Can grid-tied residential solar/wind installs erode traditional power company's bottom line? The cynical money person’s guide to our renewable energy future | Grist The notion that utility companies no longer see residential renewable power as a benefit to the overworked-aging grid seemed far fetched. Now - there are several utility companies advertising how wrong it is to "let these people use the grid as their own personal power bank - for free" .... or, "poor people will have to pay more to make up for renewable energy freeloaders" ... because residential wind/solar people pay less, or nothing, or god forbid - they actually get paid money for the exces power produced above what they use. The residential renewable power owner is becoming the utility company's bad-guy poster child. You theoretically threaten the utility company's income stream - you will rue the day. .
in human terms, it makes perfect sense. that's why government has to step in, flawed as it is. if we keep increasing power demand by moving from oil to electricity, it should calm some power company executives fears that they will lose some of their paycheck, although, i'm sure most will prefer to see it increase. same with stockholders.
I've been a fan of decentralized/smaller/distributed (and nat gas - today I would include roof solar and on-shore wind) power ever since Southern Calfiornia Edison tried to put a coal fired plant in my backyard (years ago in New Jersey of all places). The utilities are quasi-state run entities with differing personalities in each state. Some states/towns (towns get the tax dollars from the plants) view utilities as an element of the economy that they can control. Maybe they can't force Toyota to build a car plant in the state, but they can sure say a power plant is needed and push that through the political and permit process. Right now a lot of (mostly blue states) are committing to quite a large % of renewables electricity as part of the Renewable Porfolio Standards, so the pressure is on for those states. California I think is somewhat unique, on the one hand an importer of outisde power, intense public oppostion to nukes/coal/ and lesser extent nat gas. Plenty of renewable resources. So the Ca. utilities have no freedom to build power plants (which is why SCE used to go elsewhere to find places to build coal plants ).
That Grist article is interesting, and so is the Milwaukee Journal-Sentinel article that it links to, which gives more details about bill-restructuring plans for a couple utilities at least. Was your "let these people use the grid as their own personal power bank - for free" line an actual quote from something you've seen, or your own paraphrase of something? It would be great to have links to examples of that. Looked at the right way, that quote can even help un-muddy the picture that the utilities may be trying to muddy. After all, people use banks as banks all the time, and the banks don't seem to mind, because nobody's getting anything for free. The banks get paid two ways, (a) fees, and (b) the spread between what they pay on stuff in (deposits) and what they charge for stuff out (loans). And those are the same two ways that all the utilities that offer net metering plans are already being paid. There's the spread between what they pay you for stuff in and what you pay them for stuff out, and there are the fees. The customers understand this and are paying as agreed. No freeloading in sight. Now, with any big market changes like this, any company will do two things: 1) It will review its pricing structure to make sure that it can be profitable and viable in the new conditions, and 2) It will also use the new conditions as cover for whatever increases it can get away with, beyond what an efficient commodity market would arrive at. (No business really wants to play in an efficient commodity market, and the ones that don't already have to, because they're monopolies, really don't want to start.) Every company will pretty much try both things. (1) is perfectly reasonable, and as for (2) there's no point getting upset with any company for trying it, any more than you get upset with gophers for digging your lawn. It's just what they do. So, the proper response to (1) is basically a yawn, shrug, and "sure, of course, you're a business, you've got to make the numbers work", and to (2) is another yawn, shrug, and "yeah, of course you'd want that too, nice try." -Chap
Nice post Chap...but I hate those gophers...actually we have moles/voles whatever they just dig up the whole yard.
PG&E and SCE already have been bailed out from their mismanagement. Note those two plus San Diago Electric, Enron, and the california Legislature created the black outs a decade and a half ago, and all but enron continues to scalp rate payers. If the smart and wealthy people use solar and bloom boxes (google, apple, etc) to decouple from the bad old california utilities, then the high costs do get passed along to the poor. The response should be better regulation so that these utilities actually die like the dinosaurs they are, but enough cheap wind and natural gas gets added to provide decent rates for those not rich enough to own a roof to add solar too. Solar does require grid improvements and back up power, but this is a small charge, not the huge charge utilities want to apply. I don't think outside of california and hawaii there is much of a problem with adding solar.
