Oklahoma House passes S.B. 1456 - Fee for Solar Owners

[omgwtfbyobbq]

I don't think so. In that case, there is no cross-subsidy because you (off-grid) are no longer receiving any benefit for which you are not paying.

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The rate-case to implement this will be an extremely interesting test case, if properly prosecuted. Some random thoughts, sitting with a pint in Heathrow:

1. There is no requirement that the charge be greater than zero. If solar advocates can make the case that there is a net benefit from additional solar installations in reducing costs to all customers, then the charge should be set to zero. Arguably, it could be set to a negative value to prevent cross-subsidies from PV households to non-PV households.

2. There's a "nanny state" problem created by the fact that residential customers don't see the real-time wholesale price. If PV households paid/received the spot price of power, then @lolachampcars points would be directly addressed (namely, that "peak power" during the day is worth more than the same kWh over night). This fact means that PV households are overpaying for power, on average.

3. On the other hand, a grid-connected PV household is getting more benefits from the grid connection than is directly measured by net usage. I've discussed this before: if I drive across a toll bridge and then return, my "net usage" is zero but I shouldn't be allowed to avoid paying the toll. The utility has real costs of maintaining the distribution and transmission system to support customers even if those customers' PV systems are producing nothing. And they've purchased and maintain a fleet of generation to provide power round-the-clock and to deliver necessary "ancillary services" to stabilize the grid in real time.

The question boils down to whether the benefits from #2 are greater than the costs of #3. This is an empirical question, very specific to the utility in question.

I agree with all of that, except for forcing a customer to pay for grid stabilization. If a local utility wants to go with a-la-carte charges, great. But if I want to opt out of paying some grid-stability charge and will let the utility cut me off if there are issues, then that should be an option.

In addition, utilities should also tally any benefits they've incurred due to PV installations and include that in their empirical analysis. The alternative is that the utility will just zero out, or pay very little, for excess PV generators if they offset more expensive generation in the aggregate, pocket the difference, and once they start incurring costs, will switch to charging PV users, which is ridiculous. They should include any benefits they've received from PV generation as a buffer that would need to be eroded prior to charging PV users.

 

[richkae]

I am really looking forward to the day when we can fight back against the big electric utility companies.

I am hopeful that soon it will be economically viable most places to have a grid independent home, powered by renewable sources with some non-renewable backup.

I wonder about neighborhood sized collectives, where 10-20 houses all have solar panels and share a small battery bank and a natural gas micro turbine as their own island mini-grid. The mini-grid size is just enough to allow purchasing an efficient gas ( a couple 100kW ) micro turbine for backup, plus to have a large PV array ( 10kW * 20 houses = 200kW ) for large short duration peak loads.
A network of smart devices schedule their power draws to optimize use. ( Run hard when excess solar is available, take turns and conserve when it is not )
2 EVs per household mean there are usually a few EVs in the neighborhood to soak up extra solar electrons. The EVs are set with minimum required charge levels - but top up to full when excess solar flows. Charging times are negotiated across the network to optimize the draw.
Why do all that? By not paying for all the transmission infrastructure outside your neighborhood, your power is a lot cheaper, and you know exactly how much of it comes from renewable sources.

 

[lolachampcar]

10 KWdc => 8 KWac => 42 KW-Hr average harvest. These are the numbers I am working with for 700 sq-ft of southern exposure roof devoted to PV in South Florida.
Contracted cost with a turn key provider is approximately $40K ($4/WHr dc) or $20K owner/builder. I'm doing owner builder. Reduce that by the Federal 30% tax credit and I am out of pocket $14K.
I anticipate just at seven year break even with zero cost of money (just about what I am getting today on my money or at least it feels that way )

I have scaled the above so I do not produce more than I use for a calendar year. I did this so that I would never be a provider to my local utility at 2.5 cents per KW-Hr which is what they buy excess power for.

They are getting peak power from me during the day for average power rates. In exchange, I use the grid as a battery for free (net metering) and have grid back up to my PV.

