Commercial energy producers are complaining about a recent change in New Hampshire’s net metering law that limits their ability to take advantage of a program meant for home owners. Net metering gives homeowners the ability to sell extra electricity produced by rooftop solar panels back to the grid at high rates. The policy shifts the cost of grid maintenance to non-solar users and allowing commercial producers to sell electricity at these high rates instead of wholesale rates paid to other commercial producers is unfair to ratepayers and net-metering users.
Net metering is a lose-lose situation for taxpayers
To The Daily Sun,
In response to the August 22 Letter from Tony Guinta and the August 23 article by Thomas Caldwell on Net Metering: Governor’s veto, as a 5 MW power plant (Solar, Hydro or BioMass) is not a residential installation, but a commercial energy producer, and as such should be paid the same rates as any other commercial energy producers.
The 1 MW limit was established to allow home owners and small business owners to offset the high cost of Electricity in this state, not to make a for-profit electricity generator company cash at the expense of the rest of the rate payers. Land required per MW is approx 5 acres (setbacks excluded). So a 5 MW system would require 25-30 acres of land.
The Bill Sponsors — Bob Giuda and Kevin Avard — advocate for the override of the Veto. If the bill sponsors wanted to use the bill for the benefit of the Biomass Industry they should not have tied it to the Net Metering bill … these are two separate issues.
The Net Metering restrictions in place keep large commercial solar and wind farms (by out-of-state firms) from disrupting the landscape. There will be no benefit to the tax payers of NH if the large commercial solar firm come to NH to install systems under subsidies, it make them more money, but does not increase the commercial taxes collected, which is a lose-lose situation for taxpayers. Instead of large power lines, which were successfully fought, along the Northern Pass, you would have eye sore large Solar farms and Wind Turbines all over the state. Most recently, there was a proposal for a 25 MW, 80,000 panel solar system in Sanbornton on private land in a rural-residential area by a Colorado firm, that would have been put on old farm fields and woodlands. The proposal would have clear-cut 50 acres of forest in the forest conservation district of the town. These are the types of projects that will flood into NH by out-of-state firms that want to reap the benefit of the subsidies without any benefit to the taxpayers. That same Sanbornton project would have been on land owned by Mr. Guinta and his family. Thus, he has a slight conflict of interest beyond his push for the “veto override” for just the City of Franklin’s growth. We all support the use of Solar and Wind projects. These commercial entities should be encouraged to come to NH, but not subsidized by the taxpayers. Let the commercial firms, large and small, in-state and out-of-state, pay their fare share to the tax base. Save the subsidies for the local homeowners that put solar panels on the rooftops, like the subsidies were meant for. Keep the VETO in place!
As more homeowners install rooftop-solar, new issues are arising. Too much solar is putting a strain on the local electric grids. Rooftop solar panels push unused power onto the grid during the day when no one is home and power consumption is lowest, the grid is forced to waste this energy whenever consumption falls below the base load supplied by local power plants. This is a waste of energy and utility payers’ money.
Net Metering policy is attractive in theory, but terrible in practice. Under many states’ net metering policies, rooftop solar costumers get to displace power from the utility company, and if the homeowner has more power than needed, the utility company is required to purchase the excess power at a retail price. By being forced to buy this energy at the high retail price, utilities must shift the cost of grid maintenance and other costs to non-solar customers. Forcing utilities o buy overpriced rooftop electricity results in higher costs on non-solar grid users and taxpayers.
The Solar industry has pushed net metering on utilities at absurdly electric rates. It is a policy that is touted to help Americans have a lower electrical cost by going solar, but raises the rates on non-solar users.
The Incredible Scam of Rooftop Solar
A modest proposal:
We’ve all heard about “shop local” and “get your food from local farmers, not distant corporate farms.” Lots of people have apple trees in their backyards. Often they can’t begin to eat or give away all the apples. In the meantime, big supermarkets sell corporate apples for one dollar a pound and up. I propose that people with backyard apples be able to take them to the supermarket and sell them to the supermarket for the same price at which the supermarket is selling apples. Furthermore, they should be able to take them at any time and receive payment. If the store gets too many local apples, it can reduce its purchase of corporate apples.
