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I'm not sure I even understand what the point of this substack article is and it is oversimplified. Is it him just examining what net-metering is then realizin

I'm not sure I even understand what the point of this substack article is and it is oversimplified. Is it him just examining what net-metering is then realizing that the utility provides more value than just electricity generation and that is eye opening to him? There's no conclusion and no cohesive argument just that the world is full of pricing distortions or that what you pay in prices isn't always exactly what you get (subsidizing some other development). Is it a take that NEM is flawed? Is it him moralizing that the climate tech industry is taking advantage of subsidies? "Don't cling to a subsidy longer and harder than necessary" --> Please look at the on-going subsidies to Oil & Gas - its absurd. If you really want to understand electricity generation pricing you should start looking at all the pricing nodes in real time and bring in energy storage, capacity payments, spinning reserves, non-spinning reserves, day ahead market, 5 minute market etc. On top of that you should start layering in how the federal government subsidizes different energy industries and add that layer on top of it. It's incredibly complex and certainly not clear what you are paying for. The top layer of how retail get's comped for the generation (in California) is interesting and a long-term risk for the utility (if enough people/companies put solar on roof and use NEM) if solar generation truly takes off. Long way to go as someone who works in the industry.

FabHK 5y ago
I agree that the article is maybe not very clear in its conclusion. But one valuable thing I took from it is this pernicious tension I hadn't been aware of before between pricing electricity in accordance - to actual production costs: large fixed "standing charge" (per unit of time), small consumption charge (per unit of energy) - with environmental goals: small fixed standing charge, large consumption charge. You could argue that you should just (that word is doing a lot of work here) internalise the external costs, and then price it as "undistorted" as possible. Does that lead to the right answer here?
- boringg 5y ago
  You end up with a bunch of other challenges. The infrastructure costs of the grid are quite high to build and operationally expensive. That cost needs to be defrayed somehow. The Time of Use (consumption charges) that aren't explained that well and differ quite significantly depending on the tariff structure you apply to. Consumption for commercial use is charged in two ways kwh that you require but also the peak kW that you need per month. This is in order to recoup the marginal cost of electricity produced at the "peak" of the month. I'm not trying to just muddy up the waters but I think the underlying analysis is overly simplistic and inaccurate. I would hate for people to think that this substack article is an accurate portrayal of the complexities of the energy system and the pricing structures. Residential rates are only portion of the grid.

FabHK 5y ago

I agree that the article is maybe not very clear in its conclusion. But one valuable thing I took from it is this pernicious tension I hadn't been aware of before between pricing electricity in accordance - to actual production costs: large fixed "standing charge" (per unit of time), small consumption charge (per unit of energy) - with environmental goals: small fixed standing charge, large consumption charge. You could argue that you should just (that word is doing a lot of work here) internalise the external costs, and then price it as "undistorted" as possible. Does that lead to the right answer here?

boringg 5y ago
You end up with a bunch of other challenges. The infrastructure costs of the grid are quite high to build and operationally expensive. That cost needs to be defrayed somehow. The Time of Use (consumption charges) that aren't explained that well and differ quite significantly depending on the tariff structure you apply to. Consumption for commercial use is charged in two ways kwh that you require but also the peak kW that you need per month. This is in order to recoup the marginal cost of electricity produced at the "peak" of the month. I'm not trying to just muddy up the waters but I think the underlying analysis is overly simplistic and inaccurate. I would hate for people to think that this substack article is an accurate portrayal of the complexities of the energy system and the pricing structures. Residential rates are only portion of the grid.