Residential Solar Regulations

[PV1]

https://insideclimatenews.org/news/20102016/florida-solar-ballot-measure-halt-clean-energy-utilities-amendment-1

Reading this article, they mention net metering as a subsidy. Does net metering work differently in other states? My agreement is that the utility will buy my excess kWhs, just like I buy their kWhs. These kWh credits are 1:1 throughout the year, but excess at the end of the energy year is (supposed to be) a dollar true-up at the wholesale rate.

PV equipment isn't free, so why should I have to pay the utility to absorb my excess, aka, give away power I generate that the utility will end up selling to my neighbors? I still pay a line fee every month regardless of energy flow, and any kWhs I consume that I didn't generate credits for, I pay all distribution and generation charges on.

We don't get free power from the grid. Any kWh credits that I take advantage of, I had to generate that power and push it out to the grid in the first place. How is that considered a subsidy?

Thoughts?

 

[mdbuilder]

The rates were originally set to pay costs, recover capital investment and provide a profit for each Kw sold. If a large percentage of customers generate their own power when the sun is up you've removed the ability to recover capex and make a small profit on those Kw's thereby shifting those costs to the remaining customers.

 

[PV1]

So, they effectively lose a customer when the customer installs solar? How would that be different than if a lot of people left an area, or the city underwent a major efficiency improvement and overall consumption dropped 50%?

(I'm trying not to make this sound snippy, but just have a calm conversation on the matter. I know how interpretation can be skewed on the internet .)

 

[mdbuilder]

There would be no difference. The power company would raise their rates or go bankrupt, it is a monopoly. When the NIMBY's and the state caused the Shorham nuclear plant to shutdown shortly after it's first startup on Long Island NY in the 80's (? might have been late 70's?) the rate payers paid. I'm sure many of them supported the shut down and many of them didn't, the later were subsidizing the former - similar issue.

 

[mdbuilder]

Stranded investment I believe is the term for CAPEX not yet paid back by ongoing revenue when some market force changes. Recovering stranded investment is a valid reason to change rates on current customers of a monopolist to make up the difference.

 

[Aerowhatt]

https://insideclimatenews.org/news/20102016/florida-solar-ballot-measure-halt-clean-energy-utilities-amendment-1

Reading this article, they mention net metering as a subsidy. Does net metering work differently in other states? My agreement is that the utility will buy my excess kWhs, just like I buy their kWhs. These kWh credits are 1:1 throughout the year, but excess at the end of the energy year is (supposed to be) a dollar true-up at the wholesale rate.

PV equipment isn't free, so why should I have to pay the utility to absorb my excess, aka, give away power I generate that the utility will end up selling to my neighbors? I still pay a line fee every month regardless of energy flow, and any kWhs I consume that I didn't generate credits for, I pay all distribution and generation charges on.

We don't get free power from the grid. Any kWh credits that I take advantage of, I had to generate that power and push it out to the grid in the first place. How is that considered a subsidy?

Thoughts?

One thing power companies never talk about is that residential solar producers give them excess power to sell to your neighbors. Even if they credit you at retail by net metering (which only seems fair . . . not charging you for what you didn't use) they still have the added benefit of selling your excess power at retail to your neighbors with only local transmission costs. They don't pay for equipment or generation so this power is basically nearly 100% profit for them.

In recent hearings here, this never came up. Not even the opposition to a PER SOLAR KW installed proposed monthly fee to solar producers mentioned it! Near as I can tell wholesale generation costs are around $.04 to $.06 per kWh. So when they resell your excess, you have saved them 4 to 6 cents per kWh on the power they delivered to your neighbor. No generation cost for them to provide it.

Now if you look at different production levels it calculates out more or less advantageous to them. But make no mistake it is advantageous to them. If I produce about the same amount I use each month then they effectively loose me as a customer except for my monthly connection charge (which by the way is supposed to be sized to support the distribution system). So they lost a customer at say 50% gross profit. However they also provided the same amount of power (my power) to my neighbors at 100% profit. (poor babies). So who is subsidizing who?? Solar residential producers provide peak power during peak power demand and unless more than 50% of the power the utility sells is customer produced solar they do just fine.

