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Utilities Should Worry; Rooftop Solar Could Soon Cut Their Profit
Lucas123 writes A study by the Lawrence Berkeley National Laboratory predicts that distributed rooftop solar panel installations will grow from 0.2% market penetration today to 10% by 2022, during which time they're likely to cut utility profits from 8% to 41%. Using those same metrics, electricity rates for utility customers will grow only by as much as 2.7% over the next eight years. By comparison, the cost of electricity on average rose 3.1% from 2013 to 2014. The study was performed for the Office of Energy Efficiency and Renewable Energy under the U.S. Department of Energy. One of the main purposes of the study was to evaluate measures that could be pursued by utilities and regulators to reduce the financial impacts of distributed photovoltaics.
But this is due to the laws. The network companies in Germany have to take all solar power. They have to pay a fixed price. The losses they make from this are covered by an extra fee paid by consumers.
All other (non-renewable) power plants have to compete for the rest of the market, and this is shrinking due to the strong growth of solar and wind power. That is why coal power plants are shut down, and why gas power plants are barely running.
All the utilities have been privatised in the UK. One thing that didn't happen was prices going down. In fact they've been rising way beyond the rate of inflation ever since.
A study by the Lawrence Berkeley National Laboratory predicts that distributed rooftop solar panel installations will grow from 0.2% market penetration today to 10% by 2022
That is not what the study shows at all. They did an analysis of what the revenue impact on utility companies would be at various hypothetical levels of PV installation between 0.2% and 10%. It ignored total costs of PV (including installation and maintenance).
Most importantly, the study does not predict that PV installations will grow to 10% or any other level. It is just a "what if" analysis.
That's because energy companies in the UK struggle to make a profit on residential business - take the bill I have in front of me from EDF Energy, it breaks down the £57.85 charge for gas and electric covering the period of 01/08/2014 to 08/09/2014 as follows:
Electricity: 5% VAT, 12% Environmental and social obligations, 17% Operating costs, 24% Network costs, 42% Wholesale costs, 0% Profit.
Gas: 5% VAT, 5% Environmental and social obligations, 16% Operating costs, 20% Network costs, 54% Wholesale costs, 0% Profit.
Their electricity sources are broken down as: 17% coal, 73.7% nuclear, 8.3% renewable, 1% other.
What people fail to realise (or just outright ignore) about pre-privatisation is that the costs were hidden and subsidised by the Treasury.
Obviously you are misinformed or just ignorant... Germany has one of the highest rates for electricity in the world. How do you think solar got such a foot hold ? It was paid for and still being propped up by the consumers ... Who pay out their nose just to say they are green... And just in case a tsunami hits there they will be safe since they got rid of nuclear power...
In some areas of the US (especially the south eastern states where cheap dirty coal rains supreme) state governments have banned the kind of solar fiance schemes and loans that have allowed people in the west or in the north east to get solar panels on their home without the huge up-front cost. Yes the solar company makes money from the deal but the home owner still comes out on top in that they aren't paying anywhere near as much in power bills.
Also utilities have attempted to restrict (and in numerous cases succeeded in restricting) the amount of power allowed into the grid from small scale generation (including grid-tie solar) or have reduced or eliminated feed-in tariffs in way that make solar less viable.
Plus there are cases of outright bans on some kinds of solar setups (I cant find a cite right now but there have been cases where people have wanted to install solar panels and a battery bank or whatever and completly disconnect from grid power but have been prohibited from doing so by state and local laws)
For the most part, they already have.
US Solar subsidies in decline:
http://www.pv-magazine.com/new...
Australian subsidies in decline:
http://www.theaustralian.com.a...
China cuts solar subsidies:
http://www.bloomberg.com/news/...
And yet it hasn't stopped solar deployments. Because even without subsidies, they're now cost competitive. Utility companies can't use the canard of government subsidized energy any longer. Yet they've invested - as the Economist notes - half a trillion in fossil fuel plants worldwide. I'm proposing a solution that at least prevents a utility meltdown during the transition period.
Do you even know why?
Because I recall explaining it to you already, just a few weeks ago. Right here on slashdot. And here you are again, trolling on the subject as it it never occurred.
