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Solar panels could destroy U.S. utilities, according to U.S. utilities

261 points by colinismyname 14y ago

revelation 14y ago
Two of Musks companies have partnered to build just that very system described in this article: http://www.solarcity.com/residential/energy-storage.aspx http://www.solarcity.com/residential/energy-storage.aspx Of course its marketed as backup power right now, but once battery costs come down this will be very viable.
startupfounder 14y ago
Original report here: http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf http://www.eei.org/ourissues/finance/Documents/disruptivecha... I believe that distributed energy is the future, plugging your house into your car, charging your car with solar and selling power to the grid when your forecasted household demand is lower then your forecasted supply. Because of the internet we now have distributed information and it is changing the world in every way. Anyone can share anything in real-time with the world. Everyone is a producer and consumer of information now. The impact of everyone being both a producer and consumer of energy will also be profound.
- luxpir 14y ago
  As a small part of this information revolution, may I suggest a (free as PDF) book on the energy problem and the varying efficacy of its potential solutions, available from here: http://www.withouthotair.com/ http://www.withouthotair.com/. It's an eye-opening read for the most part and uses real-world figures for its estimates to show just what might and might not work in replacing fossil fuels around the world. I wouldn't have been as interested in reading it myself if the Economist/Bill Gates hadn't given it their approval.
  - lifeisstillgood 14y ago
    Cannot recommend this book enough - brilliant as it just looks at the figures - how much of Britain (Author is a Cambridge mathematics prof.) would have to be covered in solar panels or wind farms to replace coal etc. Entertaining, memorable and instructive. Go read.
    - reitzensteinm 14y ago
      I too absolutely recommend Without Hot Air; if you're interested enough to read this far into the comments, you'll enjoy the book. It's a refreshing physicist's take in a field normally consumed with politics and hand waving.
- fauigerzigerk 14y ago
  I'm not so sure. Unless you have huge guaranteed subsidies like in Germany, making these investment decisions carries substantial risk. Is it really smart to buy solar panels and large batteries that amortize over 10 years when there could be a technological breakthrough right around the corner? Do you really want to be in a position to operate and maintain that technology, buy insurance, deal with repairs, etc? I know I don't. And if you're talking about disconnecting from the grid entirely (I know you don't but the OP did), you suddenly have a high availability issue on your hands. That's never going to happen. I think at the end of the day, solar will be operated by utilities. They don't have to buy all equipment on one day, so they can spread the risk. They have professional staff to fix and maintain things when they are broken.
- snowwrestler 14y ago
  The analogy to the Internet is apt. But it's worth remembering that the Internet backbone was not built on the existing phone network. Instead the Internet backbone was developed as a separate infrastructure, by separate companies, which was then hooked to the existing telephone (and eventually cable) last-mile infrastructures. I'm not sure the same thing is possible in power generation, because power plants, substations, and power lines are so much more expensive than telecomm switches. What we need is the power equivalent to the fiber optic cable--a huge breakthrough in line capacity. The only thing that could compare is probably high-temp superconductivity.
ollysb 14y ago
The culture of protecting existing businesses is becoming infuriating to read about. Businesses are there because they're the most efficient way to solve the needs of a group of people. If circumstances change and a better solution presents itself then both new and _existing_ businesses have an opportunity to take advantage of it. There's absolutely nothing to stop the existing utility companies being the companies that lead the charge with solar power.
- deleted 14y ago
  [deleted]
- gmu3 14y ago
  I acknowledge this is slightly off topic, but the culture of attacking industries seems somewhat problematic for similar reasons. Passing unfriendly restrictions and higher and higher taxes on oil companies, doesn't really help solve the problem. Sure they're oil companies now, but they're not really oil companies. They're energy companies, are the biggest investors in better solutions, and have the most to lose if they don't invest in the future so why hinder them so much?
- akiselev 14y ago
  This article isn't talking about protecting them, simply the problems that they are now facing and will likely face in the future. "There's absolutely nothing to stop the existing utility companies being the companies that lead the charge with solar power." Did you read the article? Energy infrastructure is amortized over THIRTY years. That means that they have huge liabilities until that equipment is payed off and chances are they have to upgrade it shortly after. Even pumping the solar companies full of government and investment dollars doesn't compare to all of the private equity that has gone into funding the existing infrastructure.
- njharman 14y ago
  You frustration is from your false assumption. Businesses are there to make their owners as much money as possible. This frequently does not involve efficiency.
  - 14y ago
marze 14y ago
Not to mention lumen per dollar increase rate of LED lighting, tablets that consume 4 watts, refrigerators that use half the power of the average installed fridge, etc. The falling prices of solar PV panels has been incredible. Most expected the price of $0.72 per peak watt to be reached in 2028, not 2013.
- ars 14y ago
  > Not to mention lumen per dollar increase rate of LED lighting The energy efficiency of LEDs still doesn't beat CFL, except for really really expensive LEDs.
  - parametrek 14y ago
    > The energy efficiency of LEDs still doesn't beat CFL, except for really really expensive LEDs. Not at all! CFLs cost $1.74 per bulb with an efficacy of 64 lumens/watt [1]. LEDs cost $12.47 per bulb with an efficacy of 84 lumens/watt [2]. As far as LED bulbs go, $10-$15 per bulb is a pretty typical price. A more correct phase is "The average LED is 30% more efficient than a CFL, but costs 7x more." Anyway, both halves of your statement are wrong. The big savings comes in flexability. LED bulbs are easily dimmable. Dimmable CFL bulbs are expensive and don't work well. LEDs can be turned off and on quickly without wearing them out. I go through a lot of CFLs in my basement, because the lights are turned on for three minutes at a time, several times a day. They actually burn out faster than the incandscents! Though in most cases it does not make sense to replace CFLs with LEDs yet. Eventually it will, see Haizt's Law [3]. CFL tech has been improving too but not as fast. In 1980 florescent tech was at 34 lum/watt. Doubling every 30 years is a dead end. [1] http://www.homedepot.com/p/t/100687000 http://www.homedepot.com/p/t/100687000 [2] http://www.homedepot.com/p/t/204084366 http://www.homedepot.com/p/t/204084366 [3] http://en.wikipedia.org/wiki/Haitz%27s_law http://en.wikipedia.org/wiki/Haitz%27s_law
