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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.
One would think that this makes perfect sense. How is it "passing the loss on to customers"? It used to be that night-time electricity was cheaper because the supply was largely flat, while the demand got lower at night. If the day-time electricity production gets to be largely covered by PV, the whole thing may either turn around or at least shift toward day-time electricity being cheaper simply because of basic economy principles, not because of some malicious intent.
Ezekiel 23:20
cost to install 600,000 homes - about 3.4 billion per year
emplyment to install 74,000 workers at 20 dollars a hour - tax about 45%+hst ( 13 more percent )
3 billion of the 3.4 billion of course ( of which the above taxes are extracted ) 1.4billion +hst (200 mill more)=1.6 billion
so above 3.4 billion -1.6 billion cost = 1.8 billion 1st year
600,000 homes not paying electricity save 10000 dollars and that equates to 1300 ( HST ) x 600,000
780 million per year
cost first year about 1.1 billion
NEXT year think 1.2 million homes and that 780 million X2
so inside 2 years the govt is gaining in taxes and the people have begun gaining but at a sustained rate new wealth....
this goes on 20 years and cause they last 20 years you have a perpetuating industry
YET NOT ONE OF THE TOP 3 PARTIES WANTS THIS FOR ITS PEOPLE.
AND yes the math is not exact here this is a quick example, now imagine the usa and germany doing this
imagine china and india
As the Economist notes, due to German and other European solar government incentives, European utilities face an existential threat to their investment future and business model. Utility giants the world over have seen this and decided to fight back against Net Metering and other means whereby homeowners can feed back into the electric grid excess energy production from rooftop solar. Barclays, the British multinational banking giant, agrees that rooftop solar and net metering represent a threat to centralized electric production utilities.
The problem utilities face is that solar tends to maximize output at mid-afternoon, exactly the same time spot prices have traditionally been at maximum. So their solution is to lobby government the world over to reverse net metering laws and end solar subsidies.
OK, time for me to get on a soapbox. I think this is shortsighted. The real problem here is that government and electric utilities have agreed on a price structure and investment plan to build out gas powered and coal powered plants that now appear to be unsustainable due to disruptive shifts in the market from technical innovation in the renewable field. As is noted in TFA, solar is - or will soon be - already cost competitive even without government subsidy.
Market fundamentalists would argue, 'let the utilities die. Their investors bought into a dying technology, the market will decide their fate.' Except that they have an endless stream of money to buy lobbyists and legislators to warp law in their favor. Further, they have a good argument that intermittent renewables will only meet partial demand. You still need baseline generation capacity from central utilities. So the problem - from their perspective - is excess production by renewables.
Except: when has excess energy production ever been a problem?
The real problem is twofold: We want to move off of fossil fuels due to global climate change and they want to maximize their vast infrastructure investments. A real policy solution would meet both needs.
Rooftop solar should be maximized. During periods of excess, gas powered plants should funnel their energy to local raw materials ore processing facilities and manufacturing. This has the benefit of distributing labor where it's needed near mining sites, rather than shipping raw materials where labor is cheapest for exploitation as well. And it keeps utilities running for the next thirty years to generate a viable expected ROI. And government policymakers could then plan a rational transition period away from fossil fuels without the economic dislocation of utility giants imploding worldwide.
Thoughts?
The TFA uses a false model for computing profits. In the USA nearly all electric utilities are regulated monopolies. The government grants them a monopoply for a particular service area. The utility fronts the capital investment (historically up to 20% of all capital investment in the whole country!!! They must raise the capital in the private markets and convince investors to invest in utilites instead of Apple or Alibaba. High returns are needed to attract that money.). The pubic service commission is obligated to allow rates that guarantee the utility a defined return on investment profit. In real life, there is a lot of wiggle room and lots of politics in rate setting, but competitive pressure is not a factor. TFA ignores this.
We could, as a matter of public policy, decide to revoke the monopoly. That would open the door to any competitor, but it would also allow the utility to charge any rate they like without asking permission, and would remove any obligations regarding reliability and quality of service. (Think daily brownouts for anyone who doesn't pay for "premium service" on the hottest day of the year.) It would also open the door for another set of poles and another set of wires running down every street; one set per competitor. NYC was like that in the 1890s, and some places in Asia are like that today with hundreds of wires on every pole and laying over every rooftop.
But a death spiral in which rising rates paid by the remaining non-solar customers drive more and more customers to generate their own power could still be possible. But it would not directly affect utility profits as the TFA claims. The regulated utility business model would be challenged, not the profits of utilities that remain regulated. Those profits are guaranteed by law.
We should also recognize that lots of the population lives in high rise apartments and do not own enough rooftop or yard square feet to use solar panels.
Funny how power utilities are all for free market capitalism until the consumers get to play.
Increasing price gouging has driven fees up while the capitial costs for consumers to generate their own electricity has gone down, with obvious results at the crossover point.
