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So the thing is the economics of rooftop solar are a lot different than power station solar. The DOE has public data on how much utilities pay for electricity.

by litany 7y ago

So the thing is the economics of rooftop solar are a lot different than power station solar. The DOE has public data on how much utilities pay for electricity. In a market like mine, Southern California Edison isn’t an electricity generator, they buy power at about $0.02/kWh but then they sell it to the residential consumer for up to $0.32. So clearly it’s a very different calculation. Regardless of that generators are building large scale solar arrays to sell power to the utilities at very much lower rates than what a rooftop owner pays to generate their own power. It’s just the rooftop owner can bypass a lot, and potentially all, of the utility and grid fees which are >90% of the cost. The other thing is that many utilities are hugely subsidizing this with net metering policies, which basically means the utility is acting as a huge battery for only the grid connection fee which, depending on the market, can be as low as $15 a month. Which basically seems to make products like the Tesla Powerwalls a really tough sell. Why pay $5000 for a tiny powerwall when, assuming you want grid connect anyway, the utility will be a way bigger powerwall for free?

ZeroGravitas 7y ago
Most research suggests that net metering is underpaying the households that deliver it. This seems very counteri tuitive to people, but remember you're paying an average cost. Gas peakers can cost thousands of times that when load is high. If you use AC then solar and high demand are correlated. At the extremes that means building a whole new powerstation that might only be used for literally hours per year.
- astanway 7y ago
  It’s overpaying if anything. Why should the utility be forced to pay retail RTM rates for power that they could have bought wholesale a month before if they actually needed it? Utility ratecase logic often has many ratepayer-unfriendly motivations but this line of reasoning is legitimate, imo.
- dkural 7y ago
  The utilities often don't want to buy this power - if they felt that they were underpaying, they'd want to buy it. Could you cite the "most research" you speak of? In fact I've read the exact opposite - that solar rooftop is economically possible only because the utility is often forced to buy it back at retail rates.
  - ZeroGravitas 7y ago
    Utilities often get recompensated based on a percentage of what they spend. If you assume they are rationally going to maximise their profit potential then saving money isn't really in their interest even before you get into externalities that they impose on others. Another example of this is utilities moving coal and gas plants that are no longer economic into these kind of compensation deals to they get a guaranteed profit based on what the cost to run. This is why it's estimated that closing all coal plants in the US would save 10s of billions dollars just in lowered electricity costs, even before factoring in pollution and carbon. For info on the research "value of solar" is the general term. It varies by geography and location (e.g whether demand is growing or falling, what the other power they displace is coming from etc) but it's generally pretty positive for solar. The number is even bigger when you include things that would save customers money rather than the utility, and as regulated industries they should probably be forced to consider those costs. But what you said and what I said aren't strictly incompatible. You could get a prisoner's dilemma type situation in which it only makes sense for you to do something if someone else is forced to do something too, otherwise they would defect and gain even more. Doesn't mean it's not economically beneficial for both. I have no real interest in whether solar makes economic sense for a household or for a utility. It clearly is at the society level and we should be organising ourselves so that we maximise the benefit, not throwing our hands up and saying "well, if it would involve changing a minor regulation on an already heavily regulated industry, then I guess I'm going to have to choose the more expensive option instead"