    - ars 14y ago
      First, a arithmetic error: it's $0.74 per CFL, not $1.74. So so the LED costs 17x as much as the CFL. Congratulations: You found an example of a really really expensive LED - which is exactly what I said. And I've seen this LED before - it's the very first one I've ever seen that beats a CFL for efficiency, and it does it by having a CRI of 80 (the legal minimum). So the color advantage LEDs have over CFL? Not for this bulb - this bulb looks terrible, so bad that it's going to turn people off from LEDs, the same way the early bad CFLs made people think they are all bad. How exactly are you saving anything from flexibility? Who cares if they are dimmable, the majority of the time you don't, and the tiny savings in electricity when you do hardly matter. I turn my CFLs on and off quite often and I go years between having to replace them. And they cost 74 cents - replacing them is hardly an expensive proposition even when they fail (which they usually don't). Check the efficiency of LEDs that cost no more than $5 (still 6x the price of a CFL, but reasonable) for around 800 lumens, if you find one that beats - or even matches - a CFL let me know. And make sure the CRI is comparable too. A low CRI CFL is also much more efficient. Haizt's Law has nothing to do with efficiency. Also, the theoretical max for efficiency is 250 lm/w. It's going to get much much harder to improve things as we get closer. I agree that eventually LEDs will beat other technology. It's just not there yet.
BenoitEssiambre 14y ago
This is nice if it leads to a switch to cheaper localized non monopolistic electricity. However, I wonder if the chain reaction could lead to widespread utilities bankruptcies and maybe even cascate to another debt crisis affecting the already fragile financial and government sectors.
- artificialidiot 14y ago
  To be honest, that would be an awesome thing to watch it unfold.
  - msandford 14y ago
    More likely that you'd see an informal/distributed 48VDC grid spring up. Less than 50V isn't considered "real" wiring by the NEC and goes largely unregulated. Think low voltage path lighting, doorbell wiring, thermostat wiring, etc. So if you and your neighbors can share power via 48VDC with no approval then you can run your own inverters to power your household stuff. There are plenty of grid-following micro-inverters that can be purchased fairly inexpensively. Forklift batteries cost a few grand but give you many kilowatt-hours worth of energy storage. Considering that the average US house seems to use about 1kW of power on average a 40kWh battery pack would allow huge amounts of flexibility to decide when to run a generator, use solar cells, wind turbines, etc. http://www.midwestlifttrucks.com/offgrid.html http://www.midwestlifttrucks.com/offgrid.html
    - XorNot 14y ago
      The problem is cost per delivered kWh over the life of the battery, sans charging inefficiencies. No Lead-Acid I know of actually beats out grid power in this application yet (you can about break-even, but what's the point?). Some of the new, cheap Lithium-Ion batteries may do it, but a game-changer would be a low-cost fuel cell of some kind (rechargeable Iron-Air for example would be incredibly cheap).
- thrownaway2424 14y ago
  Well, that's basically what private care ownership did to private streetcar and bus companies in the first half of the 20th century. Many of today's "public transit" agencies started life as bailouts (takeovers, the only reasonable kind of bailout) of private companies who could not compete with the car.
ck2 14y ago
I doubt most people can afford enough solar and battery storage to power all the air conditioning needed for the longer, hotter summers we are having. We'll just use less coal which is a great thing, until the coal industry starts getting subsidies to stay alive in a few decades (which is certainly going to happen considering their political power). Grid-tie is a much better answer for people and utilities though. Solves the daytime demand problem.
- msandford 14y ago
  While you may doubt, I am quite confident. Forklift batteries are readily available and not terribly expensive. Heavy, yes, but you weren't going to put the batteries on your roof for a bunch of other reasons anyhow.
  - tedsanders 14y ago
    How not terribly expensive are forklift batteries? I imagine they're similar to lead acid golf cart batteries, which if I recall cost roughly $250/kwh. They're still too expensive compared to natural gas backup. -A former utility employee
    - msandford 14y ago
      Here you can find a 24kWh 48VDC "industrial" battery (forklifts being the primary use) at around $190 per kWh. http://gbindustrialbattery.com/Forklift_Battery_Sizes_and_Specifications_Zone15.html http://gbindustrialbattery.com/Forklift_Battery_Sizes_and_Sp... They are more expensive than natural gas backup if you buy them new at retail. But these things get un-useful in an industrial setting quite regularly while still retaining quite a bit of utility for people who just want medium term household energy storage. Would it be practical for EVERYONE to buy these things up used? Not a chance. But if you just want to set yourself up nicely look around. They go for a few hundred used as that's all the recyclers will pay for them. EDIT: I wasn't thinking of them in comparison to natural gas backup until you brought it up. When 10kW of solar cells cost $10k and a 5kW inverter costs another $3k-$5k the idea of paying another $5k to put in a rather large-sized battery doesn't seem all that out of place to me. But you're right that a small natural gas generator would win re: batteries.
dmckeon 14y ago
More like: business model of utilities disrupted by distributed energy resources. Also, peak demand in CA is at 9 pm, not noon: https://www.caiso.com/outlook/outlook.html https://www.caiso.com/outlook/outlook.html The underlying problem is the mismatch between the old business model: Generate, distribute, and deliver electricity; charge for connection to grid and for electricity delivered and consumed. and the new situation: Generate *or* purchase electricity from various providers, including households with solar panels, distribute and deliver electricity, charge for distribution, delivery, availability, and for electricity consumed. Consider the migration of television from broadcast to CATV to cable to the current YouTube / TiVo / Hulu / whatever model - basically, a shift from a hierarchical top-down head-end driven model to a widely distributed model. Utilities are facing a similar disruption, and their challenges include restructuring their generation / collection / distribution system; the costing and billing to support that; the regulatory and funding environment to cope with all of that; and to do it with generating plant equipment that will have very long term costs. I wish them luck.
