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The retail cost of electricity consists of the capital cost of generation (20-30 year cost of building a plant) PLUS fuel costs; depreciation and maintenance of

by slv77 5y ago

The retail cost of electricity consists of the capital cost of generation (20-30 year cost of building a plant) PLUS fuel costs; depreciation and maintenance of the grid; financial risk of selling electricity at a fixed price to consumers while purchasing it at a variable price; billing and collections; the risk of non-payment and compliance burdens as a regulated entity along with overhead and profit. A rooftop solar owner under net metering has zero costs or risks outside of capital depreciation but still sells electricity to the grid at full retail price. There is no obligation to provide the neighbor with power during high demand times when power is more expensive. No costs to build or maintain the grid. No costs to bill your neighbor. No risk if he doesn’t pay. No obligation to extend power to distant communities over rocky terrain. These costs and risks are non-trivial and in California represent more than two-thirds of retail cost of electricity. Costs for solar installations are dropping while other cost are rising. What the grid needs now is not more solar installations but very capital intensive investments in energy storage and more robust distribution systems. Renewables aren’t going to decrease the cost of the grid but likely increase it as power will need to be able to be distributed across states to compensate for a rainy day in So-Cal. The rooftop solar installations in So-Cal with excess power doesn’t compensate for the more power demand from No-Cal is there is no way to move power between them. Net-metering is paying a rooftop solar owner well in excess of the value of the electricity produced. No free agent in the market would ever buy power at retail rates. There is nothing special about the electrons coming from a rooftop solar installation versus a commercial solar installation a mile away but the rooftop solar owner gets paid 5x the price for those electrons. If there is anything special about them is it the commercial solar plant because it can distribute its power beyond the step down transformer at the end of the block which is as far as the rooftop solar owners power can be distributed. Paying the rooftop solar owner in excess of market rates is a subsidy. Win for rooftop solar and lose for every other participant.

jjk166 5y ago
> The retail cost of electricity consists of the capital cost of generation (20-30 year cost of building a plant) PLUS fuel costs; depreciation and maintenance of the grid; financial risk of selling electricity at a fixed price to consumers while purchasing it at a variable price; billing and collections; the risk of non-payment and compliance burdens as a regulated entity along with overhead and profit. For the electric company, a rooftop solar panel is a source of electricity with no capital cost of generation, no fuel costs, no depreciation, no maintenance, no variable pricing, and no new billing and collections, no additional risk of non-payment, and no additional compliance burdens - it's free. > A rooftop solar owner under net metering has zero costs or risks outside of capital depreciation but still sells electricity to the grid at full retail price A rooftop solar owner gets a credit on their own account for what they would have paid for the electricity they provide, so it looks like they are getting paid retail rate, but this is fictitious. Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total), then I retail them to you for 2 dollars a piece ($20 total); I'm currently up $10. You sell me back 5 water bottles at 2 dollars a piece ($10 total); I now have $0 in cash, but I have 5 perfectly good water bottles. I am in exactly the same position I would be in if I had only sold you 5 water bottles to begin with. Now I retail my remaining 5 water bottles to someone else for $2 each; overall I'm still up $10. I haven't subsidized you nor has anybody lost anything. Every customer has paid the same price for what they actually consumed, and I have made the same profit off of my wares. Likewise, ff the electricity company purchases a kwh for 5 cents and retails it to you for 11 cents, then credits you back 11 cents if you give them a kwh, that kwh only cost them the initial 5 cents, and is ready to be retailed. No one has ever claimed that rooftop solar is the be all end all silver bullet to fix every issue with power generation. It doesn't need to be. More rooftop installations which the electricity company isn't paying for don't inhibit investment in energy storage and robust distribution systems. But rooftop solar decreases emissions, reduces grid demand in turn reducing stress on the grid, locates power generation much closer to power consumption reducing transmission losses, and overall increases the available supply of electricity. If you live in the environment or have an electric bill, all of those things are beneficial to you.
- slv77 5y ago
  > Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total)... Except that the price of water varies based on the season and you are obligated to sell water at a fixed price when it is convenient for the buyer and buy water back at the same time when it is also convenient for the buyer (duck curve). Over the course of a season the buyer has stated that his intention is to buy as much as he sells and be net-zero every season but refuses to store even a single bottle of water (e.g. batteries). The buyer would be very upset if water always be available at any time of the day or night in reasonable quantities. The buyer doesn't want to pay any costs for bottling (peaker plants, hydro), storage (batteries, pumped hydro) or water distribution (grid). The buyer has a habit of buying water when there is a drought and it is expensive and sell it back to you when there is a flood and water is cheap. The buyer doesn't want to change his lifestyle so that his water usage was more in-line with with the seasons (e.g. smart thermostats, lifestyle changes). The buyer has zero incentive to reduce his overall usage below current levels. You are expected to sell water on credit and track and collect from buyers every month (billing) but the buyer doesn't believe that he should have to pay for that for that because you have to do it anyway. Sometimes you don't get paid but the buyer wants to be guaranteed he will be paid even when you don't get paid (credit risk). Your suppliers are being mandated to reduce the amount of waters being pulled from aquifers (fossil fuels) and are saying that the cost of water during droughts will likely rise over the next 20 years. In addition we'll likely see more floods and expect that prices of water during a flood may go negative so you expect based on his habits that your buyer will lose you more money then in the past. The trucks you use to move water around are old and have caused accidents due to poor maintenance (fires) and need to be replaced with more expensive models (buried cable). Nobody wants you to build warehouses since the 50's (hydro) because they are ugly and all good land for warehouse has been used but you are running out of warehouse space. This is leading to scenarios where entire communities haven't been able to get water and people have died. The relationship with this buyer is massively one-sided and a money losing proposition. You have been sued because of the accidents and have gone into bankruptcy. Your buyer is a middle-class home owner and when you talk to him about the challenges he doesn't want the relationship to change and he expects that he won't pay more over the next 20 years. Costs for other buyers have roughly doubled in the last 10 years and are on average poorer then your homeowner.