Aerowhatt

 

[mdbuilder]

errr, you used what you 'didn't use' and 'sold them' the excess you over generated so you could time shift it to later in the day not not pay for what you use later.

Additionally, you are avoiding the cost required to avoid this whole issue entirely. Which is, you could install a battery at what, 15K? And replace that every 8-10 years. Much cheaper to avoid all that and use the utilities equipment for free.

 

[Don]

Mississippi was the 45th state to pass a net metering law, so obviously they don't have much experience . . . . but at least we weren't 50th as we are in so many other categories

As to what your solar Kw is worth compared to the Kw the utility sells you, I found this discussion

"The economics are simple. The value of a kilowatt-hour produced by a utility is derived, in part, by the fact that such power is guaranteed to be available. The current residential rate for electricity in Mississippi today is about 11¢ per kilowatt-hour. That figure includes all of the costs of producing power, including the fixed costs of the system, as well as the value of knowing that power will be available when customers need it. On the other hand, customers who produce solar power from their rooftops don’t offer a product of equal value. Those customers contribute only a token amount of power to the grid, providing none of the infrastructure and none of the guarantee that utilities do. Power that is not guaranteed to be available doesn’t have the same market value as power that is, but retail net metering treats them equally. That is a market distortion that has real dollars-and-cents consequences."

It does make sense to me that a Kw that I add whenever I want to is not as valuable as a Kw from the power company - When the sun goes down and my Kw is lost to the grid, somebody must pick up the slack and that means generating a reserve all the time (which costs money) so that the grid can absorb fluctuations. I would consider a 75% value to be fair . . . . if you can get them to agree to pay you that much. On the other hand, a value of only 50% doesn't seem fair to me at all - It is a usable Kw, for as long as it's there, though I suppose it may well be 'lost' in the reserve and effectively go unused - Still, it has value

Don

 

[mdbuilder]

Well said.

Look, when it cost 50k+ and hardly anyone could do it to install solar on your house net metering was great idea that provided some incentive for the early adopters. It won't last forever because it is not fair. At some point it will change, maybe soon or maybe in 10 years but it will change.

If you think about it and look at one of those graphs showing the parabolic increase in installed solar, ask yourself why? That is not happening because millions of fellow Americans have become evangelicals for solar. It is happening because of the invention of purchase power agreements by Wall street. The PPA allows a very profitable business for the installer and a big cut of profit for the banker TODAY all coming from what you the customer will pay over the next 20 years.

When the salesman for the solar company shows up at your house in a $50,000 <2 or 3 year old shiny crew cab pickup and the installation crew arrives in shiny new cargo vans there is something making the whole system a little too profitable. Tax credits and net metering.

 

[PV1]

Cost of batteries have come down considerably. Tesla's new Powerwall holds 14 kWh and can output 5 kW and costs $5,000. Used Model S battery modules are about $5,000 for 21 kWh, but you'll need to add a $3,000 watt inverter. So, $5,000-$8,000 for a battery system that should be able to float a small house indefinitely.

Even if solar isn't (yet) dispatchable power, it does provide power during on-peak hours, which collectively over a region would negate the need to ramp up base load generation or fire up peaker plants. Between solar and EVs, demand should flatten out, and that should benefit the utilities.

 

[Aerowhatt]

errr, you used what you 'didn't use' and 'sold them' the excess you over generated so you could time shift it to later in the day not not pay for what you use later.

Since the narrative is mostly ruled by one side of the issue I'm not surprised with the level of brainwashing (for lack of a better term) on anyones own perspective on this issue.

Firstly: connection charges are a fee that everyone pays on their bill to have the ability to use power for an additional cost. It is meant to cover the capitalized costs and maintenance for one customers share of the infrastructure required (whether one uses any power or not). So lets get this out of the discussion period. The utilities use it to muddy the discussion. When what we are talking about is the commodity of kWhs. Sure many utilities have robbed Peter to pay Paul using profits from commodity sales to subsidize capital and maintenance costs. If they have done this then they should restructure their fees. Everyone should pay the same monthly fee to reserve the ability to use power from the grid right?

Simply put. If I use 10kWh a day and produce 10kWh and I pay a connection fee monthly then I shouldn't be buying any power. A simple example should help.