- SoftwareMaven 14y ago
  While I agree with you 100%, I think the real challenge is going to be people not wanting to pay for the invisible "availability and distribution" when they've spent their entire life being trained they were paying for the electrons themselves. If I were in that business, I would be putting a lot of marketing dollars into retraining people that the value of availability and distribution is a good percentage of the costs that they incur today, so when a customer starts generating their own electrons, they already know there is value in being attached to the network, value that corresponds with continued revenue for the company.
  - Zigurd 14y ago
    These are touchy subjects with vertically integrated monopolies. The equivalent to separating the value, and price, of transport from other services in telecom is called "structural separation." Telcos don't like it one bit. They prefer pricing and costs to be opaque. It may be that obfuscating costs and margins in consumer electric service is just as advantageous to the utilities.
_delirium 14y ago
Something that would be interesting: a map estimating the areas in which a typical suburban home roof covered with PV panels would produce enough energy to power a typical suburban home's worth of electrical usage, assuming some level of battery technology. I'm not actually sure what it'd look like. Seems like there might be a tradeoff between hotter areas, which have both higher PV output and higher peak electricity usage (due to A/C running flat out on hot days), and cooler areas which are lower on both. I guess the ideal situation would be something like SoCal within a mile of the coast: tons of sun yet ocean-moderated mild temperatures. But not sure about the rest of the country.
- madaxe 14y ago
  Everywhere, in the near future. Graphene PVs promise to be ultra-efficient, and could double up as very high capacity supercapacitors.
- asynchronous13 14y ago
  I'm an electrical engineer and I've done these calculations for my own home. The roof area of a 1200 sq ft ranch home is much larger than the surface area of solar panels needed to power the home. (in other words, your map would show pretty much all of north America). But covering all of a roof with solar panels is very expensive. The biggest problem is that the "typical suburban home" is ridiculously inefficient. In terms of bang for your buck, investing in efficiency improvements is a much better choice for the average home owner. Don't even consider solar panels until you've reduced energy needs first. After efficiency upgrades, modern solar panels make a lot of sense financially speaking.
  - ph0rque 14y ago
    I've had a solar installer make a report... it would take a little more than half of my roof (the house is a ~1000 sq ft one-story building).
  - toomuchtodo 14y ago
    The cheapest watt is the watt you never had to generate.
jrh555 14y ago
One thing that may save utilities for a while is the rise of the electric car. There will be a need for charging stations to charge these cars when away from home and solar may not be practical in all locations. This could be especially true in cities where there may not be enough room for all the solar panels needed. Electrified roads that charge up cars as they drive on them would be even better and would be a natural extension of existing utility services. If utilities were smart they would focus on helping to accelerate the transition to electric vehicles.
skybrian 14y ago
Actually, it looks like it's according to one consultant that one of the utilities hired. But it's about long-term trends that are interesting enough. A summary by a more careful writer would be appreciated.
InclinedPlane 14y ago
Ironically widespread availability of solar power could lead to increased pollution. Purely hypothetically, if somehow it became popular for people to generate some, but not all, of the power they need from solar panels then perhaps people would pay less money to the power companies. Power production becomes less profitable and there's less demand for expanding supply. Meaning that the cheapest power production that requires the lowest capital investment will win out. And that's coal.
- deleted 14y ago
  [deleted]
- dangrossman 14y ago
  That used to be coal. Now it's natural gas. The gap has grown large enough in some places that coal plants get converted to run on natural gas. http://www.sourcewatch.org/index.php/Coal_plant_conversion_projects http://www.sourcewatch.org/index.php/Coal_plant_conversion_p...
  - toomuchtodo 14y ago
    This is actually a huge deal. Coal advocates disparage environmentalists about the coal industry going down the tubes, when its really US fracking efforts that are driving down the cost of natural gas.
- tedsanders 14y ago
  Peaker plants are typically natural gas, not coal. Coal plants are very large, very capital heavy, and cannot be adjusted as finely. (At least in California/USA. I can't comment on other parts of the world.)
sophacles 14y ago
I work in this space. I think it is worth noting that, yes this is true for some players, particularly at middle management and executive levels. However it is equally work noting that some of the resistance is just conservative engineering. Would you just grab the latest 0.1 release of the hot new database and throw it up on your production systems because everyone keeps talking about the promise of it? This is a real concern at the engineering levels. One of the problems with distributed generation is not that it eats away at grid profits - there is still profit from maintaining the grid that allows you to have power even if your solar panels break. There are price structures that allow this to be profitable for utilities (however everyone involved needs to look at it with fresh eyes -- homeowners need to stop thinking about it in just profit from unused kwh and utilities need to stop looking at it in terms of kwh pushed). The problem is that huge and expensive amounts of infrastructure are designed an manufactured with a one-way power flow in mind. Protection schemes are predicated on a star(ish) topology of distribution lines, where the assumption that power flows from the "hub" out.