My apple proposal may seem ill advised, but that is exactly how rooftop solar power works. The homeowner gets to displace power from the power company, and if the homeowner has more power than he needs, the power company is obligated to purchase it, often for the same retail price at which it sells electricity. That policy is called net metering. In order to accommodate the homeowner’s electric power, the utility has to throttle down some other power plant that produces power at a lower wholesale price.
The exact arrangements for accepting rooftop solar vary by jurisdiction. In some places, net metering is restricted in one way or another.
A large-scale natural gas-generating plant can supply electricity for around 6 cents per kilowatt-hour. Rooftop solar electricity costs, without subsidies, around 30 cents per kilowatt-hour, or five times as much. Average retail rates for electricity in most places are between 8 cents and 16 cents per kilowatt-hour. Yet, paradoxically, the homeowner can often reduce this electric bill by installing rooftop solar.
It is actually worse than forcing the power company to take 30-cent electricity that it could get from a natural gas plant for 6 cents. When the company throttles down a natural gas plant to make room for rooftop electricity, it is not saving six cents, because it already has paid for the gas plant. All it saves is the marginal fuel that is saved when the plant is throttled down to make room for the rooftop electricity. The saving in fuel is about 2 cents per kilowatt-hour. So 30-cent electricity displaces grid electricity and saves two cents.
But where does the other 28 cents come from? Who pays for that? Part is paid for by the federal 30% subsidy for solar energy construction cost. That takes care of about nine cents per kilowatt-hour. That leaves the homeowner with electricity costing him 21 cents per kilowatt-hour. The cost comes from his monthly payments on the loan to build the solar system divided by the number of kilowatt-hours generated that month. If he pays cash for the solar system, then the monthly cost is his lost investment return on the cash he paid. If he lives in a jurisdiction where electricity costs 11 cents, then he is losing 10 cents for each kilowatt-hour generated (21 cents minus 11 cents). But if he lives in California, where larger home users of electricity pay 53 cents per kilowatt-hour if they consume beyond a baseline limit, he saves 32 cents for each kilowatt-hour of solar electricity generated. In that case, the power company is losing kilowatt-hours it could have sold for 53 cents. Other customers have to pay more to make up the lost revenue.
From the standpoint of society, rooftop solar substitutes 30-cent electricity in order to save two cents. If the homeowner is at least breaking even, as he usually is, he hasn’t lost anything due to the substitution. The money to pay for the 30-cent electricity comes from the taxpayer-provided subsidy and revenue that is no longer paid to the power company. The taxpayers and power company pay for 30-cent electricity that could have been obtained for two cents by burning a little more natural gas. If the homeowner makes a profit on the solar power, then the burden on everyone else is even greater. Since the power company is guaranteed a rate of return, or at least has to break even, rates have to be raised enough to pay for the overpriced rooftop electricity. The burden falls on society to pay for the scheme. The purveyors of rooftop solar, crackpot environmentalists and rooftop solar-owners, are happy. Everyone else is screwed.
Here is an example of rooftop solar that costs 30 cents a kilowatt-hour. A 5-kilowatt rooftop system costs about $21,000 installed. It will generate 7,000 kilowatt-hours per year. If it is financed over 20 years at 8% interest, the annual payment will be $2,139. The cost per kilowatt-hour is $2,139/7,000 = $0.306, or 30.6 cents per kilowatt-hour. Of course, costs and interest rates vary, as does sunshine. If you think 8% is too high for the interest rate, ask yourself if you would loan your neighbor $21,000 for 20 years for less. Rooftop solar is expensive compared to utility-scale solar, because it is a small custom installation. The orientation and slope of the house roof may be less than ideal. Large-scale utility solar, in contrast, can be as cheap as seven cents per kilowatt-hour.
An increasing problem, already present in California, is too much solar. The electric grid has a combination of base load power and additional peaking loads. The base load runs 24 hours a day and is not easy to throttle down. Solar power peaks around midday. If there is so much solar as to threaten the base generation, solar has to be curtailed. In California, this happens in the spring, when sunshine is plentiful but the air-conditioning load is not yet large. When solar dies, in the hour before sunset, peak power consumption is often being reached. In that case, solar aggravates the rate at which the rest of the grid has to increase power output to handle the early evening peak. If the homeowner is at least breaking even, he is probably generating surplus electricity during the middle of the day, adding more solar during the critical midday period and increasing the size of the sudden surge in power demand when the sun fades.