- kragen 7y ago
  We're talking about an average net-metering cost of about US$0.12/kWh, right? That's 3.3¢/MJ in SI units, US$120/MWh in the units used in most real-time electrical markets. LMPs do sometimes get as high as US$120/MWh and even higher — I've seen US$160 at times — but never anywhere close to US$12000/MWh, as your "cost thousands of times that" comment suggests. (US$40 is more typical, and sometimes prices go negative, so you can get paid to burn energy.)
  - astanway 7y ago
    RTM prices in ERCOT can easily spike to the price cap of $9000/MWh during bad days: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/012318-ercot-real-time-prices-spike-near-6000mwh-non-spin-reserves-deployed https://www.spglobal.com/platts/en/market-insights/latest-ne...
    - kragen 7y ago
      Interesting! So even if the demand would justify paying $12000/MWh, ERCOT just permits brownouts or blackouts instead of paying that much? (I can't load the article you linked.)
      - astanway 7y ago
        Realistically a price higher than that wouldn't really have any effect on incentivizing generators any more, since there is a limit to how fast they can ramp up, how much spinning reserve capacity they have etc. So, it mostly just serves to protect the market from falling off the rails. The grid operation itself is actually largely disconnected from the market - the ISO primarily calls the shots with scheduling regardless of what the market is doing.
nimish 7y ago
Because the powerwall allows you to "buy" power at the opportunity cost of $0.02/kWh vs paying up to $0.32/kWh ? If you end up generating a lot of excess solar using a lot of grid power at peak times, it could pay for itself. But of course, you need to do the calculation for your situation.
- boringg 7y ago
  I don't think powerwall has that functionality. At least original powerwalls only provided backup power. From a C&I perspective this is one of the sources of revenue for batteries - however there are many different ways for electricity charges to be passed on to customers. It isn't only kWh.
  - benj111 7y ago
    "I don't think powerwall has that functionality" From wikipedia "When originally announced in 2015, two models of Powerwall were planned: 10 kWh capacity for backup applications and 7 kWh capacity for daily cycle applications" https://en.m.wikipedia.org/wiki/Tesla_Powerwall https://en.m.wikipedia.org/wiki/Tesla_Powerwall I take it the daily cycle applications include that functionality.
TheSpiceIsLife 7y ago
> they buy power at about $0.02/kWh but then they sell it to the residential consumer for up to $0.32. This is the most important factor in the whole discussion. The electricity retailers, which consist of a call centre and a two billing systems, accounts payable and accounts receivable, buy electricity for virtually nothing, $1.00 buys them 50kWh, that's about double what my houses uses per day with two adults. edit to add: per day I'm guessing the electricity retailers aren't making a lot of money after expenses, otherwise investors would flood the market. How would a reduction in wholesale electricity price translate to a reduction in residential retail price given the wholesale price is already almost at zero.
- astanway 7y ago
  Wholesale price is definitely not “zero”. It fluctuates wildly, and if a retailer is exposed to the real time market at the flow date, they can expect to lose hundreds of thousands of dollars. RTM prices can easily spike from $50/MW to $8000/MW in an instant if a generator trips. So, retailers buy hedges to cover this risk, at price premiums that reflect the inherent exposure insurance.
  - zaroth 7y ago
    But what’s happening more and more now is that batteries are arbitraging those rate spike, and ultimately those spikes will disappear entirely.
    - astanway 7y ago
      Utility scale batteries are not yet a proven and deployed technology. Not to say there aren’t successes - Aliso Canyon and the AEMO installation in Australia have both been very well received by their respective system operators. But there’s a very long way to go before batteries will exist as a viable, general alternative to natural gas peaker plants.
      - tomrod 7y ago
        You're exactly right. Thanks for adding the the knowledge pool today!