To those ignorant, he's correct, but the reason isn't that renewables are functional, but that legal system for selling electricity was jury-rigged to serve unstable renewables at the cost of everyone else, from customers to competitors.
Electricity in Germany, like most EU states is sold on exchanges and spot sale price is determined based on it, while long term contracts usually are at least loosely based on those prices as well.
And in Germany, there is a law that dictates that before you can sell any coal/nuclear power on exchange, ALL of produced renewable power must be sold.
In other words - when wind blows, if you're running a nuclear or coal plant, you cannot sell any of your produced electricity until your wind/solar competitors sold everything they produced. At the same time, you are not allowed to shut the plant down, because you need to sit on the grid as spinning reserve for when wind blows too hard or stops blowing to pick up the slack.
This has resulted in ridiculous paradoxes, such as the fact that spinning reserve which is mostly coal and natural gas has become unprofitable, causing bankruptcies. Not because electricity is cheap - when renewables are down, the spot price is ridiculously high, and when you count the subsidies in Germany which are pushed to building and maintaining renewables, electricity in Germany is incredibly expensive for end customers. But at the same time, when renewables do produce, coal, natural gas and nuclear plants cannot sell electricity (not because they don't produce energy, but because laws ban them from doing so!) and are forced to actually pay people who take their electricity (again, grid balance!)
Which in turn prevented renewables from being hooked to the network, because you cannot hook wind or solar to network without almost entire capacity worth of spinning reserve sitting on the network - you risk grid collapse and those rules are there for that very reason. The situation is utterly ridiculous and is a great example of just how dysfunctional the current German model is. Because the moment you remove this particular rule, electricity cost would collapse and renewables would dive deep into the red as their unstable production cycle would mean that the only times they could sell was the same time that others can sell, meaning their electricity would always be very cheap and far below levels needed to pay back for the plant.
Germany is a great example of an utter failure in terms of emissions as well. The moment is started implementing the aforementioned policy, it had to break its Kyoto targets of CO2 emissions reduction (more spinning reserve needed due to inherent instability of renewables), and after 15 years of stable yearly reduction of CO2 emissions, Germany's CO2 emissions grew for several years after implementation of these policies.
Actually, the cost of subsidizing solar and wind has doubled the cost of power in Germany. Not only is that inflicting pain on consumers, German manufacturing is finding it hard to compete with countries where energy is cheaper. Politicians are quickly backtracking.
And Germany's power industry is increasing the amount of energy generated with coal. That's because coal power is the cheapest and they need some way to keep down those skyrocketing prices. Absent the need for that, many of those companies could afford more expensive but cleaner sources such as natural gas, using gas either from Russia or from fracking to create a domestic supply.
Mandating expensive and unpredictable power sources such as solar and wind, is making German power generation more coal-based and thus dirtier. Closing nuclear plants is having a similar impact on the more stable sources of power.
http://www.bloomberg.com/news/2014-04-14/coal-rises-vampire-like-as-german-utilities-seek-survival.html
Note this:
"The result: RWE now generates 52 percent of its power in Germany from lignite, up from 45 percent in 2011. And RWE isnÃ(TM)t alone. Utilities all over Germany have ramped up coal use as the nation has watched the mix of coal-generated electricity rise to 45 percent last year, the highest level since 2007."
Actually it's far worse. Right now, users on the same electric grid as the solar user are directly subsidising the solar producer through higher utility payments. This is due to inherent instability of solar production and spikes this causes, which require more complex grid management to keep the grid stable. Which means more costs, which are paid through price on delivered electricity, which is lower to the solar producer.
This is already the case in Australia, where this has been decried as a direct subsidy from the poor to the rich (poor generally can't afford solar while rich can, and poor are basically paying for solar panels of the rich through their higher utility payments).
I suspect that even through pundits will resist, the real costs of having residential solar hooked to the grid will be pushed back onto solar users so they don't free ride off other people's backs by instituting some sort of "grid stability fee" for anyone who has solar hooked to the grid.
