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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.
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.
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."
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.)