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The quiet rise of solar power — and the financial problem that could arise

ksen

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http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/30/wonkbook-the-latest-obamacare-surprises/

When it comes to rooftop solar, a battle is brewing worldwide against utilities and users. "It's still less than one percent of energy capacity worldwide, but the surge in installations of rooftop solar panels is beginning to hit utilities and their business model of charging customers on the basis of consumption. Joined by traditional energy companies, they are lobbying governments to reverse decades of subsidies to green, renewable energy such as solar and, in some cases, to tax them. In Europe, Australia and in the United States, energy companies have powerful lobbies that argue that they form a cornerstone of the economy and provide jobs to tens of thousands. Governments are forced to pay heed and in some cases they have acted." Tracy Rucinski and Byron Kaye in Reuters.

Study suggests these utilities could face dire straits without policy changes. "All these solar households are now buying less and less electricity, but the utilities still have to manage the costs of connecting them to the grid. Indeed, a new study from Lawrence Berkeley National Laboratory argues that, without policy changes, this trend could soon put utilities in dire financial straits. If rooftop solar were to grab 10 percent of the market over the next decade, utility earnings could decline as much as 41 percent. To avoid that fate, many utilities are now pushing for reforms that would at least slow the breakneck growth of rooftop solar — say, by scaling back those 'net metering' laws. And that's opened up a war with many fronts." Brad Plumer in Vox.

I didn't realize it was the State's job to prop up your out of date business models.

Nationalize all the electrical utilities and take the profit motive out of the model.
 
Nonsense. The utilities want free supplies. Humankind will find ways of using more and more energy.
 
The state regulates the utility industry. What it can charge, whom it must serve.

The problem with solar is that the largely fixed cost of constructing and maintaining grid is currently amortized across units of power sold. People who maintain a grid connection but don't consume power are exploiting the model. They are free riding.

The common-sensical non-ideological solution to this would be to have a fixed grid charge and a variable power charge that is more in line with the marginal cost of power. If someone want to completely disconnect from the grid they can avoid the grid charge.

I can't think of any valid reason why anyone of any ideology would find this objectionable.

I can't imagine why anyone would want to cling to outdated system that does not serve its purpose in the modern world.

Ignorance and bias, I suppose.
 
The state regulates the utility industry. What it can charge, whom it must serve.

The problem with solar is that the largely fixed cost of constructing and maintaining grid is currently amortized across units of power sold. People who maintain a grid connection but don't consume power are exploiting the model. They are free riding.

The common-sensical non-ideological solution to this would be to have a fixed grid charge and a variable power charge that is more in line with the marginal cost of power. If someone want to completely disconnect from the grid they can avoid the grid charge.

I can't think of any valid reason why anyone of any ideology would find this objectionable.

I can't imagine why anyone would want to cling to outdated system that does not serve its purpose in the modern world.

Ignorance and bias, I suppose.
So in other words a flat "grid tax".
 
So, the simple way to solve this problem is to charge a fee to hook up to the grid, and then buy and sell energy on the grid like any other commodity, rather than having the cost of connection and maintenance buried in the cost of energy.

Why are people so worked up about something that can be solved by accountants?
 
This isn't unheard of. The same thing has happened to water utilities. Use less water, means less income. The infrastructure does require a base amount of income to operate and maintain the system. Despite what some might think, they don't operate on a large margin.
The state regulates the utility industry. What it can charge, whom it must serve.

The problem with solar is that the largely fixed cost of constructing and maintaining grid is currently amortized across units of power sold. People who maintain a grid connection but don't consume power are exploiting the model. They are free riding.
Well, free riding as in they paid for the solar power cells.

The common-sensical non-ideological solution to this would be to have a fixed grid charge and a variable power charge that is more in line with the marginal cost of power. If someone want to completely disconnect from the grid they can avoid the grid charge.
Isn't there this charge for the gas utilities? You pay for the infrastructure (one fee) and you pay for the gas (another fee). Now that I think of it, I thought that was how my electric bill was chopped up too. IE, when you get these wonderful options to save oodles on the cost of electricity, it only applies to a very specific portion of the bill. Or is this all state by state?

I can't think of any valid reason why anyone of any ideology would find this objectionable.
It certainly isn't objectionable. That'd be like complaining about how people shouldn't bitch about raising a decades old tax to help with the upkeep of our transportation infrastructure.
 
Because the way the energy is produced matters - is carbon a bi-product?

And why do the huge subsidies of the fossil fuel industries get ignored?
 
The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries

http://www.huffingtonpost.com/bevis-longstreth/the-financial-case-for-di_b_4203910.html

Tom Steyer, a summa at Yale and graduate of Stanford Business School, founded Farallon, one of the larger, and one of the most successful, hedge funds in the country. Recently he joined Michael Bloomberg and Henry Paulson to form an NGO called Risky Business. Risky Business has undertaken a national risk assessment of climate change to reveal the financial risks that the United States faces from what it calls "unmitigated climate change." This study is scheduled for release in the summer of 2014. Its likely impact on the trading value of fossil fuel company equities will be harsh.