I don't know about the UK but in the US we have a curious blend of government and private public utilities companies. They are supposedly private but they are government regulated complete with a monopoly over their assigned area. The amount of profit they are allowed to make is also regulated. If they make too much then that money is refunded to customers and if they come up short that money is levied against the customers. Not really capitalism at all.
Yes, your fable about the German renewable energy program is the narrative coming out of the energy industry and the right-wing press. However, it's pretty much phony, or at best, misleading. Whenever you find that story told, you will invariably also find adverts for fossil fuel companies. You find statements like this one:
Which is basically like saying, "Hey, there's an inherent flaw in our method of producing energy, so if you come up with something better, it's your fault if there are problems". Seriously, think for a minute about that Luckyo quote and what it means. There's so much nonsense coming out of the energy industry right now that it's not even funny. And it's a worldwide, coordinated effort to spread FUD (and things like the "Sun Tax" and "Solar Surcharge" and other alternative energy tariffs).
However, the Brattle Group's recent study tells a different story about Germany's experiment:
http://cleantechnica.com/2014/...
Here's the Brattle Group's actual study:
http://www.brattle.com/system/...
In fact, the program is so successful that Angela Merkel is now pushing reductions and eventual phasing out of the subsidies.
You are welcome on my lawn.
Here in Houston, our generation and distribution are separate. We have over 30 different electricity retailers (and 2 generators), each of whom has a zillion different plans. You should see it. And they all have these fancy names like RateLocker, RateProtector, NightHawk, etc that give you all sorts of different rates depending on what you want. There's one that gives you free power on Sunday. There's one that charges less at night than during the day.
I really hope the rest of the country doesn't end up this way. It's a pain in the ass. You thought cell phone contracts were bad? Try an electricity contract. Yes, it's a contract of fixed length (12 months, 24 months, etc.) and if you cancel, you pay a fee. One I looked at was a 5 year contract that cost $150/year remaining if you wanted out! (If you move out of their service area and can prove that, they do let you out free, fortunately.)
The world has changed. Power pools. Generators bid (typically incremental cost) power into the pool which stacks up the bids and tells the cheapest to run and everybody else not to. They all get paid the price of the highest bid run that period.
This is a vast oversimplification. Long term deals from ratebase (the old way) are still honored with exceptions (usually transparent incestous deals to shift profit from regulated utilities to pure open market utilities. e.g. PG&E is banned from long term deals because they just aren't trustworthy, and ran out of second chances, no matter how many drinks they buy.)
I was involved in writing trading/dispatch floor software for many of the players in these pools.
It's a decent compromise between regulated monopoly and an open market. Highly regulated and transparent market. Not a huge burden on small players. There are no tiny players.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
cite
Germany is really leading the way.
Actually, that's incorrect. Pump storage is completely incompatible with modern renewables because of the way it's designed to work. Turbines and pumps cannot be directionally switched easily, so the process for switching directions is designed to be done twice a day - pump water during the night, flush water through turbine during the day. It's a predictable cycle, so directional shifting can be planned in advance and executed.
Renewables would require near instant mode switching. Which is incompatible with aforementioned systems, and as a result, Germany is actually shutting down its pumped energy storage gradually.
I'll also add that it took approximately 100 Billion Euro of taxpayer money in just the subsidy portion to pay for that accomplishment. Not very impressive at all. Wind, by cost comparison in Germany is kicking solar's ass.
Most flawed study ever. Without any evidence they automatically assumed homeowner solar usage would skyrocket from 0.2% to 10% in only 8 years? I read the study, there is no explanation of why they believe this.
Without some amazing break through in solar power efficiency and much lower prices we will not see 10% adoption by 2022.
I would have to pay $30,000+ for solar panels to generate the electricity I'm currently paying $200 a month for. But that fluctuates, during the winter it's $75 a month. Let's assume I average $125 a month, about $1500 a year. It would take 20 years to reach the $30,000 I would have to pay today for the solar panels, and that's assuming the panels or other equipment need no repairs for 20 years. Solar just isn't worth it yet. When 2 or 3 grand in panels can handle everything then people will consider it, but it makes no sense spending 20 years worth of electric bills all at once.
my karma will be here long after I'm gone