Utility-scale solar costing seven cents is a big waste of money. Rooftop solar costing 30 cents is insane. Special interests – the solar industry and environmentalist crackpots – have convinced legislatures and public utility commissions to stack the deck with net metering and absurdly high tiered electric rates. The result is to make it profitable for homeowners to invest in what otherwise would be very expensive electricity. Society as a whole pays for the economic waste, amounting typically to 28 cents per kilowatt-hour of rooftop electricity.
It is foolish to justify rooftop solar on the grounds of reducing CO2 emissions, because if you work the numbers, it costs about $800 to avoid emitting a metric ton of CO2 using rooftop solar. You can buy a carbon offset that does the same thing for $10. Reducing CO2 emissions is dubious in any case. Global warming-climate change ideology is struggling because warming is not remotely meeting expectations. Believers are starting to lose their faith in global warming. It is dawning on them that global warming is another scary disaster in a long parade of scary disasters that never materialize but make money for interested parties. Fewer people want to waste billions on a quixotic quest for renewable power.
The most prominent remaining global warming believers are now advocating nuclear power as the best means of reducing CO2 emissions. CO2 is plant food that makes plants grow better with less water. It greens deserts and increases agricultural productivity. Bring it on.
Many solar installers are using outlandish claims to help sell solar panels, some so outlandish San Isabel Electric is calling them fraudulent. Claims of massive savings, to the point of eliminating consumer’s electric bill, have officials concerned about how the fraud will affect customers. San Isabel is telling customers the best way to find out how solar panels will affect their monthly bill is to talk to the utility directly and take the claims on salesmen with a grain of salt.
San Isabel warns of fraud
A solar energy company based out of Provo, Utah, is being accused by San Isabel Electric of making fraudulent claims, using the electric co-op’s name and trusted reputation as a sales tactic in the Pueblo West area.
Several San Isabel Electric members have reported experiences of Ion Solar sales representatives going door to door making claims that Ion Solar is working with San Isabel Electric on solar projects, working for SIEA or is affiliated with SIEA — all as part of their sales pitch.
“They are telling our customers false information about our business practices like what would happen to their rates if they went solar and also they are saying that customers will no longer get a bill from San Isabel Electric,” said Paris Elliot, spokeswoman for the utility.
Elliott said San Isabel Electric fully embraces solar power, the positive business opportunities solar power growth is providing to the Southern Colorado community, as well as the potential energy bill savings for some consumers.
“However, San Isabel Electric is not in any way affiliated with any solar contractor, or any other contractor of any other trade,” she said.
“This is starting to damage our reputation because our members are getting false information about solar.”
Elliott said the utility has its own solar energy facility.
“This is the second time in a year that Ion has been making these claims door-to-door. They said they were going to stop last year in August and they apologized,” Elliott said.
“They actually went to a San Isabel executive’s door as well as a board member.”
Elliott said the first instance occurred during July 2017. Ion Solar has made apologies by email and have promised to correct the problem in both instances.
“San Isabel Electric Association takes great pride in our ability to provide Southern Colorado with superior customer service, reliable power, local control and steady rates and we’ve done so for 80 years. The misrepresentation of Ion Solar’s relationship with San Isabel is confusing our Members, thus damaging our credibility and honorable reputation.” General Manager and Chief Executive Officer Reg Rudolph said.
San Isabel Electric is asking members who have been contacted by Ion Solar, or any other company misrepresenting San Isabel Electric, to email the name of the company, the phone number/means of contact and an explain of how they misrepresented San Isabel Electric to firstname.lastname@example.org.
Members who are considering adding solar panels to their home or business are encouraged to contact San Isabel Electric’s Energy Services Department to discuss how it will affect your rate and system interconnection (net-metering).