the term bank for free was loosely borrowed from a number of fear mongering utility statements, like the one below: NV Energy CEO: Solar Has Gotten a ‘Free Ride’ on the Grid : Greentech Media Here, the talking head is referencing the ultra teeny niche group of grid tied PV folks that for the purpose of emergency preparedness, have a battery backup system. The utility spin is, if the free loading PV (with battery backups only ... but they don't usually mention battery systems) grid tied person charges his battery during off peak rates (6pm to 10am) then 'sells' the power back to the utility during peak times - the utility death spiral will begin (another utility favorite term). Ergo - your free loading residential PV villain. The FUD ads fail to ever talk about the grid's load loss being minimized when power is generated on the users roof as off setting their FUD, as well as other grid benefiting qualities. You won't hear Edison tell their audience (for example) how if our PV system provides the grid with our ~1,000-2,000kWh's year surplus during peak load periods - the utility (unwilling through legislation) pays us the puny wholesale rate of 2cents/kWh - then it turns a hearty profit by providing that surplus to our community at peak summer rates that can exceed 35cents/kWh @ Tier 4 user rates ... but then, that kind of honesty would defeat the ad. The utility exec isn't going to tell you they would have had to buy that power from somewhere anyway - or that the profit they make on our surplus goes to pay executive's bonus heavy $300K/yr sallery, in stead of new transformers because capitol outlay reduces bottom lines - on which bonuses hang. .
What do the exec's need solar providers' money for? Edison executives' secret spending It ain't transformers. .
In the Wisconsin Energy case we have an easy to manage situation. Solar owners were allowed to do time of use getting peak retail for their panels, and then paying lower rates for night use. You could do wholesale prices for the number of productive hours (buy and sell) then pay the owner wholesale if they over produced, and retail if under producing. Check at the end of the year from the utility for over production, check to utility for under production. The percent is so small that the extra solar owners get paid could easily get passed to other consumers, but .... the utility execs want to get paid.
I have to come back asking forgiveness, because it turns out I was mixing up two different terms, which led me into a serious mistake. Relying on Wikipedia this time to make sure there's no room for error ... Net purchase and sale is the scheme where you get paid one rate for the power you put on the grid, and charged at retail for the power you take off ... so the utility is able to use the spread between the two to cover costs. Conceptually, it uses two meters, one to measure power in, one for power out. Net metering, which is what I said in my earlier post, isn't that. It can be done with one meter as long as it can turn both directions, and the result is that you get paid at the same rate you get charged - there is no spread. What I said earlier really applies to net purchase and sale, because that makes sense to me. But I guess there are a bunch of states and customers with real net metering plans, sloshing power in and out at the exact same rates, and if that's the case I can sympathize more with the utilities' argument. It's not every day you see anybody expected to do business buying and selling at the same price. I guess I'd still rather see the utilities just directly say "you know, net metering really creates a pretty artificial business situation with zero spread, can't we please go to net purchase and sale so it's more like anybody else's business", instead of saying "fud fud freeloaders fud backs of poor ratepayers fud" but maybe that's too wonky for the news cycle. I guess net metering was easier back when meters were mechanical clockworks and you'd really need two of them to do net purchase and sale. Surely any smart meter today can be set up with any rate differential you want, times of day, seasons, whatever, and probably updated remotely to boot. -Chap
Having just returned from a trip, I'm not yet caught up. But ... I'm not yet sympathizing with these utilities' argument. Even with net metering, they still get the fixed meter- or account-charge, separate from the energy charge. That amount is currently about $60/year to my provider, and exactly $240/year to dad's provider. As distributed generation expands, the utilities will put more effort into 'fairly' setting the fixed vs. variable charges, so those of us using the utility as a 'bank' will still pay our fair share through the fixed service charges. On top of that, my net metering doesn't actually zero out the energy cost. With the local two-tier rate structure, I'm banking my surplus during summer on the low tier (roughly $0.06/kwh), and buying it back during winter heating season on high tier ($0.12/kwh). That gives them some spread on which to pull in some revenue. (This seasonal load pattern relates to my climate zone, where winter heat dominates and summer AC is minimal.) Note: This excludes my state's temporary solar production incentive. That incentive expires in 2020, so is not a long term issue. It is also capped at about 1 or 1.5% of utility revenue. When my utility hits that cap in 2016 or 2017, incentive payments to us producers will be proportionately reduced to keep the total within the cap.