[1] Things like transformers are highly tuned for this type of flow, to the point where even small changes or running out of spec can seriously degrade the expected lifetime (usually thought out and planned on the time-frame of 30 years.) Power flowing the other way is a "break the line" event, period, to protect that equipment. A lot of substations don't have the type of capacity or equipment to handle power swings too far out of spec, because they designed that way for maximum efficience of the push model. Something this article misses in it's analysis, is that power companies building infrastructure is absurdly expensive - getting right aways for power lines is a decade long, legally perilous, and highly prone to regulatory whim, endeavor (the NIMBY crowd is strong here). As such, once one is put in, the cost is amortized over 30+ year timelines, and efficient operation is actually strongly considered. Demand response and efficient appliances are actually in the interest of utilities, and they do recognize this. If they can't build new infrastructure to increase supply, they want demand to remain within their capability to deliver (and when done right, the base "connected" fee to the customers can be as or more profitable than more power to fewer customers). Finally, all the understanding and models of how electricity works in an interconnected grid is based on models assuming "roughly" steady state capable generators. Things like solar and wind have some problems in this, as they can contribute instability to the overall system - if the wind dies, you have to have hot standby power to keep voltage levels up. If everyone in a region has PV, and clouds move in, they will be demanding more power from the grid. On a "partly sunny" day, this result in weird spikes, again placing strange wear patterns on transformers and generators that are ramping up and down in response. Even the engineers I know who are all about this stuff are hesitant to just deploying it, because of all this technical challenge. Just like I would be hesitant to throw an unknown datastore into a stable working system without staging, testing, and otherwise slowly integrating it. It's even worse for the utilities, because they are in a "damned if you do, damned if you don't" position. What is worse - rolling slowly with the new technology and being blasted as obstructionists, or going head first, and being blasted when the unexpected happens and breaks a bunch of things, or finding a middle ground and making everyone unhappy? [1] at transmission levels, this isn't true, and in dense urban centers the topology is meshier, but this statement is still true for a (geographically anyway) majority of power distribution.
ahi 14y ago
At least here in Michigan, DTE Energy is pushing efficiency and solar. Part of this is a legislated requirement, but I think the big motivator is how the regulator calculates their profit margin. AFAIK, they don't make their margin on selling electrons, but on capital investment. Higher utilization of their generating capacity just means slimmer profit margins. Most of their plants are 40-50 years old so they have plenty of capital investment and profits headed their way even if solar cuts into demand. I could be wrong about any or all of this, since I'm working off memory and I'm not going to read 100 page regulator reports.
yessql 14y ago
This piece overlooks the fact that utilities can install solar power cheaper than a residence can. This will always be the chase. Electricity will drop in price accordingly.
- fiatmoney 14y ago
  But transmission losses will be lower when generation is closer to the point of use, and storage costs may be too (eg, hot water tank or "accumulated" AC in a well-insulated house, vs. expensive batteries).
- toomuchtodo 14y ago
  Generation and transmission are two different utility businesses. This article is about how people are not going to want to pay to be hooked to the utility "just in case".
  - snowwindwaves 14y ago
    I believe people will. E willing to pay quite a bit, just in case, because that power is extremely valuable to someone when they are otherwise facing the prospect of having none.
- khalstvedt 14y ago
  Although the point of the article is to identify a snowball effect with distributed solar generation vs. fossil fuel, that angle leaves out a lot. Obviously utilities companies will (try to find a way to) pivot, and provide services or guarantees that a disconnected setup would not have. Hell, they may even install panels on your roof when your house is built in exchange for discount/free energy, and sell the excess for profit.
madaxe 14y ago
How long before the utilities (likely successfully) lobby to make PV/DER illegal, I wonder. Soon, I'd wager. As I see it, the purpose of this report is FUD, which is usually the opening move of any protectionist initiative. Edit: alternately, they'll push to tax it to high hell, or at least argue that they own sunshine (like water utilities do over rainwater collection) and should therefore be paid by PV users.
- tedsanders 14y ago
  I think that's an unfair and cynical view of the goals of utility companies. Some utilities may lobby to make distributed PV illegal, but I believe only to protect people and the integrity of the grid. -A former utility engineer
  - madaxe 14y ago
    The goal is to enhance shareholder value. End of story.
    - tedsanders 14y ago
      That's not the end of story. The reality is that utilities are filled with thousands of employees. Not every employee has the sole goal of enhancing shareholder value. Anyway, enhancing shareholder value isn't necessarily at odds with allowing people to generate electricity with distributed solar. You can defer quite a bit of capital expense (e.g. power lines) if the load gets reduced by generation. Finally, for some regulated utilities, maximizing revenue doesn't mean maximizing profits. Sometimes regulations set the profit, and there are ways to game it that don't involve running the utility as a private-profit-maximizing firm.
MikeCapone 14y ago
Solar doesn't have to be expensive up-front thanks to companies that lease solar systems like SolarCity (who's chairman is Elon Musk, ran by his cousins).
robbrown451 14y ago
If they are regulated monopolies, it seems like any issue they complain about is directly addressable by adjusting the rates they are allowed to charge, so as to keep their profits reasonable.
cinquemb 14y ago
I wonder when CSP tech is going to be talked about in the mainstream. It seems like when it comes to solar, people just think of PV.
stesch 14y ago
Hello from the wasteland Germany. Everything is in ruins.
leashless 14y ago
The chapter and verse of the grid utility economics as they are impacted by solar and wind is in http://smallisprofitable.org http://smallisprofitable.org which was The Economist's Book of the Year 2003. (disclaimer: I helped edit this)
afterburner 14y ago
Excellent news then! I would certainly prefer more solar power, and it looks like the utilities agree it's possible.
graycat 14y ago
