An arms race describes a two-sided competition, where each side feels forced to respond to each new development by the other. Sometimes there is no winner. The arms race between the US and Soviet Union resulted in increasing production of ever-more-dangerous weapons until one side went bankrupt. Other times, a healthy balance is reached. The evolutionary arms race between milkweed and monarch butterflies created both a very toxic plant and a butterfly/caterpillar with the unique ability to eat it. The US energy industry finds itself in the middle of an arms race between solar and batteries. These two technologies could make a perfect pair. As solar power grows stronger it pushes midday prices down, creating more opportunities for batteries. However, an arms race is a delicate dance. If one side gets too far ahead of it partner the game falls apart.

Figure 1 | California Annual New Energy Capacity by Technology

Our first figure shows the sum of capacity by year for new energy projects coming online in California. Here we see the race to the bottom, where a decade of impressive solar additions pushed midday prices lower and lower, at least in sunny SP15. We also see the response, with batteries taking the lead as the “hot” new technology. In the last couple years, these two resources have battled it out to a standstill, with new solar and battery projects racing to unload and absorb midday MWs respectively.