I guess I don't know enough to decide whether I sympathize with any particular utility on their dollars and cents situation, but it makes sense to me that net purchase and sale will give more flexibility to tailor the pricing as changing conditions may demand. Sometimes I look at bankrate.com's "safe & sound star rating" reports for different banks, and one of the things they report on is the balance between the revenue brought in by interest spread and that brought in by fees. They seem to consider a good mix of those two sources to bode well for the health of the bank. -Chap
The country has a mish mash of regulations. Its important to remember politicians think corporations are people, and the big utilities have a large amount of influence. This is not a red/blue issue, infact it seems that the blue states have more of a pro big utility anti-renewable regulatory policy. California has a strange pro big utility pro renewable pro import from other states politcy which is really puzzling. Simple changes to government regulation could rapidly and inexpensively increase renewables, but the big utilities would not be able to profit as much from a smaller share of the pie. Cut The Price Of Solar In Half By Cutting Red Tape - Forbes Fuzzy's regulation of solar in Washington state is quite fair and sustainable. It allows for a grid charge and the utility to make a small profit, while encouraging solar. The big incentive the 30% federal credit, could easily be paid for by a small coal tax, say $50/ton. shifting from coal to solar/wind/natural gas probably benefits the environment by that $50 ;-) The solar policy in austin really favors the consumer and is not sustatinable if a large number of people go solar. It has an easy out though. The city is requiring 3% solar (150 MW), and the extra subsidies can be capped there. That shouldn't raise rates very much for the non-solar customers. Right now austin is 21% renewable almost all of it is wind, and 23% nuclear. The biggest rate increase will not be the solar, but when we shut down coal (26% today) before the end of the decade. The biggest risk to poor regulation is California, where there is a big incentive for home owners to convert, but regulation locks in high utility profits. If the big utilitis PG&E and SCE do less, but are regulated to keep all their profits, the poor will definitely suffer. This is about poor regulation, not that solar is unfair.
The net-metering definition is a general one. It's hard to nail down 'net-metering' because some areas mean something different than another area. Net metering in our area means (by way of example) if we burned 3,000 kWh's in a given summer month, the bill might be around $900. That's because our Tier 4 power (in summer) costs a boat load more than summer time Tier 1 (ie; just the first few hundred kWh's). BUT . . . . . if we had a SURPLUS of 3,000 kWh's in a summer month (and no other usage for the entire year) - we'd be paid for that surplus at 2.9¢ kWh ... or $252. Surplus gets paid at the wholesale rate that the utility might get it for, buying from power generation in AZ. The grid tied rules are not that bad right now ... but if the utility gets its way, you can be SURE they'll want to absorb any and all surplus that one may generate. Then again ... NO grid tied PV owner will EVER have a 3,000 kWh surplus in a month, as the utility company refuses to allow grid tied systems to be "over-built" beyond one's usage, based over the prior 24 months (So Cal Edison rule ... your's may vary). Of course one can game the system by becoming more energy efficient "after" the 24 month averaging cycle has been logged by the utility company. Example 2: If we used 3,000 kWh's in one summer month - and then the NEXT summer month we had a 3,000 surplus - the 'credit' would zero out the prior month. The difference is a month to month thing - versus an accounting ... a 'true-up' at the very end of a yearly cycle. The 3,000 kWh's will act as a month to month 'credit' - based on the same Tiered system. So in the real world, if we ran lots of Christmas lights & electric heaters in December .... and tons of air conditioning in July/August .... it wouldn't matter that during the other 9 months we provided the utility with 300 kWh's per month surplus .... because our surplus would only count as a Tier 1 credits ... at the 2.9¢ rate. The 3 heavy usage months (lots of Tier 4 usage) would wipe out any payment owed by the utility to the customer, and they'd still be paid a boat load. That's ok too. It's the changing of the rules .... forced to pay an extra $150 - $200 or more, just for the privilege of being grid tied . . . that's the rub. To bring about this scheme, the utility has to lie, and say PV/wind turbine folks are free loaders ... and old people will be forced to pick up the tab (implying residential renewable energy is burdensome rather than a benefit to the grid. The truth of the matter is, it's like down town Detroit. Fat leaders over paid their self, rather than put good money back into infrastructure to look towards tomorrow's growth. So human 'flight' took place - folks left Detroit. The lost tax revenue to support their fat salary and retirement plans became a public burden. The only remaining thing the old dinosaur system could do (because they SURE weren't going to cut their own paychecks/retirement/medical plans) is jack up tax payments to cover the shortfall. Bureaucrats had to tax the "old people" ... the poor people that could't flee. IMO re-setting the goal post for current PV folks is not going to go well for the utility - & it won't go well for any future installs either. It WILL serve to protect the old system, and it'll protect future fossil fuel use for running the natural gas or coal fired power generators. That'll keep carbon fuel costs up. A win-win for both utilities. .
To say that I am not sympathetic to the utilities is the under-statement of the year. I have read enough lies and spin from those clowns to last me a lifetime. The base equation goes like this: coal based electricity is sourced at ~ 2 cents a kWh PV in huge solar farms costs $2 a watt, good for about 50 kWh of lifetime production = 4 cents a kWh Result: if they do not get greedy (hah!) customers will stay with them for the convenience and pay a 2 cents / kWh surcharge. My local utility is an example of one headed for extinction. I pay $50 for ~ 200 kWh, or 25 cents a kWh. Home PV + battery is going to beat that handily in the next few years, and it will be clean.
