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One reason net-metering is close to fair is that we are talking about delivered electricity. Every unit I send back to the grid is a unit that doesn't need to b

One reason net-metering is close to fair is that we are talking about delivered electricity. Every unit I send back to the grid is a unit that doesn't need to be delivered by the power company but the power company can sell it to my neighbor for retail price. A second reason net-metering is close to fair is because mid-day units of electricity are more valuable. Solar production peaks midday while household usage is U-shaped, so most production flows out to the grid during the high-price periods. Rates average peak and off-peak pricing so rate customers typically don't see that. In other words, solar production produces high-value kWhs the utility can sell to my neighbor for retail, even though they don't have to generate or deliver it themselves.

tomp 11y ago
I don't understand your logic for "more valuable" - there's more electricity at midday (because sun) and less usage (because sun and people are at work), so more supply & less demand => price drops, not rises!
- supercanuck 11y ago
  air conditioners in the desert
- dpierce9 11y ago
  Well in general demand peaks midday while household usage is u-shaped (morning and evening peaks). This makes sense, since when people go to work they are not at home and their work energy use tends to be higher than home energy use. But if you don't like that explanation, simply look at any price curve for any of the organized electricity markets (they are public) and you will see demand and price peaks mid-day.
  - tomp 11y ago
    Aha... so do you have a typo in your answer? > Solar production peaks midday should have been > Solar consumption peaks midday ?
    - dpierce9 11y ago
      No. Solar consumption does peak midday but that is trivial because electricity is nearly always used when it is produced. Electricity demand, which is basically the same thing as consumption, peaks midday (as do prices). And solar production peaks midday. The fact that solar production matches demand is a nice feature of solar that I think militates in favor of net-metering policies.
      - tomp 11y ago
        Ok, I get it... I misread and misunderstood your comment in a few different ways :)
    - cstejerean 11y ago
      Electricity consumption peaks mid-day, solar or not. Solar production happens to also peak mid-day, which is great because it coincides with the peak consumption period, which makes it more valuable.
- prostoalex 11y ago
  Utilities who bill for "time of use" generally have more punitive rates during the day time because of higher demand (and also send these flyers suggesting you use electric washers and dryers closer to midnight). The fact that people are at work doesn't imply a drop in usage - they just start consuming electricity at the office, retail location, etc.
- raisedbyninjas 11y ago
  Industrial machinery for facilities that don't run 24 hrs/day increase the draw energy during business hours.
- gknoy 11y ago
  I suspect that the increased demand such as air conditioning or business-related electrical usage peaks during the daytime (business hours). In hotter climates, air conditioning is a substantial user of electricity, even to the point where some places have to ration their usage of it. Solar puts electricity back on the grid at the time when it's most in demand.
WaylonKenning 11y ago
Hey, as someone who used to work for an energy utility looking at setting up a solar market place, there's some info you're missing: - The wholesale price is the cost of generating electricity. The retail price includes the cost of serving the customer, i.e. billing. Sure, there are less transmission costs, but in New Zealand they only play about 20% of the retail cost. - Also, just because midday rates of electricity are high, those high rates tend to subsidise the cost of running the network when rates are low (i.e. other times). Power Stations don't come for free. People want security of supply, but then to be able to poach from the most profitable parts of the day?
- dpierce9 11y ago
  I don't know why your first point is relevant, the marginal cost of billing is incredibly minute. The second point is interesting but calling it poaching is tendentious. No one is saying power stations, transmission lines, distribution networks, voltage support, frequency regulation, or any of the other myriad features of modern electricity grids are free. The point is how do you distribute the costs of those goods fairly (i.e. in proportion to use). Utilities are saying netmetering is unfair because it results in stranded costs that must be born by non-solar customers and I am saying that they are overestimating their stranded costs to the extent that they don't count the increase in the efficiency of their ability to serve load (because solar gen is basically already made and delivered electricity they bill for but don't have to buy). It is a really really hard question to know by how much they are overestimating stranded costs. IMO this is about aggregate demand and the stranded cost thing is a red-herring.
  - WaylonKenning 11y ago
    Sources please! There's more to retail than just billing. Off the top of my head there's advertising, acquisition of customers, creation of plans/pricing/campaigns, getting consumption information (which in New Zealand is from 50+ local distribution companies, each with their own formats), there's purchasing from the wholesale market in such a way that you're not losing money all the time, there's setting up a call centre to service those customers, there's meeting regulatory requirements such as a government disputes process, those are just the ones I can think of sitting here. And I'm not saying that those costs should be massive, I'm just saying those costs exist. Someone must pay for them. Considering I've observed that the margin on retail electricity customers is not much (like $2K of customer lifetime value over 10 years), it's not like in New Zealand electricity companies are rolling around in cash from profit per customer, it's really just a volume game (the company I worked for had 430,000 retail customers). BTW, the value chain in energy from generation to transmission to meter to cash is full of lots of participants. In New Zealand, the generator, wholesaler, retailer, national distributor, and local distributor are all separate entities. To say "Utilities ... are overestimating their stranded costs to the extent that they don't count the increase in the efficiency of their ability to serve load" ignores the reality of this value chain. At best, this really only benefits the local distributor.
tmrgn 11y ago
The high-value kWH logic only holds true with a negligible amount of running solar capacity, however. If we realize the vision of a massive restructuring of energy provision towards photovoltaics, we also have to remodel how to determine the fair price for solar production. In Germany, for example, wholesale rates on sunny days are severely depressed since a few years (which doesn't hurt producers, however, since they were guaranteed fixed feed-in rates, but electricity consumers in general who have to pay for the support programs.)
- dpierce9 11y ago
  This is a good point though one thing is that we can pretty much always use more electricity (Alcoa can start smelting more or something) and since we don't have feed-in tariffs I am not sure we will see those same market signals.
  - tmrgn 11y ago
    Right. In addition, flattening intermittent feed-ins as a business model hasn't really taken up (via large scale storage solutions, for example). Of course FITs strengthen the drive towards market-ignorant feed-ins. Still, as most renewables have very low variable costs, one might expect similar problems in more market-like regimes too.
DrScump 11y ago
<Every unit I send back to the grid is a unit that doesn't need to be delivered by the power company but the power company can sell it to my neighbor for retail price.> Your entire premise assumes that there is an immediate, local, retail consumer who will buy all of your production the instant you produce it. Under the net-metering model, the utility has to pay you retail for the power even if it is surplus and unsellable.

