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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
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?
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.