Read at: https://www.chieftain.com/news/pueblo/san-isabel-warns-of-fraud/article_7185ec89-f149-5aac-8468-cba4596076be.html
Without proper consumer safety measures in place, it is far too easy for bad actors to prey on unsuspecting solar customers. Fraudsters are using state and federal programs to collect incentive money aimed at increasing solar usage without actually installing any solar panels. State’s must ensure any programs using cash incentives have adequate consumer protections to stop fraudulent collection of incentives.
Solar installer charged with fleecing state, customers
The owner of a Shelton solar power installation company has been charged with stealing more than $62,000 in state energy incentives and fleecing nearly two dozen customers in Fairfield and New Haven counties.
Christopher Stapleton, 56, of Fairview Oregon, was charged Friday with two counts of first-degree larceny and one count of first-degree larceny by defrauding a public community.
He was released after posting $100,000 bond.
State police said they received a complaint from the Connecticut Green Bank, a state agency created to accelerate investment in clean energy projects in the state regarding CatchinRays 2 LLC, of Kneen Street Extension in Shelton.
The Green Bank manages the state’s Residential Solar Investment Incentive Program which provides cost incentives to home owners and businesses who have solar power systems installed. The incentives are paid directly to the installers.
State police said in 2014 and 2015, CathinRays 2 received incentive payments from the Green Bank on behalf of 23 customers for a total of $62,0000.
However, a subsequent investigation determined that the customers, who had paid CathinRays 2 between $500 and $25,000, never had the systems installed, police said.
State police said the customers unsuccessfully attempted to receive refunds from CathinRays 2 and were owed a total of $125,000.
When state police later contacted Stapleton by telephone they said he told them he had been dealing with “alcohol abuse issues,” and had been unable to run a successful business. But they said he denied taking any money he wasn’t entitled to.
Read at: https://www.ctpost.com/local/article/Solar-installer-charged-with-fleecing-state-12926254.php
Family Businesses for Affordable Energy believes that New Hampshire ratepayers should not subsidize unsustainable and inefficient energy producers of any type and encourage the New Hampshire Senate to reject SB 446 in its current form. SB 446 would significantly expand the state’s net metering program by increasing amount of excess power solar producers can sell back to the utility company from 1 megawatt to 5 megawatts. In addition to exponentially expanding the net metering subsidy, the bill also propped up New Hampshire’s six remaining biomass plants with ratepayer money. SB 446 was on the brink of passage before legislators raised concerns regarding the tax consequences of the legislation. The subsidies for biomass were defended on the basis that those facilities are unable to compete against plants that run on natural gas and other lower-cost fuels. Ratepayers across the state would see a yearly increase of $20 million a year to prop up the plants. The House Science, Technology, and Energy Committee unanimously agreed to an amendment that eliminated biomass generators from the bill with the promise of subsidizing them via two other energy bills being considered. Representative Michael Harrington sponsored an amendment to reduce the rate for projects over 1 megawatt, which ultimately failed. The amended bill will now be sent back to the Senate. FBC opposes this bill because it perpetuates government support of favored electricity producers, forcing the rest of the market to subsidize expensive and inefficient technologies.
Both the Connecticut House and Senate have voted to pass S.B. 9, a bill that would roll back the state’s net energy metering program, much to the relief of ratepayers across the state who have been saddled with increasing energy costs to support Connecticut’s government-favored solar industry. While the legislation expanded the state’s Renewable Portfolio Standard to a 40 percent mandate by 2030, it also included provisions that significantly reduced the negative impacts of net metering by eliminating the system and supplanting it with what is known as a “buy-all-sell-all” incentive that would require a solar owner to sell his or her power to the grid at a new rate to be determined by the Public Utilities Regulatory Authority for a 20-year period. The user would have to buy back all the power they use at a retail rate. The buy-all-sell-all design separates consumption from production, which helps address the cost shift associated with net metering.