tomp 11y ago

I don't understand your logic for "more valuable" - there's more electricity at midday (because sun) and less usage (because sun and people are at work), so more supply & less demand => price drops, not rises!

supercanuck 11y ago
air conditioners in the desert
dpierce9 11y ago
Well in general demand peaks midday while household usage is u-shaped (morning and evening peaks). This makes sense, since when people go to work they are not at home and their work energy use tends to be higher than home energy use. But if you don't like that explanation, simply look at any price curve for any of the organized electricity markets (they are public) and you will see demand and price peaks mid-day.
- tomp 11y ago
  Aha... so do you have a typo in your answer? > Solar production peaks midday should have been > Solar consumption peaks midday ?
  - dpierce9 11y ago
    No. Solar consumption does peak midday but that is trivial because electricity is nearly always used when it is produced. Electricity demand, which is basically the same thing as consumption, peaks midday (as do prices). And solar production peaks midday. The fact that solar production matches demand is a nice feature of solar that I think militates in favor of net-metering policies.
    - tomp 11y ago
      Ok, I get it... I misread and misunderstood your comment in a few different ways :)
  - cstejerean 11y ago
    Electricity consumption peaks mid-day, solar or not. Solar production happens to also peak mid-day, which is great because it coincides with the peak consumption period, which makes it more valuable.
prostoalex 11y ago
Utilities who bill for "time of use" generally have more punitive rates during the day time because of higher demand (and also send these flyers suggesting you use electric washers and dryers closer to midnight). The fact that people are at work doesn't imply a drop in usage - they just start consuming electricity at the office, retail location, etc.
raisedbyninjas 11y ago
Industrial machinery for facilities that don't run 24 hrs/day increase the draw energy during business hours.
gknoy 11y ago
I suspect that the increased demand such as air conditioning or business-related electrical usage peaks during the daytime (business hours). In hotter climates, air conditioning is a substantial user of electricity, even to the point where some places have to ration their usage of it. Solar puts electricity back on the grid at the time when it's most in demand.