Lets say I use 3kWh during the period that I produce 10kWh exporting 7kWH. Lets look at that 7kWh where does it go, what does it do, and who gets paid for it?

I made it and it goes out on the grid running my meter backwards from power used last night in my home.

That power (used overnight) was generated by the power company at a cost in fuel and generating capacity, etc. They make about 50% of retail in gross profit on it.

I then replaced it in their system with power that they have no cost associated with producing. They sell it to my neighbor at full retail virtually 100% gross profit.

So they make twice as much gross profit on that 7 kWh than if I didn't have solar and just used it myself (didn't give it back to them the next day).

The downside for them (if there is one) is the 3kWh that they didn't sell me during the day. Even considering this as a loss they still make more gross profit If I have solar than if I don't.

Now a bit of the mud

They claim load on the system is more wear and tear on their equipment. On any grid finger there are multiple loads on a single pole transformer. With the levels of solar power production penetration the US it's simply not true. In fact with solar penetration less than 18% to 22% their infrastructure works less hard not more. Two solar equipped homes on a five or six load finger will reduce the load through the pole transformer significantly for most of the solar day . . . it runs cooler and lasts longer.

Many utilities use TOU or (time of use billing) because peak loads require extra generation capacity which cost more to fuel and to be ready and quickly scalable. Solar provides the most power during the peak load curve further reducing their generating costs during sunny peak load periods while everyone using power is still using it at the premium TOU rate.

The whole issue of distributed solar and Utilities fighting it has no economic foundation. It's about maintaining control of a monopoly. It's driven by irrational fears of the industry.

Finally the claim that distributed solar has disruptive effect on the grid. Many good studies have been done in areas with more than 20 times the distributed solar generation of the average state in the US and have found no such hurdle. You see when a cloud comes over it only shades some of the roofs. If an overcast moves in it doesn't just happen like the snap of fingers. It drifts in at low speeds and reduces solar generation in a predictable, yes gentle way.

Think about it, If I turn off the disconnect on my solar system in full sun I've instantly added a 2000 watt load to the grid. If a neighbors air conditioner switches on it adds a 6000 watt load to the grid (With a very large surge load at startup). If an oven is switched on a 4000 watt load. An electric clothes dryer 6000 watts. The oven and clothes dryer switch on and off (heating element) during the cycles many times. Yet the utilities absorb these random, variable and larger load changes without any crying and moaning about destabilizing the grid. No extra monthly charges for owning high load appliances that "destabilize the grid"???? It's business as usual and far more abrupt and unpredictable than cloud shading or full overcast of distributed solar. The arguments used in these PRC "negotiations" are mostly ridiculous and unfounded. Wait, maybe brainwashing is the best term.

Aerowhatt

 

[PV1]

We just had a brutal summer. Most days, our A/C (and likely everyone else's) ran non-stop all day long. Being that we are out on the fringe of the grid circuit, my excess electrons are many miles closer to the load of my neighbors than the power plant is. Our A/C uses 3,300 watts. Subtract that from the 9,000-10,000 watts of generation, then that means that my excess generation is powering 1-2 neighbors during peak demand, with electrons only traveling on about 1/4 mile of utility lines. Factoring in line loss, it takes much more energy from the power plant to deliver 1 kWh to the customer than it does my excess solar generation, yet my neighbor pays the exact same amount to the utility.

So, one system can offset 1-3 houses worth of demand power while only losing kWh sales for one house. But, as Aerowhatt said, I still pay a monthly access fee, so it's not a total loss, and I still run out of credits and have to buy power through the winter.

If the utilities have time of use metering, then that tells me there is a considerable swing between day and night demand, and solar helps to shave the daytime demand, reducing the load on transformers and extending their life. Plus, since many solar owners complement their system with an EV (or vice versa), the EV increases nighttime demand, further leveling the demand curve.

