I would hope at such small levels of production, the proximity to the user would reduce power losses and be automatically corrected for by the timing generators

I would hope at such small levels of production, the proximity to the user would reduce power losses and be automatically corrected for by the timing generators so as to shift production closer to the user. It does seem like close to retail rates aren't outrageous to believe are fair for small quantities. I think you'd need to get to the point where generation was a significant fraction of local usage before transmission was costly or inefficient... but by then you'd likely find batteries cheap enough to also just load shift by physically storing the electricity in small buildings around a city. Maybe the retail rate should go down, but it does make some sense for a tiny generator right next to or even in the same building as a user should get closer to retail rates than generator rates. If enough people did it they could eliminate transmission lines entirely and just use batteries.