An interesting read if you have a few minutes.

 

Quote

Utilities increasingly fear that the falling prices and rising availability of clean solar power will threaten their business model, which ties profits to the amount of capital investment they make in the grid, and sometimes to the amount of electricity sold. Consequently, in states across the country, utilities are using their money and clout to push policymakers to undercut solar power and make it harder for homeowners and small business owners to produce their own clean energy.
 

 

US Blocking Rooftop Solar Web.pdf

It's very difficult to explain what the hell is going on with the great democracy of the US of A these days.

42 minutes ago, bankruatsteve said:

It's very difficult to explain what the hell is going on with the great democracy of the US of A these days.

 

Well, it's not capitalism and free enterprise, that's for sure. 

 

Utilities don't want to pay for metering that does not benefit them and  don't like being compelled to buy power they don't need, shocking. 

 

I'm all for solar. Let people buy and install it up to code using their own money.  

Not the first time US businesses were blocking progress. Just remember what oil giants did to EV1 car 40 or so years back...

17 minutes ago, tomazbodner said:

Not the first time US businesses were blocking progress. Just remember what oil giants did to EV1 car 40 or so years back...

 

Yes, and don't forget the Stromberg Condenser and all the engines that burn water that the oil companies buy the patents to....

 

 

In the US, roughly 2/3 of retail electricity cost is distribution, so when you net meter the utility ends up with a significant penalty on exported and imported energy that nets out to zero.

 

For my (legacy) system, I produced 2,000 kWh, exported and re-imported about 850kWh on my last bill, and only self-consumed the rest.  About 300kWh went to charging my EV, mostly during the day to maximize self-consumption. My bill was $26.  The nominal energy rate is $0.26/kWh, so the distribution component is roughly $0.174/kWh— therefore I received a system benefit of $0.174*850*2 or $300.

 

In reality it isn’t quite that bad for the utility, since over 90% of the exported energy likely stays on the same distribution circuit, but still I got about $165 in value for under $30.  You can’t run a utility on those economics.

 

(And sadly, because of the way the rates work, I am disincentivized to add battery backup or any additional solar to improve the situation.  Also, my other two electric bills elsewhere where I cannot have solar are stupidly high despite extremely low consumption on them.)

 

From a systems perspective, utilities can install all the solar they want at about 30% of the cost for residential rooftop.  They want to stall rooftop solar and develop their own grid solar as long as possible to the point that the value of generation on their system during the day approaches zero for their customers.  That part is a bit unfair…

10 minutes ago, tjo o tjim said:

In the US, roughly 2/3 of retail electricity cost is distribution, so when you net meter the utility ends up with a significant penalty on exported and imported energy that nets out to zero.

 

For my (legacy) system, I produced 2,000 kWh, exported and re-imported about 850kWh on my last bill, and only self-consumed the rest.  About 300kWh went to charging my EV, mostly during the day to maximize self-consumption. My bill was $26.  The nominal energy rate is $0.26/kWh, so the distribution component is roughly $0.174/kWh— therefore I received a system benefit of $0.174*850*2 or $300.

 

In reality it isn’t quite that bad for the utility, since over 90% of the exported energy likely stays on the same distribution circuit, but still I got about $165 in value for under $30.  You can’t run a utility on those economics.

 

(And sadly, because of the way the rates work, I am disincentivized to add battery backup or any additional solar to improve the situation.  Also, my other two electric bills elsewhere where I cannot have solar are stupidly high despite extremely low consumption on them.)

 

From a systems perspective, utilities can install all the solar they want at about 30% of the cost for residential rooftop.  They want to stall rooftop solar and develop their own grid solar as long as possible to the point that the value of generation on their system during the day approaches zero for their customers.  That part is a bit unfair…

 

Why would they not just put rooftop systems on all the residential roofs that want it and sell the consumer the power?

 

I do not think the utilities should be compelled to buy  excess power from their customers.

 

I think the customers should be able to install panels at their own expense and use that power to offset their cost. 

12 minutes ago, Yellowtail said:

 

Why would they not just put rooftop systems on all the residential roofs that want it and sell the consumer the power?

 

I do not think the utilities should be compelled to buy  excess power from their customers.

 

I think the customers should be able to install panels at their own expense and use that power to offset their cost. 

It is cheaper for the utility to do a single grid-scale plant than putting it on a bunch of individual roofs.

 

Using my example from my last bill, without batteries I would only be able to offset about half of my annual demand with solar alone and no export.  Fair enough from a systems perspective, but then you add some awkward burdens to the utility (very fast ramp rate as the sun goes down), so you end up requiring a battery as well to offset maybe 20% of your night time demand.  That is really the best-case scenario for the utilities and customers today. 

2 minutes ago, tjo o tjim said:

It is cheaper for the utility to do a single grid-scale plant than putting it on a bunch of individual roofs.

 

Using my example from my last bill, without batteries I would only be able to offset about half of my annual demand with solar alone and no export.  Fair enough from a systems perspective, but then you add some awkward burdens to the utility (very fast ramp rate as the sun goes down), so you end up requiring a battery as well to offset maybe 20% of your night time demand.  That is really the best-case scenario for the utilities and customers today. 

 

Historically, much less power is needed at night, yes?

 

In any event, the utility has to have the capacity to operate at max power, with without solar, so it may not benefit them to install a grid-scale plant.

21 hours ago, Yellowtail said:

 

Historically, much less power is needed at night, yes?

 

In any event, the utility has to have the capacity to operate at max power, with without solar, so it may not benefit them to install a grid-scale plant.