It's simple: A utility's costs for a customer are basically a fixed cost for a connection plus a variable cost for the power a customer uses. The fixed cost pays for the astoundingly expensive equipment needed for a connection, and the variable cost pays just for the actual power. In the US, the wholesale cost of power on the grid has long been about 0.5 cents per kWh, that is, relatively low. I have some figures from 2007 saying that the cost of power at the plant from coal is less than 3 cents per kWh and, nuclear fission, 2 cents. Now, if a lot of consumers put solar panels on their roofs but remain connected to the grid, then they will pay less to the utility which stands to fail to get back its fixed costs. So, eventually the customer will get an electric bill that itemizes a much larger fixed cost for the connection and a lower variable cost for the actual power. In the meanwhile, there will be a lot of 'politics' where people with solar panels want to pay not enough for the fixed cost of the grid which will mean that people without solar panels will pay too much. And the people with solar panels will want to be able to sell power back to the utilities which; such power will cause engineering problems on the grid, and the solution of these problems will raise the fixed costs. For the batteries, so far they are too expensive. Same for home electric generators. Generally a big problem with electric power is that storage is very expensive. Net, for generating electric power, super tough to improve on the results of the last 100 years in electric power engineering where the power comes from falling water, burning coal, or nuclear fission. In simple terms, for the grid, really no one wants power from unreliable sources such as wind and solar because (1) still need the fixed cost of the present system for when the wind is not blowing and the sun is not shining, (2) wind/solar variability can cause stability issues on the grid (to be solved by a 'smart grid', that is, more fixed cost for the grid), (3) the good wind/solar sources are generally too far from the major grid demands meaning long distance transmission lines (more cost). My guess is that if take the subsidies away from wind and solar, then for the grid wind/solar will fall like a lead balloon. Broadly, wind/solar for the grid asks us to pay for fixed cost twice, once for wind/solar and again for our current system for when wind/solar are not providing enough power. Heck, except for dress up, I have just one pair of shoes and wear them rain or shine -- I don't have separate shoes for rain and then shine. I have one computer for night and day and not separate computers for each. I want to pay for just one source of fixed cost of electric power, not one source on days with wind or sun and another source otherwise. Power from wind/solar may be useful, say, for smelting aluminum, generating hydrogen from water, providing energy to make gasoline for water and coal. Note something these three candidate uses have in common: The output is easily stored, that is, buffered. Then notice the problem of electric power for the grid: The means of storage are far to inefficient. For the grid, as far as I can see, wind and solar are just nonsense pushed by a 'wind/solar subsidy industry' that wants to talk people into measuring temperature not with thermometers but pictures of polar bears. There is another candidate, small nukes. So, from Japan can buy a 'box'. In a neighborhood, dig a hole in the ground, install the box, and cover it over. Connect the box to the grid of the neighborhood. Then the box, just buried in its hole in the ground, provides all the electric power for the neighborhood for, say, 20 years. The savings are maintaining the long distance power transmission from the power station to the neighborhood. Of course the interior of the box is a nuclear fission reactor. Now if my startup works and I get rich and build a nice place in the rural hills of, say, New Hampshire, then maybe I will be able to get such a box! Also for my 4 wheel drive truck to get around in the winters, use that power to make gasoline from water and coal! Maybe!
fnordsensei 14y ago
Decentralized power generation makes society as a whole far more resilient against sabotage and natural disasters. As for the business model, Heinlein has a comment: "There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back."
jusben1369 14y ago
I think this is a fascinating argument and makes sense. However, Is the EEI really someone we trust with a report like this? It seems - given their position - they have a lot to gain and little downside in trying to scare what are essentially politicians into helping protect them. Perhaps that's why the media ignored this report to begin with?
- spenrose 14y ago
  The report is interesting BECAUSE the EEI represents the institutions with the most incentives to resist change.
deleted 14y ago
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teeja 14y ago
Of course they might "destroy US utilities", which is why some of us appreciate them so much. Of course they won't destroy hydro or wind plants. There was a time when power generation "had" to be centralized, just as AT&T "needed" to have a telecom monopoly and we "need" to have ISPs. Technology is sweeping us past that necessity; those days are ending. Now that the utilities have stripped and burned most of the easily-stripped fossil fuel resources (leaving no such easy plundering for future generations) and kept the profits for themselves, we are all starting to enjoy getting a slice of the pie. Dear Utes: don't let the door hit you in the ass.
JulianMorrison 14y ago
A similar cycle will trash the gasoline car industry when electric meets the combination of [cheap, useable] that is sufficient to trigger a demand reduction / supply contraction cycle in the less fungible parts for gasoline cars.
jmspring 14y ago
One of the best tales regarding an entrenched utility, costs, and an individual wanting to hook into the grid. Ken Adelman has made his name known for a number of things, but his fight w/ PG&E was one of the more memorable ones -- http://www.solarwarrior.com/pgebattle.html http://www.solarwarrior.com/pgebattle.html
Stauche 14y ago
This article is the most long winded explanation to a fact I've ever seen on Hacker News. DUHHHH Obviously they could destroy U.S. utilities!
Stauche 14y ago
"rooftop solar fucks up the utility model even at relatively low penetrations" I couldn't have said it better(funnier) myself
dghughes 14y ago
Utility companies are in the power business I don't see why that means a giant plat full of machinery. Say a little old lady wants solar panels but is in no way capable of installing them anymore than she can install plumbing. Power utilities should offer solar panels, wind turbines, battery storage systems. Even electrical to hydrogen foe storage. The power company should be like an ISP only instead of modems they service power generating devices.

