Gambling State Says the Solar Gamble Is Over

New submitter mdnuclear writes: In a strange echo of the depressed oil economy SolarCity recently announced a layoff of a quarter of its workforce as the apparent result of the Nevada PUC's decision to phase solar net-metering customers down from retail to wholesale per kWh. A scathing editorial in the WSJ last December took both solar leasing companies and their financial underwriters to task, calling net metering a "regressive political income redistribution in support of a putatively progressive cause."

Wednesday the PUC fronted a possible compromise, 'grandfathering' existing net metering customers to their current rates to create a third caste of energy consumers, those who had been in the right place at the right time — for awhile. One who had paid $22k into solar lamented, "I'm not happy; my wife isn't happy, we could have done something else with that money." Like many who leave Vegas, perhaps they should have. But this begs the real question... are net-metering schemes ultimately 'right' or 'wrong' for the grid?

Comments

Re:Why retail?

[Anonymous Coward]

The argument was that you were supplying the electricity right at the point of consumption (it just flows to your neighbor), hence you aren't incurring all of the transmission costs of typical retail power. You're also likely reducing power company expense -- our local substation can't handle our neighborhood's power draw, and we used to complain about flickering lights...until 3 people on the block got solar, and no no lights flicker and the pwoer company didn't have to upgrade the substation.

I knew something was up

[rsilvergun]

here in Arizona when I started seeing these ads on youtube with a bunch of old people talking about something scary, ending with a passionate plea to vote for such and such law, which turned out to be a law that let the power companies stop paying for the electricity folks with solar panels put back into the grid.

The whole "net metering" debate is just the power companies fighting solar. As time goes on it'll make electricity _too_ cheap. The reason we have public utilities is that businesses are in the business of making money; so for anything more important than a twinkie you're going to get price gouged sooner or later...

Re:I knew something was up

[rgbatduke]

No worries. With the Great Global Warming Conspiracy in place, power companies have already been raising rates and gouging people for years and anticipated being able to do so for decades. Solar simply bites into that with net metering.

But it is nothing like the bite that is going to happen if any of the three or four companies or major projects that claim to be on the verge of fusion energy turn out to be correct within the allotted timeframe. Or, better yet, if two or three companies solve it slightly differently at once, so there isn't even a window of real patent-monopoly free from competition.

Of course that is also going to more or less kill solar in its tracks unless/until they can get prices down to order of $0.10/watt/decade of operation. That will break even with fusion, maybe, possibly -- the difference between free but unreliable "fuel" in the case of solar vs almost free and reliable fuel in the case of fusion, with both of them costing order of $100 million/GW for the generation facility, a quantity that is recoverable at current retail rates in a matter of days of operating at capacity (power companies charge order of a billion dollars for ten hours of the electricity produced by a gigawatt plant).

If Lockheed-Martin's semi-sized megawatt plant works, we might even see the real demise of the electrical grid and giant regulated monopolies, over time. Communities could buy off-the-shelf generation in a modular way and plug it into a municipal grid and pay for it on a co-op basis.

In the meantime, all measures taken to combat carbon dioxide raise the cost of electricity. All things that raise the cost of electricity increase the profits of the government regulated monopolies that sell it, that are usually permitted only a more or less fixed marginal profit. They'll make electricity using squirrels in cages if that's what the public mandates, as long as they get a fixed MARGINAL profit on the final retail price.

rgb

Time-of-day metering

[crow]

Sure, drop the rate back to wholesale for the buy-back of net metering, but then price it based on the spot market at that time, not the overall rate. The prices are highest during the day, so net metering for solar would likely pay more than the retail rate if the utilities had to pay for it based on the time.

Overall, utilities are saving money from solar--they're reducing what they have to pay to support peak demand, and now they're coming back and trying to suck more money out of their customers.

This is a money grab by the utilities, plain and simple. This has nothing to do with fairness.