If that equation changes dramatically, I'll have a chance to scratch my Tesla Battery Itch by buying a wrecked MS and using its battery as my local storage. 85KW of ten year life is easily worth the $20K I would have to pay for it and my projected return moves from seven to ten years

Now if a tinker like me can already cost justify grid defection, imagine what a utility could do if they brought their engineering, regulatory, purchasing and project management skills to putting PV on roofs and installing local (neighborhood) off generation storage......

 

[wycolo]

> imagine what a utility could do if they brought their engineering, regulatory, purchasing and project management skills to putting PV on roofs and installing local (neighborhood) off generation storage...... [lccar]

But isn't that Solar City's job? The people 'who really care'?


> a natural gas micro turbine [richkae]

So these have replaced the n.g. ICE? Interesting; might sound like Roadster gear whine 24/7 ?!
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[lolachampcar]

Yes, that is SC's business model. Funny, an outside company is literally hitting the utilities over the head with a most attractive solution and all the utilities can think about (exaggeration for effect) is how these PV equipped homes are freeloading on their grid. Utilities have access to capital, long term capital management structures and the customers; ALL OF THEM. They can also use their smart meters to determine when and where local storage should be employed and, by knowing exact usage patterns, just how much storage is needed. If they miss by a bit, they can use their grid for back up and refine the estimate for the next neighborhood. There is absolutely no reason, apart from lethargic inefficiency, that any utility should not be able to clean Solar City's clock and, in doing so, make themselves relevant fifty years from now.

 

[Incredulocious]

An interesting article covering this issue:
"Throwing Shade" | Sierra Magazine

Here's some excerpts:

There's a problem with this cost-shift argument, says Tom Beach of CrossBorder Energy in Berkeley, California: The data don't support it. In fact, he says, "it's just the opposite."

Beach has studied the costs and benefits of rooftop solar in eight battleground states, usually at the behest of solar energy companies and nonprofits. Brandt's $20,000 calculation, he says, is based on the cost to the utility of net metering but ignores or undervalues solar's benefits. When utilities assess the value of their own new power plants, they calculate the full range of lifetime costs and benefits. They don't do so for homegrown solar, however, so Beach did it for them, reckoning the dollar value of what distributed home solar brings to the table: It reduces the need for expensive new power plants and transmission lines; less energy is lost in transmission because much of the power is used right where it's generated; it requires no fuel and so provides a hedge against future fossil fuel price increases; and it could allow utilities to meet state renewable energy and greenhouse gas emission goals without paying for utility-scale solar and wind farms.

When Beach applied that analysis in California, he found that rooftop solar costs and benefits were about equal: Monthly electric bills were lower for solar homeowners, but the financial benefits their panels provided to the grid made up the difference.

When he ran the same study in Arizona, he found the benefits side was far higher: For every dollar of solar cost to the utility (primarily from net metering), the state's solar homeowners provided $1.54 in long-term benefits. According to Beach's analysis, Arizona's solar roofs subsidize other ratepayers and the utility to the tune of $34 million a year. So if anyone is free-riding, it's the utility and non-solar ratepayers.

Also on the block in California is the nascent market for home solar systems that incorporate battery storage. SolarCity is partnering with electric car company Tesla on one such system (the CEOs of the two companies, Rive and Elon Musk, are cousins). The idea is to store solar energy in battery packs for use at night, with a connection to the grid solely for backup. The state's three largest utilities--Southern California Edison, Pacific Gas and Electric, and San Diego Gas and Electric--have all refused to connect any such systems to the grid, citing reliability concerns. Even more than net metering, battery storage threatens the utility business model; it could, for example, allow homeowners to form small, superefficient neighborhood microgrids that huge, costly utilities could never outcompete. More than 300 California households are awaiting the commission's decision so they can flip the switch on the solar-battery systems waiting in their garages.

 

[ItsNotAboutTheMoney]

An interesting article covering this issue:
"Throwing Shade" | Sierra Magazine

Here's some excerpts:

I'd expect that the primary "cost" of home PV is not net metering, it's loss of distribution fees. Net metering acts as incentive that tips the homeowners over to solar PV, but utilities "lose" not only net metered income but all of the distribution income from home-generated consumption. It's easy to say "their problem", but billing distribution by kWh is the same mental system as paying for roads with fuel taxes. From the other side Robert points out that flat pricing of electricity, and hidden subsidies for low income users further distort the market and prevent accurate, open pricing. It looks like we're going to end up with the same stupid fixed fee that states are using with plug-ins.