261 points by colinismyname 14y ago

Two of Musks companies have partnered to build just that very system described in this article: http://www.solarcity.com/residential/energy-storage.aspx http://www.solarcity.com/residential/energy-storage.aspx Of course its marketed as backup power right now, but once battery costs come down this will be very viable.

startupfounder 14y ago

Original report here: http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf http://www.eei.org/ourissues/finance/Documents/disruptivecha... I believe that distributed energy is the future, plugging your house into your car, charging your car with solar and selling power to the grid when your forecasted household demand is lower then your forecasted supply. Because of the internet we now have distributed information and it is changing the world in every way. Anyone can share anything in real-time with the world. Everyone is a producer and consumer of information now. The impact of everyone being both a producer and consumer of energy will also be profound.

luxpir 14y ago
As a small part of this information revolution, may I suggest a (free as PDF) book on the energy problem and the varying efficacy of its potential solutions, available from here: http://www.withouthotair.com/ http://www.withouthotair.com/. It's an eye-opening read for the most part and uses real-world figures for its estimates to show just what might and might not work in replacing fossil fuels around the world. I wouldn't have been as interested in reading it myself if the Economist/Bill Gates hadn't given it their approval.
- lifeisstillgood 14y ago
  Cannot recommend this book enough - brilliant as it just looks at the figures - how much of Britain (Author is a Cambridge mathematics prof.) would have to be covered in solar panels or wind farms to replace coal etc. Entertaining, memorable and instructive. Go read.
  - reitzensteinm 14y ago
    I too absolutely recommend Without Hot Air; if you're interested enough to read this far into the comments, you'll enjoy the book. It's a refreshing physicist's take in a field normally consumed with politics and hand waving.
fauigerzigerk 14y ago
I'm not so sure. Unless you have huge guaranteed subsidies like in Germany, making these investment decisions carries substantial risk. Is it really smart to buy solar panels and large batteries that amortize over 10 years when there could be a technological breakthrough right around the corner? Do you really want to be in a position to operate and maintain that technology, buy insurance, deal with repairs, etc? I know I don't. And if you're talking about disconnecting from the grid entirely (I know you don't but the OP did), you suddenly have a high availability issue on your hands. That's never going to happen. I think at the end of the day, solar will be operated by utilities. They don't have to buy all equipment on one day, so they can spread the risk. They have professional staff to fix and maintain things when they are broken.
snowwrestler 14y ago
The analogy to the Internet is apt. But it's worth remembering that the Internet backbone was not built on the existing phone network. Instead the Internet backbone was developed as a separate infrastructure, by separate companies, which was then hooked to the existing telephone (and eventually cable) last-mile infrastructures. I'm not sure the same thing is possible in power generation, because power plants, substations, and power lines are so much more expensive than telecomm switches. What we need is the power equivalent to the fiber optic cable--a huge breakthrough in line capacity. The only thing that could compare is probably high-temp superconductivity.

ollysb 14y ago

The culture of protecting existing businesses is becoming infuriating to read about. Businesses are there because they're the most efficient way to solve the needs of a group of people. If circumstances change and a better solution presents itself then both new and _existing_ businesses have an opportunity to take advantage of it. There's absolutely nothing to stop the existing utility companies being the companies that lead the charge with solar power.

deleted 14y ago
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gmu3 14y ago
I acknowledge this is slightly off topic, but the culture of attacking industries seems somewhat problematic for similar reasons. Passing unfriendly restrictions and higher and higher taxes on oil companies, doesn't really help solve the problem. Sure they're oil companies now, but they're not really oil companies. They're energy companies, are the biggest investors in better solutions, and have the most to lose if they don't invest in the future so why hinder them so much?
akiselev 14y ago
This article isn't talking about protecting them, simply the problems that they are now facing and will likely face in the future. "There's absolutely nothing to stop the existing utility companies being the companies that lead the charge with solar power." Did you read the article? Energy infrastructure is amortized over THIRTY years. That means that they have huge liabilities until that equipment is payed off and chances are they have to upgrade it shortly after. Even pumping the solar companies full of government and investment dollars doesn't compare to all of the private equity that has gone into funding the existing infrastructure.
njharman 14y ago
You frustration is from your false assumption. Businesses are there to make their owners as much money as possible. This frequently does not involve efficiency.
- 14y ago

marze 14y ago

Not to mention lumen per dollar increase rate of LED lighting, tablets that consume 4 watts, refrigerators that use half the power of the average installed fridge, etc. The falling prices of solar PV panels has been incredible. Most expected the price of $0.72 per peak watt to be reached in 2028, not 2013.

ars 14y ago
> Not to mention lumen per dollar increase rate of LED lighting The energy efficiency of LEDs still doesn't beat CFL, except for really really expensive LEDs.
- parametrek 14y ago
  > The energy efficiency of LEDs still doesn't beat CFL, except for really really expensive LEDs. Not at all! CFLs cost $1.74 per bulb with an efficacy of 64 lumens/watt [1]. LEDs cost $12.47 per bulb with an efficacy of 84 lumens/watt [2]. As far as LED bulbs go, $10-$15 per bulb is a pretty typical price. A more correct phase is "The average LED is 30% more efficient than a CFL, but costs 7x more." Anyway, both halves of your statement are wrong. The big savings comes in flexability. LED bulbs are easily dimmable. Dimmable CFL bulbs are expensive and don't work well. LEDs can be turned off and on quickly without wearing them out. I go through a lot of CFLs in my basement, because the lights are turned on for three minutes at a time, several times a day. They actually burn out faster than the incandscents! Though in most cases it does not make sense to replace CFLs with LEDs yet. Eventually it will, see Haizt's Law [3]. CFL tech has been improving too but not as fast. In 1980 florescent tech was at 34 lum/watt. Doubling every 30 years is a dead end. [1] http://www.homedepot.com/p/t/100687000 http://www.homedepot.com/p/t/100687000 [2] http://www.homedepot.com/p/t/204084366 http://www.homedepot.com/p/t/204084366 [3] http://en.wikipedia.org/wiki/Haitz%27s_law http://en.wikipedia.org/wiki/Haitz%27s_law
  - ars 14y ago
    First, a arithmetic error: it's $0.74 per CFL, not $1.74. So so the LED costs 17x as much as the CFL. Congratulations: You found an example of a really really expensive LED - which is exactly what I said. And I've seen this LED before - it's the very first one I've ever seen that beats a CFL for efficiency, and it does it by having a CRI of 80 (the legal minimum). So the color advantage LEDs have over CFL? Not for this bulb - this bulb looks terrible, so bad that it's going to turn people off from LEDs, the same way the early bad CFLs made people think they are all bad. How exactly are you saving anything from flexibility? Who cares if they are dimmable, the majority of the time you don't, and the tiny savings in electricity when you do hardly matter. I turn my CFLs on and off quite often and I go years between having to replace them. And they cost 74 cents - replacing them is hardly an expensive proposition even when they fail (which they usually don't). Check the efficiency of LEDs that cost no more than $5 (still 6x the price of a CFL, but reasonable) for around 800 lumens, if you find one that beats - or even matches - a CFL let me know. And make sure the CRI is comparable too. A low CRI CFL is also much more efficient. Haizt's Law has nothing to do with efficiency. Also, the theoretical max for efficiency is 250 lm/w. It's going to get much much harder to improve things as we get closer. I agree that eventually LEDs will beat other technology. It's just not there yet.