In Georgia both the PSC and the legislature is being lobbied hard to effectively outlaw private solar installations at the same time that the utilities are running a PR Blitz about how much they are working on solar energy. Having the most corrupt governor in the country doesn't help things here either
This is standard modus operandi for three local trolls: angelsphere, dblll and amimojo. Use the arguments that look like they make sense to a layman, advance them with yellow press-style arguments and finish off by questioning the intelligence of anyone who dares to point out flaws.
Here dblll relies on relative ignorance of most people of how grids and grid stability actually works. Instead he simplifies the model to make it look feasible to a layman - grid is essentially a pool after all, and surely if there's input somewhere, it would balance out the lack of input at another location?
In general, that is indeed correct, and how grid is generally balanced. But as with all engineering problems, devil is in the details. And details make his model utterly ridiculous and completely unfeasible. The problems here is DISTANCE and LOCALIZATION OF PRODUCTION.
Most of German wind power is located in the North. Most of the consumption is in the South-West. This means that power must be pushed over large distances, with a lot of transformers and substations balancing the flow. And when the supply suddenly dies, it takes a while for automation to switch back. At the same time, the sheer volume that tends to go offline at once is quite large, as production is concentrated in certain regions. As a result, if you do not have spinning reserve in the producing regions, by the time switching brought you power from the South, your grid in the North is already down and you have countless transformer fires if you tried to keep it up regardless.
Nuclear has the exact same problem actually. We here in Finland are currently building a 1.6GW unit in Olkiluoto. As nuclear is far more reliable, we need much less than that capacity of installed spinning reserve, so if his hypothesis of "distance doesn't matter" was true, we could just increase our imports from Russia, Sweden and Estonia to make the shortfall. We have very good connections to all of these countries and routinely both import and export power.
In real world on the other hand, we had to build a 300MW power plant in Forssa, about half way between the new plant in Western Finland, and major consumption centres in Central Finland and Helsinki to provide the spinning reserve for this new unit. Because distance matters.
What you horrendously fail to realize, or just outright lie and omit, is that these for profit energy companies that make 'no profit' still seem to pay CEOs and top management millions of dollars in salaries. There's profit, they just pretend there isn't, and leverage against themselves with loans and subsidies to milk as much money as possible, since they know the power must stay on and the government will continue to subsidize. It's a fucked up shell game they play and it fucks everyone of their customers.
Hollywood movies bring in hundreds of millions of dollars and yet their creative accounting claims they lose money on almost every film. It's the same exact bullshit on a smaller microeconomic scale but within a larger macroeconomic shell to funnel profits from.
The largest solar-thermal plant yet built, Ivanpah, at 400 MW capacity, is on the same transmission lines as Hoover Dam. Both are near Las Vegas. It doesn't need thermal storage because the dam effectively does the job. When Ivanpah is running, Hoover can save the water for other times of day.
When you look at a grid as a whole, instead of individual plants, you find synergies like this you can apply. Detractors of renewable energy tend to ignore that most plants are grid-connected, and power demands vary by time of day and season. Thus Ivanpah is well matched to Las Vegas. Peak demand happens when it is sunny and everyone is running air conditioning. Sunny is exactly when that plant is pumping out electricity.
Solar, however, is a poor match for the Pacific Northwest, because it is cloudy much of the time. Instead, hydroelectric and nuclear are the main sources up there. Lots of rain and mountains make hydro easier to build. Detractors will point to Germany and say solar sucks. Well, Germany is far north, and not very sunny. Italy and Spain are better suited climatically. Just because it doesn't work that well in one country or region does not mean it cannot work in better locations. The opposite example is Chile, which is rapidly installing solar. The high Andean plateau is not only exceedingly dry, it is cold and high altitude, both of which improve performance of solar panels.
Varying the production more often and with more amplitude decreases the efficiency and increases the maintenance costs. Maybe that's a claim by the power industries but that seems to be a legit one.
Like, this stuff is not free and to just build solar and wind capacity (whose nominal megawatts/gigawatts are inflated and capacity factor overestimated) while not caring about the grid is myopic and stupid.
Wind is especially problematic as it can fall off a cliff from one hour to the next and this may happen country-wide.
Mind you I believe I'm a pretty hard line environmentalist next to most everyone. I "hate" all those renewables because Germany has shown up what actually happens when you apply the dogmatic, simplistic no-thinking thinking. Higher costs for everyone who pays and the CO2 emissions increasing.
I believe we need new industries that can consume the intermittent surplus energy.
E.g. a place that manages a fleet of light trucks (for companies to use and for people to rent for the day), that perhaps routinely does battery swaps, where a shit ton of battery charging happens when it's the cheapest but the power use is strongly coupled to consumption goals, updated every 5 minutes and they may quickly collapse or rise back as dictated by the utility provider or some kind of regulatory structure. I'll call that a "push smartgrid".
Chemical industry with a production that can easily be scaled up/down or rather "scaled out", as per the computer jargon. Well I hope such things can be done (with "reverse fuel cells", water treatment/dessalination, or who knows what) and obviously there would be a lot of engineering and investment needed.