 

[rjcbox]

The struggle will be with systems then designed to carry the homeowner OFF GRID. Think Solar City and Tesla batteries. The technology is there, and the economics are almost there. If the fees are too high that will be the result. Will they then tax you to go off grid?

my thoughts exactly

 

[Skotty]

A flat fee would be a stupid thing to do. One thing not mentioned yet is that it would unfairly penalize customers with smaller PV systems that rarely if ever feed electricity back to the grid. Usually when you have problems like this, it is an indication that the wrong thing is having fees or taxes applied to it.

 

[FlasherZ]

I am an owner of my electric utility (a co-op), so I'm both an interested customer and an interested owner of the utility.

I understand what's at play -- for years and years, our "facilities charge" has not reflected the true infrastructure cost of grid connection. About 5 years ago, we paid about $15/month for a meter connection and the rest was made up in the cost of electricity; calculations reveal that the true fixed costs are somewhere around $50-60/month. Distributed generation does result in subsidization, because if I pay less usage as a result of my generation, other customers who do not have generation are going to shoulder that. Over the past few years, the co-op has been adjusting its service charges so that the "facilities charge" properly reflects fixed cost, and the "energy charge" reflects the variable/usage costs. Facilities charge has been going up and the variable energy rates have been going down (when considered in contrast to wholesale energy costs). It is doing this carefully, because it has a side-effect that customers must deal with -- there are many customers who have multiple meters, or some with very little usage, and it has doubled their bill on a monthly basis. By the time this adjustment is made, it will have quadrupled the bill for the smallest consumers. It will redistribute costs somewhat between customers, but it will reflect the reality of the business when they are complete.

This is NOT a penalty for solar generation -- our co-op wants as much distributed generation as we can get, but considered fairly among all customers... we just need to ensure that fixed costs are fairly distributed across all who connect to the grid, and variable costs are distributed based on consumption by owners.

 

[lolachampcar]

Flasher,
I am certain you are correct but it misses the very nature of what is happening and neglects the need for any (non-protected) business to understand what the market is and will do to them be it fair or not.

Moving the balance from generation costs to infrastructure costs to achieve an accurate representation to your customers will slow the PV only rate but dramatically accelerate the PV plus local storage defection rate. If I were a utility interested in my relevance fifty years from now, I would not want that.

The grid has great value. Utilities have tremendous capabilities to build, operate and manage electrical infrastructure. From a competitive standpoint, they have THE SINGLE most important element and that is access to ALL the potential customers. If I am sitting at the top of a utility I'm not going to care for one minute how my billing reflects my true costs. I am going to care about how technology is obsoleting my old model and how I can evolve that model to best make use of the technology to provide my customers with a better, cheaper, cleaner product that ALSO maintains my monopoly. Every single defection is a customer I have to win back and the simple fact that I allowed a situation that promoted defection lessons the chances that I have or can develop the skills to WIN that customer back. In fifty years I want to be in the 24 hour cycle management (local storage plus grid) AND generation business which means I HAVE to own the point production capabilities. I can own those capabilities if I pay for them and maintain them without cost or hassle for my customers. I have those customers used to everything for nothing without any sense of responsibility. Why on earth would I educate them out of that "condition" only to have them realize that there is a better solution than the one I am providing?

A failure to evolve yourself to remain relevent is simply pissing away an inherited monopoly.

Trust fund babies do it all the time People (and companies like Solar City) that have had to kill what they eat tend to value their fortune differently.