BenoitEssiambre 14y ago

This is nice if it leads to a switch to cheaper localized non monopolistic electricity. However, I wonder if the chain reaction could lead to widespread utilities bankruptcies and maybe even cascate to another debt crisis affecting the already fragile financial and government sectors.

artificialidiot 14y ago
To be honest, that would be an awesome thing to watch it unfold.
- msandford 14y ago
  More likely that you'd see an informal/distributed 48VDC grid spring up. Less than 50V isn't considered "real" wiring by the NEC and goes largely unregulated. Think low voltage path lighting, doorbell wiring, thermostat wiring, etc. So if you and your neighbors can share power via 48VDC with no approval then you can run your own inverters to power your household stuff. There are plenty of grid-following micro-inverters that can be purchased fairly inexpensively. Forklift batteries cost a few grand but give you many kilowatt-hours worth of energy storage. Considering that the average US house seems to use about 1kW of power on average a 40kWh battery pack would allow huge amounts of flexibility to decide when to run a generator, use solar cells, wind turbines, etc. http://www.midwestlifttrucks.com/offgrid.html http://www.midwestlifttrucks.com/offgrid.html
  - XorNot 14y ago
    The problem is cost per delivered kWh over the life of the battery, sans charging inefficiencies. No Lead-Acid I know of actually beats out grid power in this application yet (you can about break-even, but what's the point?). Some of the new, cheap Lithium-Ion batteries may do it, but a game-changer would be a low-cost fuel cell of some kind (rechargeable Iron-Air for example would be incredibly cheap).
thrownaway2424 14y ago
Well, that's basically what private care ownership did to private streetcar and bus companies in the first half of the 20th century. Many of today's "public transit" agencies started life as bailouts (takeovers, the only reasonable kind of bailout) of private companies who could not compete with the car.

ck2 14y ago

I doubt most people can afford enough solar and battery storage to power all the air conditioning needed for the longer, hotter summers we are having. We'll just use less coal which is a great thing, until the coal industry starts getting subsidies to stay alive in a few decades (which is certainly going to happen considering their political power). Grid-tie is a much better answer for people and utilities though. Solves the daytime demand problem.

msandford 14y ago
While you may doubt, I am quite confident. Forklift batteries are readily available and not terribly expensive. Heavy, yes, but you weren't going to put the batteries on your roof for a bunch of other reasons anyhow.
- tedsanders 14y ago
  How not terribly expensive are forklift batteries? I imagine they're similar to lead acid golf cart batteries, which if I recall cost roughly $250/kwh. They're still too expensive compared to natural gas backup. -A former utility employee
  - msandford 14y ago
    Here you can find a 24kWh 48VDC "industrial" battery (forklifts being the primary use) at around $190 per kWh. http://gbindustrialbattery.com/Forklift_Battery_Sizes_and_Specifications_Zone15.html http://gbindustrialbattery.com/Forklift_Battery_Sizes_and_Sp... They are more expensive than natural gas backup if you buy them new at retail. But these things get un-useful in an industrial setting quite regularly while still retaining quite a bit of utility for people who just want medium term household energy storage. Would it be practical for EVERYONE to buy these things up used? Not a chance. But if you just want to set yourself up nicely look around. They go for a few hundred used as that's all the recyclers will pay for them. EDIT: I wasn't thinking of them in comparison to natural gas backup until you brought it up. When 10kW of solar cells cost $10k and a 5kW inverter costs another $3k-$5k the idea of paying another $5k to put in a rather large-sized battery doesn't seem all that out of place to me. But you're right that a small natural gas generator would win re: batteries.

dmckeon 14y ago

More like: business model of utilities disrupted by distributed energy resources. Also, peak demand in CA is at 9 pm, not noon: https://www.caiso.com/outlook/outlook.html https://www.caiso.com/outlook/outlook.html The underlying problem is the mismatch between the old business model: Generate, distribute, and deliver electricity; charge for connection to grid and for electricity delivered and consumed. and the new situation: Generate *or* purchase electricity from various providers, including households with solar panels, distribute and deliver electricity, charge for distribution, delivery, availability, and for electricity consumed. Consider the migration of television from broadcast to CATV to cable to the current YouTube / TiVo / Hulu / whatever model - basically, a shift from a hierarchical top-down head-end driven model to a widely distributed model. Utilities are facing a similar disruption, and their challenges include restructuring their generation / collection / distribution system; the costing and billing to support that; the regulatory and funding environment to cope with all of that; and to do it with generating plant equipment that will have very long term costs. I wish them luck.