As FBAE has argued before, net metering unfairly shifts the costs of maintaining the grid and transmitting electricity onto non-solar customers, many of whom are family businesses. As solar panels proliferate, the fixed costs of the power grid must be shared over a smaller number of users. Utilities are now paying premium retail rates for the ever-expanding net-metered solar being generated in Connecticut, and they are not seeing the reduction in capacity, transmission and regional grid costs. As a result, non-solar ratepayers have been feeling upward rate pressure. Last year, Connecticut’s standard generation service rates increased twelve percent. Eversource and UI’s generation rate for residential customers increased by nearly twenty percent. These increases translate to sizable added monthly costs for businesses across the state. Net metering aggravates the problem by saddling ratepayers with ever-increasing prices. For small businesses with tight margins, every dollar counts. Rate increases exacerbated by cost-shifting add another obstacle for “mom and pop” family businesses trying to survive in the state that the Tax Foundation ranks 44th in the country for their business tax climate. FBAE applauds the Connecticut House and Senate for working to make the user/producer system more fair and friendly to family businesses across the Constitution State.
A recent study in Montana is showing how little benefit customers receive from solar users selling their excess power back to the grid. A typical solar user provides $.04 of benefit, but is reimbursed at a rate of $.12 per kilowatt from other customers. Montana has the opportunity to bring down the rate of reimbursement to match the benefit to other customers later this year.
Montana’s largest utility overpays for rooftop solar energy, study suggests
By Tom Lutley
Homes and businesses with rooftop solar provide a small benefit to NorthWestern Energy through net metering, the company reported this week, although maybe not enough to warrant current compensation.
In a 40-page cost-benefit analysis of solar net metering, Montana’s largest utility company concluded that the energy rooftop solar delivered back onto the grid had a net value of about 4 cents per kilowatt hour. That’s about a third of what net-metering customers are currently compensated, which is retail value.
The 2017 Montana Legislature ordered the study to determine whether the costs of accommodating net-meterers were being unfairly distributed to other customers. A possible result of the study was that people delivering rooftop solar back onto the grid would have to pay more for the ability to do so, most likely by receiving less credit for the surplus power sold back to NorthWestern.
After the report, which was done by third-party analysts, NorthWestern remained skeptical about the cost benefits.
“The central theme is maybe the value of the electricity that is produced and whether the consumer generator is getting paid a real high price for it,” said Butch Larcombe, of NorthWestern Energy.
The terms net meterers receive from NorthWestern are likely to come up this fall as the Public Service Commission begins a comprehensive review of NorthWestern’s rates, the first review of its kind in several years.
There are 2,100 NorthWestern customers with their own sources of renewable energy, Larcombe said. Most of those customers have rooftop solar panels, though there are a few windmills. Through net-metering, they pump surplus power onto the grid when the sun shines, but then draw electricity from NorthWestern when there’s little solar power to top.
The price of solar panels is less than half what it was ten years ago. Better rates have piqued the interest rooftop solar enthusiasts. There were fewer than 300 NorthWestern customers using net-metering 10 years ago, according to the utility.
Solar advocates say NorthWestern’s study is the starting point of the conversation, not the end.
“This thing’s really going to affect Montana’s energy future,” said Andrew Valainis, Montana Renewable Energy Association executive director. “The way Montana homeowners are going after net-metering. The way businesses are installing net-metering. It’s going to affect how they can do that.”
Valainis sees an under-realized potential for rooftop solar in Montana. The technology gives consumers a choice about where their energy comes from. Homeowners benefit, but business and government buildings with large roofs benefit even more so. There are jobs connected to the installation of the 2,100 net-metering systems online.
There’s a sentiment among renewable advocates that the NorthWestern-commissioned study, which was done by Navigan, has set the net value of rooftop solar too low, a debate that will continue into fall.
Homeowners in Arizona are regretting a required set of solar panels that have been installed on their homes by the homebuilder. The systems are generating very little power and it is nearly impossible to get them serviced. It is important for consumers to have access to quality products provided by certified installers.
Homeowners say solar panels shouldn’t be their problem
By: Courtney Holmes, Joe Ducey
Deep in Goodyear is Canta Mia, a 55-plus subdivision with the big sell of energy efficient homes.
The builder AV Homes touts awards it’s received for innovation in green home design, but some homeowners we spoke with are not happy with the solar company it chose to install their solar panels.
Dan Haarstad says when he bought his new house in 2013, the builder had already picked the panels and the installer.
“If you ordered a house or had a house built they would install Echo (first) Solar,” he says. “It was a requirement.”