 

[FlasherZ]

Perhaps my case is partially unique in that the co-op is not investor-owned and instead customer-owned. Our leadership does give a thought to a few decades down the road, but not from an investment engine perspective. If the best model in the future is to have 100% local generation and storage, then I think the co-op will be happy shedding a good chunk of its infrastructure and migrating to more of a services company, perhaps more of a clearinghouse for settlement between customers who primarily supply and store their own but must share on the neighborhood level for resiliency. That will arrive when it's needed, though - the goal isn't profit but rather to provide services required by our member-owners. I don't see that happening in any near-term time periods, and the picture is far from clear as to the "right" model. Solar efficiency everywhere but the deep South is still an issue - without incentives, I can't even make a grid-tie system give a payback during the panels' lifetime here much less the added cost of battery maintenance. We don't have the California climate and regulatory environment (read: large-scale generation opposition and tax hell) that makes it work there. Storage still remains a big issue, and solar PV installations are running *from* storage instead of to storage because net metering allows for it. We can argue the "cheap coal" / "cheap nuclear", "true cost not reflected" points all day long, but until dynamics begin to shift it won't propel the owners here to change things. A big part of this is the non-refund nature of net metering when you generate more than you consume -- want to get paid for your generation? You have to become a supplier rather than a member-owner.

Perhaps the restructuring of fixed costs vs. variable costs will drive some owners toward solar PV storage installations for those small applications (the minimally-powered lean-to in the middle of a farm field, or the oil pumps you see here). My neighbors, for example, have had two meters for their home - one on their shed, one on their home - and are now starting a project to consolidate them because of the restructured infrastructure costs. Before we need a major shift, storage technologies must radically change, as solar PV + storage implementations are still a giant PITA compared to simple grid-tie. I know more people who have tried PV+storage options and converted back to traditional grid-connection because of the high cost and lack of reliability of PV+storage installs.

So is there a risk that the model might allow more customers to go completely "off-grid" now, then return to a future model that would use a "neighborhood clearinghouse" for resiliency? Perhaps, but the natural monopoly will still hold considerable assets and advantage -- easements and rights-of-way -- that new companies won't have the benefits of (or will have to negotiate on a neighborhood by neighborhood basis). It's my belief that in 90%+ of the US, you will still need a connection to the grid, and that won't change - whether because you have no roof space, you don't have enough sun, or you have greater resiliency requirements.

Maybe I'm missing something, though - if so, help me understand what I'm missing.

 

[lolachampcar]

Flasher,
I made an assumption that, when you commented about PV from a co-op owner's perspective, that PV was relevant to your co-op.

PV grid defection is only a concern in places where PV makes sense (sorry for stating the obvious). If you are a utility where there is no return on PV then your customers will not be investing in it and your reason for existing will not evaporate because of it.

Now if we consider places where PV is viable, then I believe utilities are simply fighting the wrong fight. Co-op or not, you currently must generate to be a utility and moving that generation from single point to distributed should be undertaken in the most efficient way possible. I believe that to be a well run utility for all the reasons above. At some point, local storage will also make sense and the utility should do this as well.

 

[FlasherZ]

Just for clarification - with incentives, I can get payback to about 15 years where I am, so 40% of the panel's life is spent above the ROI line (without considering opportunity annuity cost of the dollars invested). So it makes sense in my case, but it's not a slam dunk either.

 

[wycolo]

> There is absolutely no reason, apart from lethargic inefficiency, that any utility should not be able to clean Solar City's clock and, in doing so, make themselves relevant fifty years from now. [LCCar]

There is absolutely no reason, apart from lethargic inefficiency, that any [franchised auto dealership] should not be able to clean [Tesla's] clock and, in doing so, make themselves relevant fifty years from now.

Point being Utilities just don't care, don't understand, expect always to obtain relief legislatively, can only react to tech initiatives made by others, etc. If Solar City comes up with an integrated 'Tesla owner's PV solution' that allows going OFF GRID, then you will see us going off grid with vigor and increasing numbers. Not because it makes macro sense in societal terms necessarily, but just because it would be neat to be self sustaining. A bold move that says it all. Let the grid deal with its own problems and its own future, we just don't have time for all that.
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[lolachampcar]

True, but I did see a lot of them react to deregulation in the 90s by bringing in top management and consulting firms in an attempt to partially reinvent themselves. If they have institutional memory and can recognize the threat, they should be capable of doing the same this time around.

However, after dealing with most of the major utilities during the 90s, I am not holding my breath.