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What you just said is that the buyback rate should be somewhere between wholesale rate and retail. There is no clear cut way to figure out what it should be so

by skolos 11y ago

What you just said is that the buyback rate should be somewhere between wholesale rate and retail. There is no clear cut way to figure out what it should be so regulators and politicians get involved in setting the rate. "Sustainable for everybody" argument can be used on both sides - if rate is set too low, the solar panel owners subsidize the rest of the customers if it is set too high then other customers subsidize solar panel owners. So the argument is not as clear as you tried to make it sound.

WaylonKenning 11y ago
There is a clear cut way - the wholesale rate. In New Zealand, an auction happens every 30 minutes where demand is tallied by the system operator (Transpower) at a Grid Extraction Point, and generators bid in what they think it's worth. The system operator then purchases the cheapest electricity available (taking into account demand is different throughout the network, and the network can't transfer all electricity to all parts of the grid because of line constraints). This is the cost of the 'raw materials' of the retail electricity price. A solar panel on your house really isn't any different that a little power station. You still have to transport that electricity somewhere, maintain those lines, maintain the voltage, run a power station when it gets dark, bill you, etc. It's not a big conspiracy, it's just that the cost of energy makes up about half the costs of the electricity system. If you set at a rate higher than the wholesale rate, then there must be other reasons to do so rather than pure financials. A good example would be if an Energy Utility wanted to attract solar customers, sell them solar systems, and put it on the bill to make them more sticky customers.
- andor436 11y ago
  That's not quite what the wholesale rate means in the US; we have what you describe but it's typically referred to as the spot market. The wholesale rate when used by politicians and the media here usually (as far as I know) refers to the monthly auction clearing rate, which is much more stable. There is also a day-ahead wholesale rate, but the net metering rollback bills I've read recently are all based on the monthly auction rate.

by skolos 11y ago

WaylonKenning 11y ago

There is a clear cut way - the wholesale rate. In New Zealand, an auction happens every 30 minutes where demand is tallied by the system operator (Transpower) at a Grid Extraction Point, and generators bid in what they think it's worth. The system operator then purchases the cheapest electricity available (taking into account demand is different throughout the network, and the network can't transfer all electricity to all parts of the grid because of line constraints). This is the cost of the 'raw materials' of the retail electricity price. A solar panel on your house really isn't any different that a little power station. You still have to transport that electricity somewhere, maintain those lines, maintain the voltage, run a power station when it gets dark, bill you, etc. It's not a big conspiracy, it's just that the cost of energy makes up about half the costs of the electricity system. If you set at a rate higher than the wholesale rate, then there must be other reasons to do so rather than pure financials. A good example would be if an Energy Utility wanted to attract solar customers, sell them solar systems, and put it on the bill to make them more sticky customers.

andor436 11y ago
That's not quite what the wholesale rate means in the US; we have what you describe but it's typically referred to as the spot market. The wholesale rate when used by politicians and the media here usually (as far as I know) refers to the monthly auction clearing rate, which is much more stable. There is also a day-ahead wholesale rate, but the net metering rollback bills I've read recently are all based on the monthly auction rate.