Even with modest solar penertration, you get the evening “duck curve”, which is a challenge for legacy power plants due more to the rate of load increase rather than the absolute magnitude of the total load.

 

The benefit of installing grid-scale solar is they get various rebates and incentives for doing so, and essentially take many of these incentives away from their customers.  At $750/kW installed and on single-axis trackers, a grid-scale plant can have less than a 7-year payback on wholesale energy costs.

 

What some utilities are hesitant to do (which is counter to good environmental policy) is reduce the number of hours per year that existing plants operate, as that will have an impact on profitability unless you actually need more capacity.

6 minutes ago, tjo o tjim said:

Even with modest solar penertration, you get the evening “duck curve”, which is a challenge for legacy power plants due more to the rate of load increase rather than the absolute magnitude of the total load.

 

The benefit of installing grid-scale solar is they get various rebates and incentives for doing so, and essentially take many of these incentives away from their customers.  At $750/kW installed and on single-axis trackers, a grid-scale plant can have less than a 7-year payback on wholesale energy costs.

 

What some utilities are hesitant to do (which is counter to good environmental policy) is reduce the number of hours per year that existing plants operate, as that will have an impact on profitability unless you actually need more capacity.

 

I do not think the utility or there users should get rebates and incentives to install solar. I think users should be able to install panels (per building codes and utility approval) to offset their cost, but I do not think the utility should be compelled to buy their excess.

 

As far as I know, most private sector companies in the US expect there payback to be eighteen months to three years. If I had submitted a proposal with  a seven year payback it would be laughed at. 

1 minute ago, Yellowtail said:

As far as I know, most private sector companies in the US expect there payback to be eighteen months to three years. If I had submitted a proposal with  a seven year payback it would be laughed at. 

For utilities, longer payback periods are actually a good thing… they are essentially given a guaranteed profit margin based on their expenditures, so the more capital investments they make, the more they can increase rates, and the more (absolute) profit they make.  They just need to figure out something else to spend money on in the next 7 years.

 

Energy projects usually require a 3-year maximum payback in the US, but there are plenty of companies that fund a pool of energy money one-time, and let savings be re-invested over time.  So, you do fast payback projects first, and then get into more capital-intensive projects over time.  Also, many projects have paybacks beyond the pure energy aspect— deferring investment elsewhere— which can make them attractive.

From what I gathered from others comments the bill would require utility companies to buy the excess electric from homes with solar cell systems.  Now that is just requiring a utility company at some expense to gather the electricity, somehow store it, and hopefully resell it.  

I have no problem if people want to install solar systems.  I am not sure of the economics of it but it seems fair that if they believe they are cost effective for homeowners to install them and use them for their own power and they put in battery storage if they have excess capacity and want to store it. 

This mindset that somehow solar power is totally clean baffles me.  Obviously there is some pollution created by the manufacture of the solar cells themselves and eventually they will fail and need to be replaced.  I don't know about the ramifications of spent solar cells and where they could either be recycled or properly disposed of.  Cars replaced horses as transportation as they were faster, more economical, able to carry more etc.  If solar powered panels truly are a good alternative, they should not need legislation either providing subsidies or forcing competing utility companies to support them.  They should stand or fall on their own merits. 

30 minutes ago, tjo o tjim said:

For utilities, longer payback periods are actually a good thing… they are essentially given a guaranteed profit margin based on their expenditures, so the more capital investments they make, the more they can increase rates, and the more (absolute) profit they make.  They just need to figure out something else to spend money on in the next 7 years.

 

Energy projects usually require a 3-year maximum payback in the US, but there are plenty of companies that fund a pool of energy money one-time, and let savings be re-invested over time.  So, you do fast payback projects first, and then get into more capital-intensive projects over time.  Also, many projects have paybacks beyond the pure energy aspect— deferring investment elsewhere— which can make them attractive.

 

Please explain how a longer payback period is better. The IRS will mandate the term you are required to depreciate the asset regardless of how quickly it pays for itself. 

 

Again, please explain how and installation that costs $100,000 and pays for itself in 7-years is better than an installation that costs $100,000 and pays for itself in 3-years. 

 

The project with the 3-year payback is generating a savings of $33,333 a year.

The project with the 7-year payback is generating a savings or $14,206 a year. 

 

Both have to  be depreciated at the same rate the IRS allows

 

Assuming a 20-year life of the project:

The project with the 3-year payback will generate $666,667 in savings

The project with the 7-year payback will generate $285,714 in savings

 

The project with the 3-year payback generated well over twice the savings of the project with the 7-year project. 

 

 

On 6/24/2021 at 8:38 AM, Yellowtail said:

Please explain how a longer payback period is better. The IRS will mandate the term you are required to depreciate the asset regardless of how quickly it pays for itself. 

Specific to public utilities, if they invest money in their infrastructure, the Public Utilities Commission will allow them to make a rate case for increasing customer rates to cover that cost.  Utilities have a fixed percentage profit margin (in theory), so they make additional profit in $ terms as they do these investments. 
 

But, savings attributable to a capital investment (once paid off) would reduce the cost basis, and thus when they go for their next rate adjustment it will roll off the books, and the rates would in theory drop back down.  Reality is that by that point, they have inflated costs elsewhere, so the rate never is reduced.

 

If you have a 3-year payback as a utility, the PUC would likely disallow a rate increase.  At 7-10 years you have marginally investable projects from the utility perspective.  What utilities really want to build is a long-life capital expenditure that doesn’t save them any money…

A flame and response have been removed.

 

Let's try to play nicely shall we?