of electrical transformers, being the 9th most exported product (out of 1,211) in China, with the USA the main destination (4.66B worth of trade).
Similarly, batteries and other electronic and power components are likely partially supplied by Chinese firms and will need alternative suppliers.
Lastly, most long-distance power lines use aluminum, which was also subject to special 25% tariffs this year. This could raise project costs and delay the much-needed upgrades to the power infrastructure of the country.
Conclusion: Building a Resilient Grid for a Green Future
Rebuilding the power grid to handle the switch to renewable energy is a rather daunting task. By reducing the importance of gas turbines and other fossil fuel power plants, the energy transition is also removing an important source of frequency stability, all while power production becomes more intermittent.
In parallel, electrification means that power grids are more strained than ever by a constantly increasing demand for transportation, heating, and industrial activity.
Green energy is likely to be the solution to the problem it causes. Battery packs, already needed in massive sizes to balance production intermittency, are likely to become the prime provider of frequency stability. Solar plant inverters will also likely be mobilized for this task.
Meanwhile, other technologies like compressed air, flywheel, and synchronous condensers are also likely to help.
In the short term, insufficient production of transformers and the special grade of steel they require will hamper grid improvements. In the longer run, the ability to properly reward providers of frequency stability, the political will to improve the power grid, and a steady supply of energy storage solutions will be the key factors in a successful energy transition.
Investing in the Power Grid
GE Vernova
GE Vernova Inc. (GEV +3.46%)
GE Vernova is the result of the split of the giant conglomerate GE in 2024 into GE Aerospace, GE HealthCare, and GE Vernova, with Vernova in the energy segment.
In that respect, this makes GE Vernova the direct heir of the 130-year-old original core of the General Electric company.
With currently 75,000 employees in 100+ countries, the company has produced 55,000 wind turbines and 7,000 gas turbines, helping generate approximately 25% of the world’s electricity.
It is present at all levels of electricity production and distribution, especially in turbine-related segments like wind, hydro, and nuclear, but also in the power grid, where it has $16B worth of projects in backlog.
Source: GE Vernova
The company sees the demand for electricity growing 2-fold by 2040, with 4 trillion dollars needed to replace coal power plants, representing a massive opportunity for electric equipment manufacturers.
Source: GE Vernova
GE is a close partner to many of the world’s largest utility companies, including French Engie, American Duke Energy (DUK -0.44%), and Southern Company (SO -0.36%), German RWE, Spanish Iberdrola, Taiwan Power Company, etc.
Regarding grid solution and electrification, GE Vernova provides battery energy storage systems, synchronous condensers, pumped storage power plants (PSPP), furnace electrification, thermal storage, solar inverters, hydrogen compressors, etc.
Source: GE Vernova
GE Vernova is also a powerhouse in energy-related R&D ($1B in annual R&D spending), notably with carbon sequestration, HVDC cables, hydrogen gas turbines, and a small modular reactor (SMR) design in partnership with Hitachi.
Source: GE Vernova
The supply issues and industrial equipment shortages in the US might be an opportunity for the company, thanks to a $9 billion cumulative global capex and R&D investment plan through 2028 for new production facilities. This includes $50M for next-generation nuclear fuel design, $300M for gas power and LNG exports, $600M in US factories by 2026, etc.
Because of the breadth of GE Vernova’s activity, investors in the company’s stock do not need to be certain about which technology will win the energy transition in the next 5 or 10 years:
- If natural gas stays important, GE Vernova is already a major actor in the segment.
- If nuclear indeed undergoes a renaissance, nuclear turbines and SMR will succeed.
- If hydrogen, wind power, pumped hydropower, or carbon capture & sequestration are booming, GE Vernova will be able to grab part of these markets as well.
So overall, GE Vernova is a good stock to consider for investors aware of the growing electricity demand, need for a better grid, and confident that GE will be a part of the answer, be it with hydro, wind, nuclear, or almost any other form of energy.