Wednesday, October 26, 2011

Shale Gas in 2005 Is Where Solar Is Today.

Except for a precious few who saw it coming when it was distant, shale gas was like a big whale that breached with no warning, swamping conventional business, policy and understanding. Indeed until 2005, Exxon held to its view that US gas production had peaked.  Until 2008 sophisticated investors were banking on US gas shortages that imports would meet and were spending billions to build LNG import facilities.

Out of the equivalent of the blue ocean depths, the shale whale suddenly appeared, bringing a domestic gas glut and crashing natural gas prices.   Still today there are naysayers, but almost exclusively outside the gas and energy industries, who believe shale gas is somewhere between a fraud and hype. Others of many stripes hope fervently it is one or the other, since shale is disruptive and destructive to the best laid plans.

Just like shale gas surprised, competitively priced solar is going to burst on the scene and be greeted with disbelief and shock by many, including in the energy business, even though its coming arrival is plain to see.

To put this in shale gas terms, solar is today around where shale gas was in 2004 or 2005, when some shale production had started but it amounted to less than 2% of total US natural gas production, and when the first test wells in the Marcellus were being drilled.

Solar is producing, with close to 4,000 megawatts  installed in the USA and 40,000 megawatts installed globally by the end of 2011.  But the solar industry is refining and testing just like the shale gas industry was around 2005 when it drilled test wells in Pennsylvania.

Gas and solar are to some strange, irreconcilable companions. A few, however, see them as reinforcing forces that together are going to change the world powerfully in the next 20 years.  The wise were not surprised by how quickly market forces drove forward shale gas and will not be surprised by the speed and strength of solar's advance. 

Opportunities are ahead.  But creative destruction is too.  Who will be ready for both and who will not?


  1. John,
    What do you see as the drivers of the growth you predict in solar? Shale gas development is primarily a result of the refinement/expansion of technology that largely existed in 2005, what should we be following to track solar expansion?

  2. Pricing, pricing, pricing. See the solar postings on Tuesday and Monday plus the comments. Also see the posting about the remarks of NRG's CEO at the Virginia's Governor's Energy Conference.