But just a few years into owning the home, Dan says he and dozens of his neighbors were barely generating any power.
And when they called for warranty service, “there was nobody to contact anymore.”
Echo First Solar was taken over by another company, Sun Edison. But in April 2016 that company filed bankruptcy and according to homeowners was unreachable. In December 2017 Sun Edison emerged from chapter 11 as a shell of itself. Court documents show it operates out of St. Louis, but phone numbers are out of service, and our emails have gone unreturned.
Dan and his neighbors went to the builder for help, hoping they would help them foot the bill since they chose the solar company in the first place.
“This was AV Homes’ concept. They sold us on this system.” He says their response was “a letter letting us know that they are not responsible.”
But Dan asks if not them, then who?
AV Homes stopped using that solar company on newer homes, but Dan says those stuck with their first choice should be treated better.
“It makes me feel used,” he says.
Dan has already replaced his, but says he’d like to be reimbursed for some of what he spent.
So you make the call, should the builder be responsible? Or should homeowners be forced to pay for another solar panel system?
Improperly installed solar panels can be a major fire risk to homes, schools, and businesses. It is important for regulators to ensure minimum safety standards are in place to protect solar customers. Make Solar Safe supports consumer safety standards for solar installers to prevent fires like the one in Leigh.
Fire at primary school in Leigh was ‘most likely’ caused by faulty solar panels
The fire service said the blaze started in the roof at Westleigh Methodist Primary School
A huge blaze at a primary school was ‘most likely’ caused by a faulty electrical solar panel.
Upper levels of the Westleigh Lane building were ‘well alight’ at the height of the fire.
A statement on the school’s Facebook page said the it will be closed until further notice.
Greater Manchester Fire and Rescue Service (GMFRS) bosses believe the blaze was caused by electrical solar panels on the roof of the hall at the school.
The fire originated where the panels are embedded. It is thought there was a fault with one of the devices.
An eyewitness said they saw four solar panels on fire.
Station manager Chris Roberts said: “A fire investigation officer examined the fire burn patterns and determined that the source of the fire was at roof level.
“The fire started on the right hand side of the roof, where a number of solar panels were in place – causing the fire to spread resulting the whole roof being ablaze.
“The pattern of the fire burn would also conclude that the fire’s origin was in the vicinity of the solar panels.
“Examination on the inside of the main hall found charring on the top of the wooden beams which were situated under the roof of the building which would only occur if the fire was above the beam.
“Due to the intense heat of the fire, wiring from the panels were burnt away so we are unable to determine if or why an electrical fault occurred.
“An eyewitness account that was given to the emergency services when the fire first started stated that they saw approximately four solar panels on the roof of the school on fire.
“These panels were located on the right hand side of the roof area. This account also supports the outcome of our investigation in determining the area of origin where the fire started and in identifying any materials that could possible cause a fire to start.”
A school statement read: “Due to the fire the whole of the school building will be closed until further notice. This includes preschool, Honey Bears Nursery and the Startwell Centre.”
California’s net metering laws are increasing the cost of electricity for non-solar users by shifting the cost of grid upkeep to a smaller and smaller pool of rate payers, while the use of the grid is shared by all users. The shift in cost has already reached $65 per year for normal utility customers and will continue to increase if California doesn’t reexamine the state’s net metering policy.
Why Am I Paying $65/year for Your Solar Panels?
700,000 California homes now have solar panels; what does this mean for everyone else’s rates?
“This is the future,” one of my neighbors recently told me, proudly showing off his rooftop solar panels, “Forget the old, inefficient utility.” The panels do look great, and, for a moment, I got caught up in my neighbor’s “green glow” of eco-righteousness. Should I be doing “my part” for climate?
But wait a second. I already am! As Severin Borenstein has been pointing out for years, a big part of the reason why rooftop solar is so popular in California is our electricity rates. And because of the way rates work, every time another neighbor installs solar, my rates go up. I’m tired of it. Why should they get all the “green glow”? Why should I be paying more for their rooftop solar, particularly given that grid-scale renewables are so much cheaper?