WaylonKenning 11y ago

Hey, as someone who used to work for an energy utility looking at setting up a solar market place, there's some info you're missing: - The wholesale price is the cost of generating electricity. The retail price includes the cost of serving the customer, i.e. billing. Sure, there are less transmission costs, but in New Zealand they only play about 20% of the retail cost. - Also, just because midday rates of electricity are high, those high rates tend to subsidise the cost of running the network when rates are low (i.e. other times). Power Stations don't come for free. People want security of supply, but then to be able to poach from the most profitable parts of the day?

dpierce9 11y ago
I don't know why your first point is relevant, the marginal cost of billing is incredibly minute. The second point is interesting but calling it poaching is tendentious. No one is saying power stations, transmission lines, distribution networks, voltage support, frequency regulation, or any of the other myriad features of modern electricity grids are free. The point is how do you distribute the costs of those goods fairly (i.e. in proportion to use). Utilities are saying netmetering is unfair because it results in stranded costs that must be born by non-solar customers and I am saying that they are overestimating their stranded costs to the extent that they don't count the increase in the efficiency of their ability to serve load (because solar gen is basically already made and delivered electricity they bill for but don't have to buy). It is a really really hard question to know by how much they are overestimating stranded costs. IMO this is about aggregate demand and the stranded cost thing is a red-herring.
- WaylonKenning 11y ago
  Sources please! There's more to retail than just billing. Off the top of my head there's advertising, acquisition of customers, creation of plans/pricing/campaigns, getting consumption information (which in New Zealand is from 50+ local distribution companies, each with their own formats), there's purchasing from the wholesale market in such a way that you're not losing money all the time, there's setting up a call centre to service those customers, there's meeting regulatory requirements such as a government disputes process, those are just the ones I can think of sitting here. And I'm not saying that those costs should be massive, I'm just saying those costs exist. Someone must pay for them. Considering I've observed that the margin on retail electricity customers is not much (like $2K of customer lifetime value over 10 years), it's not like in New Zealand electricity companies are rolling around in cash from profit per customer, it's really just a volume game (the company I worked for had 430,000 retail customers). BTW, the value chain in energy from generation to transmission to meter to cash is full of lots of participants. In New Zealand, the generator, wholesaler, retailer, national distributor, and local distributor are all separate entities. To say "Utilities ... are overestimating their stranded costs to the extent that they don't count the increase in the efficiency of their ability to serve load" ignores the reality of this value chain. At best, this really only benefits the local distributor.

tmrgn 11y ago

The high-value kWH logic only holds true with a negligible amount of running solar capacity, however. If we realize the vision of a massive restructuring of energy provision towards photovoltaics, we also have to remodel how to determine the fair price for solar production. In Germany, for example, wholesale rates on sunny days are severely depressed since a few years (which doesn't hurt producers, however, since they were guaranteed fixed feed-in rates, but electricity consumers in general who have to pay for the support programs.)

dpierce9 11y ago
This is a good point though one thing is that we can pretty much always use more electricity (Alcoa can start smelting more or something) and since we don't have feed-in tariffs I am not sure we will see those same market signals.
- tmrgn 11y ago
  Right. In addition, flattening intermittent feed-ins as a business model hasn't really taken up (via large scale storage solutions, for example). Of course FITs strengthen the drive towards market-ignorant feed-ins. Still, as most renewables have very low variable costs, one might expect similar problems in more market-like regimes too.

DrScump 11y ago

<Every unit I send back to the grid is a unit that doesn't need to be delivered by the power company but the power company can sell it to my neighbor for retail price.> Your entire premise assumes that there is an immediate, local, retail consumer who will buy all of your production the instant you produce it. Under the net-metering model, the utility has to pay you retail for the power even if it is surplus and unsellable.