Here's an excerpt from the message Tom Steyer delivered to the Trustees of Middlebury College on January 22 of this year:

"I believe a fossil fuel free portfolio is a good investment strategy. While there's always a concern that any decision will impact returns, there is a strong argument that a portfolio free of fossil fuels is a smart investment. The available research, looking backward, shows that the return penalty would be tiny - but in any event good investors rarely look backward. Looking to the future, the data on climate change makes it clear that something has changed, and as the rest of the world realizes this, fossil fuel stocks will come under increasing pressure. At the moment, other investors have not fully realized the risk that carbon reserves will become a stranded asset; if you acknowledge what your own science departments are telling you, this gives you an edge relative to those investors. I can tell you that in my own investments, I have directed my financial team to divest my holdings of fossil fuel investments so that I will have a fossil fuel free portfolio myself - in part because I am convinced it will outperform the market."
 
And why do the huge subsidies of the fossil fuel industries get ignored?

tbf to our resident conservatives and libertarians I don't think they do ignore those. However they aren't nearly as vocal about them as they are, say, about getting rid of the social safety net.
 
The state regulates the utility industry. What it can charge, whom it must serve.

The problem with solar is that the largely fixed cost of constructing and maintaining grid is currently amortized across units of power sold. People who maintain a grid connection but don't consume power are exploiting the model. They are free riding.

The common-sensical non-ideological solution to this would be to have a fixed grid charge and a variable power charge that is more in line with the marginal cost of power. If someone want to completely disconnect from the grid they can avoid the grid charge.

I can't think of any valid reason why anyone of any ideology would find this objectionable.

I can't imagine why anyone would want to cling to outdated system that does not serve its purpose in the modern world.

Ignorance and bias, I suppose.

You are right. This is how large industrial users are charged. There is a demand charge based on typically the highest 15 minute long peak use of power in the month. You can think of it as the charge to cover the utility's capital investment in the distribution of electricity, the power lines, substations, etc. . The consumption charge is for the total amount of power used in the month. This is the charge for the power consumed that recovers the utilities costs of generating power, including usually, their investment in the generating power plant.

Home and business users were spared the demand charge because the metering required to do it was pretty expensive in the analog world. But that has changed with the digital revolution.
 
The state regulates the utility industry. What it can charge, whom it must serve.

The problem with solar is that the largely fixed cost of constructing and maintaining grid is currently amortized across units of power sold. People who maintain a grid connection but don't consume power are exploiting the model. They are free riding.

The common-sensical non-ideological solution to this would be to have a fixed grid charge and a variable power charge that is more in line with the marginal cost of power. If someone want to completely disconnect from the grid they can avoid the grid charge.

I can't think of any valid reason why anyone of any ideology would find this objectionable.

I can't imagine why anyone would want to cling to outdated system that does not serve its purpose in the modern world.

Ignorance and bias, I suppose.
So in other words a flat "grid tax".

In other words, pay for the service you are receiving.

Do you object to this principle or do you not understand that is what is being advocated?
 
This is the problem with solar and wind power, they are intermittant sources of power and require 100% back up when the sun doesn't shine and the wind doesn't blow. As there gets to be more of it the utilities will have to recover their investment in their generation stations in the demand charge.

I thought that this would be attached to my previous post.
 
Fixed grid access charge would be a good idea. And it's not like it's unprecedented as my electric company already charges a fixed service charge plus usage and it would be only a matter of adjusting this flat component rather than having an entirely new paradigm anyway.
What could be done additionally is to have a spread between buying and selling price of electricity instead of net metering. With net metering, the solar panel owner is using the grid as in effect a free battery, but the grid operator should be able to charge for that service.
 
And why do the huge subsidies of the fossil fuel industries get ignored?

tbf to our resident conservatives and libertarians I don't think they do ignore those. However they aren't nearly as vocal about them as they are, say, about getting rid of the social safety net.

Libertarians ignoring corporate welfare? Since when?
 
This is the problem with solar and wind power, they are intermittant sources of power and require 100% back up when the sun doesn't shine and the wind doesn't blow. As there gets to be more of it the utilities will have to recover their investment in their generation stations in the demand charge.
Solar is better than wind in that it better tracks with demand. I.e. there is much more demand during the day than at night and AC loads are higher on sunny days. But backup and storage are still going to be needed.
Large flow batteries operated by utilities (paid for by grid fee and spread on buying/selling power) or solar hydrogen generation (for example by using the new perovskite cells) are two possible solutions to the intermittency/storage problem.
 
tbf to our resident conservatives and libertarians I don't think they do ignore those. However they aren't nearly as vocal about them as they are, say, about getting rid of the social safety net.

Libertarians ignoring corporate welfare? Since when?

What does this issue have to do with "Corporate Welfare"?

It's about the challenges of fixing an outdated business model in a highly regulated environment.

Utilities have regulated profits. They will not suffer losses because of this in the long run. If they undercharge one customer they make it up on another.
 
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