Plan B

[overshoot]

If utilities don't do retail metering, consumers can get similar results by pooling their loads. Solar cogeneration is short-term steady while most domestic loads are intermittent, which means that over an hour a consumer might be a net provider to the grid but get charged amost as much as without cogeneration.

On the other hand, a buyers' co-op smooths out the load variations and approaches the effects of net retail metering. Which is appropriate, because (unlike wholesale rates) cogeneration does not put extra load on the grid.

If utilities don't adapt to these realities in a more realistic way than offering wholesale (i.e. solar plant) rates to cogeneration providers, they're likely to see a lot of pressure for cities and especially smaller towns taking over last-mile electrical distribution to get the same effect.

This last is not completely hypothetical; at least one Sunbelt town (mine) is moving in that direction.

Re: Government should not pick winners and losers.

[jhoger]

Government should pick winners and losers when the market produces sub optimal outcomes.

Unless you replace reason with religion. In that case it could be like you said.

Re:Something is always up.

[thinkwaitfast]

piles upon piles of legalese to build up

When I installed my solar, I looked at what sort of incentives that I could get. It would have paid a good chunk of it but after seeing all of the 'legalese ' and who owned what, I decided to go it alone.

Now a few years later, my system is 100% paid off (ie, already paid for itself), all mine, making free electricity and don't have to bother with any companies. And since I built up a good base system, I can add quite a few more panels without any additional cost. In the years since I set up my system, the price of solar panels have fallen to a less than one year payback time

Re: Government should not pick winners and losers.

[Anonymous Coward]

Government should pick winners and losers when the market produces sub optimal outcomes.

Unless you replace reason with religion. In that case it could be like you said.

To elaborate, in an ideal world the government would tax appropriately so that externalities were accounted for. You run a polluting coal plant, well we are going to charge you what we think the medical bills will be and then use that money to offset those costs. Factor in the lost work and income over a shortened lifespan, and their bill would be non trivial. In the case of Shina, well in the process of producing stuff you are poisoning the world and treating people like crap, well we have to account for that as well.

So, you can say, "Government should not pick winners and losers, provided you first level the playing field to account for externalities forced on the population.''

It doesn't have that soundbyte feel, but it is accurate..

Re:Government should not pick winners and losers.

[Ol Olsoc]

Well your 'little more' is x4.23 as much. Instead of selling at the market price for supplying power at 2.6, they were selling it at the customer purchasing price of 11. Now they are being dropped back down to normal supply pricing. It was inevitable. Those kinds of premiums are only temporary to jump start an industry. Once they get large enough, the premium is removed and they then have to compete with everybody else in the market. After all, a market that makes nothing can't afford maintenance and other costs and collapses.

You mean like nuclear power? http://www.ucsusa.org/sites/de...

Or petroleum? Or NatGas? Or Hydroelectric?

From another article:

http://www.misi-net.com/publications/NEI-1011.pdf

On energy incentives, and an tl;dr version from Wikipedia:

A 2011 study by the consulting firm Management Information Services, Inc. (MISI) estimated the total historical federal subsidies for various energy sources over the years 1950–2010. The study found that oil, natural gas, and coal received $369 billion, $121 billion, and $104 billion (2010 dollars), respectively, or 70% of total energy subsidies over that period.

The percentage is higher for renewables, which given the much smaller percentage of use, and of course the fact that renewables wasn't even on the map during that time. cite https://en.wikipedia.org/wiki/...

Corn based Ethanol production and the Alcohol credit for the FET is subsidized to the tune of almost 17 billion a year, renewable is 5 billion.

My point is that it's all subsidized. That the government subsidizes new power production isn't anathema to me in principle, but it would seem that the well established technologies shouldn't be getting subsidies. If you need to be subsidizing oil, natural gas, or coal for 60 plus years, they should be abandoned, right?. Or perhaps something else at play? Regardless, calling this "regressive political income redistribution in support of a putatively progressive cause." while apparently finding all of th others is hypocricy at t's finest.