Net metering itself basically makes for a fair transaction by allowing the customer to export power and receive credit for it. Whether or not the utility pays end-of-year credits at retail or wholesale rate should be up to the utility, that's the only difference I see between a consumer-generator and a PPA with a large scale generator. When the utility was de-regulated and the energy market formed, you can buy power from other entities, such as wind farms or solar farms. These guys sell their power via a PPA. So, for energy you buy from these generators, they get the base kWh generation charge, and the utility gets all the fees for the infrastructure. This is fair because that energy flows through many miles of line and equipment. Net metering allows a homeowner to also be a generator. Since the generation and load are at the same location, any dump to the grid likely doesn't even make it off your street or road. Since these electrons hardly touch any grid infrastructure, this presents almost no cost to the utility (actually can save the utility money if you're on the fringe like I am by reducing endpoint demand) and the monthly access charge should cover wear on these few feet of line. If I net draw, then I pay full rate for those kWhs. If I net export, then I receive wholesale rate on those kWhs, just as a large generator would.

But, as you pointed out, net metering makes battery storage optional, so that *may* be where the subsidy bit comes from. But realistically, does losing out on a few kWh sales to gain peak shaving hurt the utility more than a solar customer getting batteries and either disconnecting completely or using the grid as a backup power source (Registering for net metering with the utility is only necessary if you want to export power. Solar battery systems can be set up to treat the grid as a backup generator and won't export power.)? I think the whole issue stems from consumers becoming self-sufficient and breaking the hold of a monopoly.

 

[Don]

The actual value of a Kw of energy isn't as cut and dried as you may think

We get our power from a Co-Op who buys that power from several sources. As things stand right now, we're paying about 11 cents from the Co-Op and some of that power is purchased from Mississippi Power who sells it at a reduced rate to the Co-Op. Because of the Kemper Plant fiasco, Mississippi power was allowed by the Public Service Commission to raise the rates on all of their existing customers by 20% before the Kemper plant even became operational. So, Mississippi Power customers who live just 3 or 4 miles from me are now paying almost 14 cents for their power, yet our Co-Op can buy power from Mississippi power and sell it to me for 11 cents and they are still making a profit. I think the Co-Op pays an average of about 8 cents for it's power

As I understand it, most Co-Ops buy 'surplus' power from large companies who generate the power and they are happy to sell it for cut rate prices so they aren't forced to make large changes in generating capacity - To make sure they always have all they need, they generate a surplus and then sell some of that extra to Co-Ops at a reduced rate and they resell it to their customers

If a power company is selling power to it's retail customers for 11 cents, but selling it's surplus for say 8 cents, does it make any sense to anyone that they should be forced to pay 11 cents for what is in effect extra surplus generated by someone else just so they can resell some of that surplus to someone else for 8 cents? I think not. I don't see how anyone could value the surplus that they wish to sell back to the power company at any rate other than the current 'surplus' rate - In actuality, I don't think it would even be reasonable for me to expect to get 100% of the 8 cent surplus price, as there are other costs involved for the power company. To expect to get 11 cents for my surplus is completely unreasonable, IMO

Don

 

[mdbuilder]

I think the whole issue stems from consumers becoming self-sufficient and breaking the hold of a monopoly.

Yes it is, of course. Utilities are natural monopolies. They own it, not you -sorry.

Many years ago I lived in a townhouse with assigned parking. I owned two spots, now 10 or so hours a day my cars were not in those spots. Was it ok for someone else to use my spot without my permission if it was empty when they pulled in?

I say no, others say yes. Judging by how often the appropriator would be annoyed (rather than apologetic)when I arrived home and parked across the back of their car, blocking them in, there are some people with odd senses of entitlement to other people's property.

 

[Aerowhatt]

The actual value of a Kw of energy isn't as cut and dried as you may think

We get our power from a Co-Op who buys that power from several sources. As things stand right now, we're paying about 11 cents from the Co-Op and some of that power is purchased from Mississippi Power who sells it at a reduced rate to the Co-Op. Because of the Kemper Plant fiasco, Mississippi power was allowed by the Public Service Commission to raise the rates on all of their existing customers by 20% before the Kemper plant even became operational. So, Mississippi Power customers who live just 3 or 4 miles from me are now paying almost 14 cents for their power, yet our Co-Op can buy power from Mississippi power and sell it to me for 11 cents and they are still making a profit. I think the Co-Op pays an average of about 8 cents for it's power

