Can Government Kill Solar?

Well, they have the guns.

Many of the skeptics who come here frequently subscribe to the notion that government is taking aim at fossil fuels. I come here hat in hand to inform you that their targets go far beyond fossil fuels.

Case in point #1: Nevada. “In late December, the state’s Public Utilities Commission, which regulates Nevada’s energy market, announced a rate change drastic enough to kill Nevada’s booming rooftop solar market and drive providers out of the state. Effective Jan. 1, the new tariffs will gradually increase until they triple monthly fees that solar users pay to use the electric grid and cut by three-quarters users’ reimbursements for feeding electricity into it.”

Why would they do such a thing? Solar is touted as our saviour, the replacement for those dirty fossil fuels. From the same article comes a possible answer: “Three years ago, the Edison Electric Institute, the utilities’ trade group, published a report called “Disruptive Challenges” that became famous in the utilities sector for its seeming candor. It describes how distributed forms of energy could send the industry into what has become known as the “utility death spiral.”

“The industry’s response has been to try to protect its revenue stream by limiting the growth of rooftop solar, in particular by claiming that solar users benefit from the grid’s existence without paying for it, as the utilities’ ratepayers do.”

Utilities don’t get discussed much when it comes to climate change. However, they are very large companies with (usually) a monopoly market. Their executives often end up on bodies like Public Utilities Commissions and they benefit from a government-sanctioned profit percentage.

And utilities love solar when it’s on their side of the meter. They get the federal subsidies and tax credits and can charge consumers whatever they are allowed. But they hate solar when it’s on your rooftop, reducing the amount of electricity you buy from the utility. They hate it so much they are trying to kill it.

If you don’t like sunny Nevada, how about equally sunny Arizona?

solar-power-rate-increases

I don’t know what they’re smoking in Arizona… but it seems to have triggered both money-grubbing and insanity. First, the greed…

Salt River Project (SRP), the utility for the Phoenix area, just proposed a new rate plan. Specifically, one that hammers well-meaning, energy-conscious solar customers with an average rate hike of $600 per year.

“Home solar generators currently receive up to $0.10 per kilowatt hour that they sell to the utility… but SRP wants to reduce that to $0.04. That’s less than SRP will be paying to generate solar power at its own new massive plant. This will effectively increase solar customers’ bills.

“Rate Increase Part #2: Grid Access. SRP is raising the flat fee that it charges to access the electric grid.

“Rate Increase Part #3: Demand Surcharge. There’s a maximum-draw surcharge that depends on each user’s peak demand.

“Now, here’s where the real insanity comes in. Incredibly, SRP says users can reduce their peak-demand fee by placing the solar panels on their roofs to face west, so they’ll generate maximum energy as demand peaks in the afternoon and evening. That’s all very well… but the utility must know that customers would already do this if they can. More to the point… what if homes don’t face east-west? Do they expect customers to dig up the foundations and rotate their houses?”

After the Arizona policy took effect, applications for rooftop solar installations dropped from hundreds a month to a handful, said Sean Gallagher, vice president of state affairs for the Solar Energy Industries Assn.”

How about California? “One of the main reasons that solar energy is growing so fast  in California is “net metering” … i.e. crediting rooftop solar users for surplus power their systems create, which is fed back into the grid for use by other customers.

Currently, rooftop solar owners are credited at the same rate they would pay the utility for electricity.

Not only is net metering a huge incentive to buy solar panels, but it is part of a wave of decentralized energy production which could help to solve our protect against terrorism, fascism and destruction of our health, environment and economy.

But the giant California utilities – PG&E, Southern California Energy and San Diego Gas & Electric – are determined to kill net metering, because it cuts into the profitability of their centralized energy production business.”

A recent assessment by the North Carolina Clean Energy Technology Center found that 16 of the 44 states with net-metering policies were considering or enacting changes. Wisconsin and Arizona recently imposed significant increases in the amounts that utilities can charge solar users.

Can government regulate rooftop solar out of existence? Yes, of course. But why would they subsidize with one hand and hammer with the other?

If utilities can buy government favor so easily, why don’t we just declare them in charge?

Back in the day when Ma Bell was a regulated utility, their power was legendary. So legendary that one movie painted them as more or less running the country. And it even had James Coburn portraying…

presidentsanalyst_poster

 

7 responses to “Can Government Kill Solar?

  1. “Currently, rooftop solar owners are credited at the same rate they would pay the utility for electricity.”

    Whoa! That’s not right.

    A rooftop solar producer should be paid only what it cost the utility to fuel its turbines. It makes no sense to pay the consumer retail rates for the electricity they produce.

    So, if every customer sold half their power back to the utility then it would be a wash? Who would pay for the capital invested in generation plants, distribution facilities, not to mention dividends and taxes?

    I can understand the connivance and greed of utilities and someone needs to slap them down – but it works the other way around too.

    Or am I missing something?

  2. “solar users benefit from the grid’s existence without paying for it”

    Yes, I think this is ‘somewhat’ true. Using solar el when it is available and grid backup causes customer’s energy bill go down, but it won’t decrease the need for the grid. So solar rooftop el users must pay the same price / year for the grid as others, if not higher. What is righteous is difficult to find out. Net metering is not necessarily a good idea at large scale.

    The same applies to industrial solar, of which providers should be punished by market for collecting cream top from the el market while leaving energy security for others

  3. Maximum Demand charges are nothing new, and solar generators who are consumers should pay their fair share of using an **unstorable** product (only) during times of peak demand.

    In the UK, heavy power users have their consumption 1/2-hourly metered. Then, the commodity-charge they pay during the entire charging period is based upon that period’s maximum 1/2-hour’s consumption.

    In January, a factory which (say) uses a 1kW heater maybe only during that 30 minutes of their peak demand, will find *every* kWh consumed during that month will be increased because of the added peak demand.

    How much is a glass of water worth?

    Zilch during the monsoon period in the tropics; a bit more to someone dying of thirst in the Sahara. Yet it’s the same commodity. Availability affects perceived value.

  4. Net metering enables some customers (the ones well enough off to afford solar panels) to get a valuable service (access to the grid) for free. Their savings must be paid for by other customers (generally much poorer ones). Left unchecked, that could well lead to a utility death spiral, resulting in no grid access for anyone.

    So some utilities are now seeking changes in policy that will enable them to keep the lights on and treat their less well off customers fairly. How evil.

  5. This classic post at Climate Etc by Planning Engineer is worth reading:

    https://judithcurry.com/2015/04/21/what-should-renewables-pay-for-grid-service/

    Planning Engineer has to be the most knowledgeable and even handed writer on this subject that I’ve ever seen.

  6. Why should small scale retail producers of anything get to sell at retail prices to a wholesale market without sharing in the associated costs of distribution?
    With the big push to solar on what is in effect retail sites like roof tops why should the big regulated utilities have to subsidize them?

  7. By the that James Coburn comedy is not only still hilarious; it was quite prophetic. It predicted suburban Americans heavily armed, wide-spread electronic surveillance, huge drug use, and a coalition of big government and big intelligence…..all with tongue in cheek.

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