by litany 7y ago

ZeroGravitas 7y ago

Most research suggests that net metering is underpaying the households that deliver it. This seems very counteri tuitive to people, but remember you're paying an average cost. Gas peakers can cost thousands of times that when load is high. If you use AC then solar and high demand are correlated. At the extremes that means building a whole new powerstation that might only be used for literally hours per year.

astanway 7y ago
It’s overpaying if anything. Why should the utility be forced to pay retail RTM rates for power that they could have bought wholesale a month before if they actually needed it? Utility ratecase logic often has many ratepayer-unfriendly motivations but this line of reasoning is legitimate, imo.
dkural 7y ago
The utilities often don't want to buy this power - if they felt that they were underpaying, they'd want to buy it. Could you cite the "most research" you speak of? In fact I've read the exact opposite - that solar rooftop is economically possible only because the utility is often forced to buy it back at retail rates.
- ZeroGravitas 7y ago
  Utilities often get recompensated based on a percentage of what they spend. If you assume they are rationally going to maximise their profit potential then saving money isn't really in their interest even before you get into externalities that they impose on others. Another example of this is utilities moving coal and gas plants that are no longer economic into these kind of compensation deals to they get a guaranteed profit based on what the cost to run. This is why it's estimated that closing all coal plants in the US would save 10s of billions dollars just in lowered electricity costs, even before factoring in pollution and carbon. For info on the research "value of solar" is the general term. It varies by geography and location (e.g whether demand is growing or falling, what the other power they displace is coming from etc) but it's generally pretty positive for solar. The number is even bigger when you include things that would save customers money rather than the utility, and as regulated industries they should probably be forced to consider those costs. But what you said and what I said aren't strictly incompatible. You could get a prisoner's dilemma type situation in which it only makes sense for you to do something if someone else is forced to do something too, otherwise they would defect and gain even more. Doesn't mean it's not economically beneficial for both. I have no real interest in whether solar makes economic sense for a household or for a utility. It clearly is at the society level and we should be organising ourselves so that we maximise the benefit, not throwing our hands up and saying "well, if it would involve changing a minor regulation on an already heavily regulated industry, then I guess I'm going to have to choose the more expensive option instead"
kragen 7y ago
We're talking about an average net-metering cost of about US$0.12/kWh, right? That's 3.3¢/MJ in SI units, US$120/MWh in the units used in most real-time electrical markets. LMPs do sometimes get as high as US$120/MWh and even higher — I've seen US$160 at times — but never anywhere close to US$12000/MWh, as your "cost thousands of times that" comment suggests. (US$40 is more typical, and sometimes prices go negative, so you can get paid to burn energy.)
- astanway 7y ago
  RTM prices in ERCOT can easily spike to the price cap of $9000/MWh during bad days: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/012318-ercot-real-time-prices-spike-near-6000mwh-non-spin-reserves-deployed https://www.spglobal.com/platts/en/market-insights/latest-ne...
  - kragen 7y ago
    Interesting! So even if the demand would justify paying $12000/MWh, ERCOT just permits brownouts or blackouts instead of paying that much? (I can't load the article you linked.)
    - astanway 7y ago
      Realistically a price higher than that wouldn't really have any effect on incentivizing generators any more, since there is a limit to how fast they can ramp up, how much spinning reserve capacity they have etc. So, it mostly just serves to protect the market from falling off the rails. The grid operation itself is actually largely disconnected from the market - the ISO primarily calls the shots with scheduling regardless of what the market is doing.

nimish 7y ago

Because the powerwall allows you to "buy" power at the opportunity cost of $0.02/kWh vs paying up to $0.32/kWh ? If you end up generating a lot of excess solar using a lot of grid power at peak times, it could pay for itself. But of course, you need to do the calculation for your situation.

boringg 7y ago
I don't think powerwall has that functionality. At least original powerwalls only provided backup power. From a C&I perspective this is one of the sources of revenue for batteries - however there are many different ways for electricity charges to be passed on to customers. It isn't only kWh.
- benj111 7y ago
  "I don't think powerwall has that functionality" From wikipedia "When originally announced in 2015, two models of Powerwall were planned: 10 kWh capacity for backup applications and 7 kWh capacity for daily cycle applications" https://en.m.wikipedia.org/wiki/Tesla_Powerwall https://en.m.wikipedia.org/wiki/Tesla_Powerwall I take it the daily cycle applications include that functionality.

TheSpiceIsLife 7y ago

> they buy power at about $0.02/kWh but then they sell it to the residential consumer for up to $0.32. This is the most important factor in the whole discussion. The electricity retailers, which consist of a call centre and a two billing systems, accounts payable and accounts receivable, buy electricity for virtually nothing, $1.00 buys them 50kWh, that's about double what my houses uses per day with two adults. edit to add: per day I'm guessing the electricity retailers aren't making a lot of money after expenses, otherwise investors would flood the market. How would a reduction in wholesale electricity price translate to a reduction in residential retail price given the wholesale price is already almost at zero.

astanway 7y ago
Wholesale price is definitely not “zero”. It fluctuates wildly, and if a retailer is exposed to the real time market at the flow date, they can expect to lose hundreds of thousands of dollars. RTM prices can easily spike from $50/MW to $8000/MW in an instant if a generator trips. So, retailers buy hedges to cover this risk, at price premiums that reflect the inherent exposure insurance.
- zaroth 7y ago
  But what’s happening more and more now is that batteries are arbitraging those rate spike, and ultimately those spikes will disappear entirely.
  - astanway 7y ago
    Utility scale batteries are not yet a proven and deployed technology. Not to say there aren’t successes - Aliso Canyon and the AEMO installation in Australia have both been very well received by their respective system operators. But there’s a very long way to go before batteries will exist as a viable, general alternative to natural gas peaker plants.
    - tomrod 7y ago
      You're exactly right. Thanks for adding the the knowledge pool today!