As I understand it, most Co-Ops buy 'surplus' power from large companies who generate the power and they are happy to sell it for cut rate prices so they aren't forced to make large changes in generating capacity - To make sure they always have all they need, they generate a surplus and then sell some of that extra to Co-Ops at a reduced rate and they resell it to their customers

If a power company is selling power to it's retail customers for 11 cents, but selling it's surplus for say 8 cents, does it make any sense to anyone that they should be forced to pay 11 cents for what is in effect extra surplus generated by someone else just so they can resell some of that surplus to someone else for 8 cents? I think not. I don't see how anyone could value the surplus that they wish to sell back to the power company at any rate other than the current 'surplus' rate - In actuality, I don't think it would even be reasonable for me to expect to get 100% of the 8 cent surplus price, as there are other costs involved for the power company. To expect to get 11 cents for my surplus is completely unreasonable, IMO

Don

I mostly agree with you. However the logistics of splitting hairs to keep their two cents per kWh from hundreds or thousands of small generators is not currently cost effective. Hence the overall rounding by the month or year for wholesale reimbursement of surplus from a residential roof top solar. Many areas will not pay you and only give you credits. Like lost minutes at the end of the month with old cell phone plans. Certainly we can agree that distributed solar impact is easier to predict and account for by utility companies than much larger and more erratic customer loads shifting, Can't we?

And when you think about that 11 cents instead of 8 cents. You have to remember that the residential generators surplus has no cost in fuel or equipment to the utility. All other power that they sell has those costs. They discount their own surplus to move it so that they don't just throw it away in large resistance loads. One could argue that a residential producer should have to do the same. Maybe they should but I don't think so. In my mind the residential solar producer surplus power has more intrinsic value due to it's source. Plus line/transformer loses from central generation to ones home can be high, up to and beyond 30% loses. 8 cents / 11 cents = .73 or 73% of retail paid for surplus. As PV1 pointed out, the solar distributed generation. Hits the grid at end use voltage (so no transformer delivery loses) and delivered just down the block so very, very low wire loses. If the solar producer didn't make it locally. The utility would be making it centrally and need to make 1.3 to 1.4 kWh to provide 1 kWh at the neighbors house. Again, it looks like it is worth every penny of full retail?

Aerowhatt

 

[Aerowhatt]

Yes it is, of course. Utilities are natural monopolies. They own it, not you -sorry.

Many years ago I lived in a townhouse with assigned parking. I owned two spots, now 10 or so hours a day my cars were not in those spots. Was it ok for someone else to use my spot without my permission if it was empty when they pulled in?

I say no, others say yes. Judging by how often the appropriator would be annoyed (rather than apologetic)when I arrived home and parked across the back of their car, blocking them in, there are some people with odd senses of entitlement to other people's property.

I'm going to have to call "bad analogy" on this one. Whoever took your parking space was not leasing it from you. If you have a meter, you lease (your share of) the distribution network from them. Yes they own it, but we pay rent to use it. So it has nothing whatsoever to do with a sense of entitlement to other peoples property.

Aerowhatt

 

[Benjamin Nead]

That "shared driveway" analogy is, as best, spurious. The idea that homeowners with their own grid tied PV are the equivalent of parking space interlopers is so wrong, it's hard to parse such observations with a straight face.

If a solar homeowner is grid tied and the utility is buying a kW of energy from them at 12 cent (the retail price here in southern Arizona,) it's a completely fair transaction. It typically happens at just about the time of day that demand on the grid is at its greatest . . . and, when the weather is particularly hot down here in the summer, the utility is often paying more that the retail rate for power in the late afternoon (perhaps as high as 40 cents or more per kW) when they have to fire up those peaker plants.

Every kW that a homeowner can generate and supply to the utility - carbon free, via solar - is a kW that the utility didn't have to spend money on for the construction and upkeep of a coal, natural gas or nuclear power plant. It's the homeowner who pays for the purchase, installation and maintenance of a PV system. If the homeowner let's it slip and the aging system they paid to have installed generates electricity less efficiently years later - or it stops generating electricity altogether - the homeowner goes back to being more or less totally reliant on utility-supplied electricity.