by slv77 5y ago

jjk166 5y ago

> The retail cost of electricity consists of the capital cost of generation (20-30 year cost of building a plant) PLUS fuel costs; depreciation and maintenance of the grid; financial risk of selling electricity at a fixed price to consumers while purchasing it at a variable price; billing and collections; the risk of non-payment and compliance burdens as a regulated entity along with overhead and profit. For the electric company, a rooftop solar panel is a source of electricity with no capital cost of generation, no fuel costs, no depreciation, no maintenance, no variable pricing, and no new billing and collections, no additional risk of non-payment, and no additional compliance burdens - it's free. > A rooftop solar owner under net metering has zero costs or risks outside of capital depreciation but still sells electricity to the grid at full retail price A rooftop solar owner gets a credit on their own account for what they would have paid for the electricity they provide, so it looks like they are getting paid retail rate, but this is fictitious. Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total), then I retail them to you for 2 dollars a piece ($20 total); I'm currently up $10. You sell me back 5 water bottles at 2 dollars a piece ($10 total); I now have $0 in cash, but I have 5 perfectly good water bottles. I am in exactly the same position I would be in if I had only sold you 5 water bottles to begin with. Now I retail my remaining 5 water bottles to someone else for $2 each; overall I'm still up $10. I haven't subsidized you nor has anybody lost anything. Every customer has paid the same price for what they actually consumed, and I have made the same profit off of my wares. Likewise, ff the electricity company purchases a kwh for 5 cents and retails it to you for 11 cents, then credits you back 11 cents if you give them a kwh, that kwh only cost them the initial 5 cents, and is ready to be retailed. No one has ever claimed that rooftop solar is the be all end all silver bullet to fix every issue with power generation. It doesn't need to be. More rooftop installations which the electricity company isn't paying for don't inhibit investment in energy storage and robust distribution systems. But rooftop solar decreases emissions, reduces grid demand in turn reducing stress on the grid, locates power generation much closer to power consumption reducing transmission losses, and overall increases the available supply of electricity. If you live in the environment or have an electric bill, all of those things are beneficial to you.

slv77 5y ago
> Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total)... Except that the price of water varies based on the season and you are obligated to sell water at a fixed price when it is convenient for the buyer and buy water back at the same time when it is also convenient for the buyer (duck curve). Over the course of a season the buyer has stated that his intention is to buy as much as he sells and be net-zero every season but refuses to store even a single bottle of water (e.g. batteries). The buyer would be very upset if water always be available at any time of the day or night in reasonable quantities. The buyer doesn't want to pay any costs for bottling (peaker plants, hydro), storage (batteries, pumped hydro) or water distribution (grid). The buyer has a habit of buying water when there is a drought and it is expensive and sell it back to you when there is a flood and water is cheap. The buyer doesn't want to change his lifestyle so that his water usage was more in-line with with the seasons (e.g. smart thermostats, lifestyle changes). The buyer has zero incentive to reduce his overall usage below current levels. You are expected to sell water on credit and track and collect from buyers every month (billing) but the buyer doesn't believe that he should have to pay for that for that because you have to do it anyway. Sometimes you don't get paid but the buyer wants to be guaranteed he will be paid even when you don't get paid (credit risk). Your suppliers are being mandated to reduce the amount of waters being pulled from aquifers (fossil fuels) and are saying that the cost of water during droughts will likely rise over the next 20 years. In addition we'll likely see more floods and expect that prices of water during a flood may go negative so you expect based on his habits that your buyer will lose you more money then in the past. The trucks you use to move water around are old and have caused accidents due to poor maintenance (fires) and need to be replaced with more expensive models (buried cable). Nobody wants you to build warehouses since the 50's (hydro) because they are ugly and all good land for warehouse has been used but you are running out of warehouse space. This is leading to scenarios where entire communities haven't been able to get water and people have died. The relationship with this buyer is massively one-sided and a money losing proposition. You have been sued because of the accidents and have gone into bankruptcy. Your buyer is a middle-class home owner and when you talk to him about the challenges he doesn't want the relationship to change and he expects that he won't pay more over the next 20 years. Costs for other buyers have roughly doubled in the last 10 years and are on average poorer then your homeowner.