Almost 700,000 homes in California have installed solar, about 5% of all homes in California. Today I want to figure out what this means for the rest of us. No fancy econometrics, no complicated model. I just want to do a simple back-of-the-envelope calculation to try to figure out how big of a deal this is.
Utilities have a lot of Fixed Costs
It is helpful to take a step back and think about what it takes to deliver electricity. Utilities have lots of what economists call “fixed costs”. For example, utilities have to maintain all the transmission and distribution lines used to deliver power. These costs are fixed (not marginal) because they do not depend on how much electricity is consumed.
Who pays for these fixed costs? We all do. Every time you use electricity, you help pay for these fixed costs. There is a long history in the United States of regulators setting electricity prices equal to average costs. Economists have argued that it would be more efficient to set prices equal to marginal cost. But the truth is this didn’t matter much in the past, in part because people didn’t have much choice about whether or not to consume electricity.
Until now. Rooftop solar is an opportunity for consumers to radically reduce the amount of electricity they buy from the utility. In Hawaii there is a lot of talk of “grid defection”, but in 99.9%+ of cases solar homes continue to be connected to the grid. Solar homes use the grid just as much as other households, as they are always either importing or exporting electricity, it’s just that they consume much less grid-electricity.
What this means is that good people like my neighbor contribute much less to paying for utility fixed costs. The fixed costs haven’t gone away, but my neighbor now has a lower electricity bill so pays far less of them. This leaves the utility with a revenue shortfall, and it is forced to raise prices. So who pays for the fixed costs my neighbor used to pay? Everyone else.
A key subtlety here is “net metering”. Households who install rooftop solar pay only for the electricity they consume “on net” after solar generation. This is easy and simple, but also wrong. Implicitly, this means that they get compensated for their solar panels’ sales to the grid at the retail electricity rate. This is too high, significantly exceeding what the utility saves from not having to supply that electricity. Under an alternative rate structure, in which households were paid the wholesale rate, you would not have this “cost-shifting” away from solar households.
Ok, but how much cost shifting is actually happening? Outside California, Arizona, and Hawaii, probably not much. But California has a lot of solar, about half of all U.S. rooftop solar. How much have California electricity rates increased due to the 700,000 homes with solar?
This is tricky because we don’t actually know how much electricity is being produced by rooftop solar. Almost everyone is on net metering, so we only observe net consumption, not solar production. Fortunately, the California Energy Commission has poured over solar radiation information and other data and estimated that total annual generation from California behind-the-meter solar is 9,000 GWh. About two-thirds of this is residential, so about 6,000 GWh. To put this in some context, total annual residential electricity consumption in California is 90,000 GWh.
So how much “cost shifting” does this imply? The average residential electricity price in California is $0.185/kWh, while the average wholesale price is about $0.04/kWh. Accounting for electricity that is lost during delivery to the end customer adds about 9% more per kWh delivered. Thus, each time a California household produces a kWh, the utility experiences a revenue shortfall of about $0.14. Multiply this by total residential distributed solar generation, and you get $840 million annually. California utilities receive $15 billion annually in revenue from residential customers, so the total shortfall is about 5%.
This is a crude calculation, and it could undoubtedly be refined. For example, distributed solar proponents argue that local generation allows the utility to avoid distribution system upgrades, which would represent an additional benefit. These impacts have been found to be relatively small, but this continues to be an area of active research. On the other hand, I’ve also made an assumption that significantly decreases my estimate of cost shift. In particular, I’ve used the average residential retail price, but California customers actually pay increasing block rates so most solar customers face a marginal price well in excess of the average price.
The total revenue shortfall works out to about $0.01 per kWh, or $65/year for the average California household. This is more than I expected. And, I’d bet most Californians are not even aware that this cost shift is happening.
So why am I paying $65/year for other people to have solar? It doesn’t make sense. Sure, I’m concerned about climate change, but my $65/year could go a lot farther if it was used instead for grid-scale renewables. Moreover, this is almost certainly bad from an equity perspective, as we know that high-income households adopt solar much more often than other households. Rooftop solar isn’t getting rid of the utility. It’s just changing who pays for it.
Reat at: https://energyathaas.wordpress.com/2018/03/26/why-am-i-paying-65-year-for-your-solar-panels/