Distributed home PV solar currently accounts for something like 1% or 2% of the electricity present on the grid. The idea that it's currently hurting the utilities is laughable at best. Also . . . the observation that solar installer "fat cats" are driving vehicles that are just a bit too nice is also misplaced. The installers have a product that is increasingly becoming more affordable and more people want it. They're increasingly making more money for providing an installation/upkeep service that is in demand, making money for themselves and making more jobs for the labor market. I think that's called "capitalism."

While we're looking at salaries, lets also take a look at what the top tier of executives who manage an electrical utility are making . . . or the amount of dark money that ALEC, Koch brothers and similar anti-clean energy concerns are funneling into political races to kill off distributed solar.

Fact is, the utilities are scared by the prospect of a 30% market share of homeowners with their own grid tied PV. They're even more frightened by the prospect that many of these homeowners will also have their own home battery storage to augment their PV displays by that time. I don't want the electrical utilities to go out of business. They will always provide a valuable service in distributing electricity that - increasing - they will play a smaller part in generating. But the electrical utilities better start eventually acting like the 21st century is actually here. Otherwise, they are going to become as relevant as land line telephone service providers.

 

[mdbuilder]

AND, agree to their terms of service. Which they can change.

Yes it is, of course. Utilities are natural monopolies. They own it, not you -sorry.

Many years ago I lived in a townhouse with assigned parking. I owned two spots, now 10 or so hours a day my cars were not in those spots. Was it ok for someone else to use my spot without my permission if it was empty when they pulled in?

I say no, others say yes. Judging by how often the appropriator would be annoyed (rather than apologetic)when I arrived home and parked across the back of their car, blocking them in, there are some people with odd senses of entitlement to other people's property.

I'm going to have to call "bad analogy" on this one. Whoever took your parking space was not leasing it from you. If you have a meter, you lease (your share of) the distribution network from them. Yes they own it, but we pay rent to use it. So it has nothing whatsoever to do with a sense of entitlement to other peoples property.

Aerowhatt

 

[PV1]

As Elon Musk said during the Powerwall 2/Solar Roof unveil, we'll still need utilities. It's not like rooftop solar is going to make them obsolete (though it will diminish their role to some extent). Each house with solar and batteries will effectively be their own utility, and the actual utility will connect everybody together. Only when there is surplus or deficit is when power will flow between buildings.

And yes, the utility does own the infrastructure, but even us solar owners pay our monthly buy-in to use it (the line fee, which if not paid, they come and take the meter, shutting us out). All the other charges are costs that go along with buying kWhs, generating said kWhs (plus additional to cover losses), and sending them through miles of line, a multitude of transformers, and possibly a substation or two. Because our excess power that goes to a neighbor doesn't incur those costs, we get credited at the full rate, because the kWhs we use at night do, and it uses those credits. Our neighbors effectively buy power from us (they pay the utility for X number of kWhs, utility credits us for X number of exported kWhs. At night and in the winter, we cash in the credits for kWhs purchased). If at the end of the energy year, there are enough credits built up to cover any remaining expenses (including the line fee for that month), then we get paid for kWhs sold to the utility, at the wholesale rate.

 

[rmay635703]

errr, you used what you 'didn't use' and 'sold them' the excess you over generated so you could time shift it to later in the day not not pay for what you use later.

Since the narrative is mostly ruled by one side of the issue I'm not surprised with the level of brainwashing (for lack of a better term) on anyones own perspective on this issue.

Firstly: connection charges are a fee that everyone pays on their bill to have the ability to use power for an additional cost. It is meant to cover the capitalized costs and maintenance for one customers share of the infrastructure required (whether one uses any power or not). So lets get this out of the discussion period. The utilities use it to muddy the discussion. When The arguments used in these PRC "negotiations" are mostly ridiculous and unfounded. Wait, maybe brainwashing is the best term.

Aerowhatt

Fixed fees need to increase? Brainwashing indeed

http://psc.wi.gov/apps35/ERF_view/viewdoc.aspx?docid=215376

Nuff said.

Fixed fees for individuals should be rolled back to 1990's levels
Until ignorant wasteful utility profiteering methods are banned

Year over year profit increases for 15 years indeed