SoftwareMaven 14y ago
While I agree with you 100%, I think the real challenge is going to be people not wanting to pay for the invisible "availability and distribution" when they've spent their entire life being trained they were paying for the electrons themselves. If I were in that business, I would be putting a lot of marketing dollars into retraining people that the value of availability and distribution is a good percentage of the costs that they incur today, so when a customer starts generating their own electrons, they already know there is value in being attached to the network, value that corresponds with continued revenue for the company.
- Zigurd 14y ago
  These are touchy subjects with vertically integrated monopolies. The equivalent to separating the value, and price, of transport from other services in telecom is called "structural separation." Telcos don't like it one bit. They prefer pricing and costs to be opaque. It may be that obfuscating costs and margins in consumer electric service is just as advantageous to the utilities.

_delirium 14y ago

Something that would be interesting: a map estimating the areas in which a typical suburban home roof covered with PV panels would produce enough energy to power a typical suburban home's worth of electrical usage, assuming some level of battery technology. I'm not actually sure what it'd look like. Seems like there might be a tradeoff between hotter areas, which have both higher PV output and higher peak electricity usage (due to A/C running flat out on hot days), and cooler areas which are lower on both. I guess the ideal situation would be something like SoCal within a mile of the coast: tons of sun yet ocean-moderated mild temperatures. But not sure about the rest of the country.

madaxe 14y ago
Everywhere, in the near future. Graphene PVs promise to be ultra-efficient, and could double up as very high capacity supercapacitors.
asynchronous13 14y ago
I'm an electrical engineer and I've done these calculations for my own home. The roof area of a 1200 sq ft ranch home is much larger than the surface area of solar panels needed to power the home. (in other words, your map would show pretty much all of north America). But covering all of a roof with solar panels is very expensive. The biggest problem is that the "typical suburban home" is ridiculously inefficient. In terms of bang for your buck, investing in efficiency improvements is a much better choice for the average home owner. Don't even consider solar panels until you've reduced energy needs first. After efficiency upgrades, modern solar panels make a lot of sense financially speaking.
- ph0rque 14y ago
  I've had a solar installer make a report... it would take a little more than half of my roof (the house is a ~1000 sq ft one-story building).
- toomuchtodo 14y ago
  The cheapest watt is the watt you never had to generate.

jrh555 14y ago

One thing that may save utilities for a while is the rise of the electric car. There will be a need for charging stations to charge these cars when away from home and solar may not be practical in all locations. This could be especially true in cities where there may not be enough room for all the solar panels needed. Electrified roads that charge up cars as they drive on them would be even better and would be a natural extension of existing utility services. If utilities were smart they would focus on helping to accelerate the transition to electric vehicles.

skybrian 14y ago

Actually, it looks like it's according to one consultant that one of the utilities hired. But it's about long-term trends that are interesting enough. A summary by a more careful writer would be appreciated.

InclinedPlane 14y ago

Ironically widespread availability of solar power could lead to increased pollution. Purely hypothetically, if somehow it became popular for people to generate some, but not all, of the power they need from solar panels then perhaps people would pay less money to the power companies. Power production becomes less profitable and there's less demand for expanding supply. Meaning that the cheapest power production that requires the lowest capital investment will win out. And that's coal.

deleted 14y ago
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dangrossman 14y ago
That used to be coal. Now it's natural gas. The gap has grown large enough in some places that coal plants get converted to run on natural gas. http://www.sourcewatch.org/index.php/Coal_plant_conversion_projects http://www.sourcewatch.org/index.php/Coal_plant_conversion_p...
- toomuchtodo 14y ago
  This is actually a huge deal. Coal advocates disparage environmentalists about the coal industry going down the tubes, when its really US fracking efforts that are driving down the cost of natural gas.
tedsanders 14y ago
Peaker plants are typically natural gas, not coal. Coal plants are very large, very capital heavy, and cannot be adjusted as finely. (At least in California/USA. I can't comment on other parts of the world.)

sophacles 14y ago

I work in this space. I think it is worth noting that, yes this is true for some players, particularly at middle management and executive levels. However it is equally work noting that some of the resistance is just conservative engineering. Would you just grab the latest 0.1 release of the hot new database and throw it up on your production systems because everyone keeps talking about the promise of it? This is a real concern at the engineering levels. One of the problems with distributed generation is not that it eats away at grid profits - there is still profit from maintaining the grid that allows you to have power even if your solar panels break. There are price structures that allow this to be profitable for utilities (however everyone involved needs to look at it with fresh eyes -- homeowners need to stop thinking about it in just profit from unused kwh and utilities need to stop looking at it in terms of kwh pushed). The problem is that huge and expensive amounts of infrastructure are designed an manufactured with a one-way power flow in mind. Protection schemes are predicated on a star(ish) topology of distribution lines, where the assumption that power flows from the "hub" out.[1] Things like transformers are highly tuned for this type of flow, to the point where even small changes or running out of spec can seriously degrade the expected lifetime (usually thought out and planned on the time-frame of 30 years.) Power flowing the other way is a "break the line" event, period, to protect that equipment. A lot of substations don't have the type of capacity or equipment to handle power swings too far out of spec, because they designed that way for maximum efficience of the push model. Something this article misses in it's analysis, is that power companies building infrastructure is absurdly expensive - getting right aways for power lines is a decade long, legally perilous, and highly prone to regulatory whim, endeavor (the NIMBY crowd is strong here). As such, once one is put in, the cost is amortized over 30+ year timelines, and efficient operation is actually strongly considered. Demand response and efficient appliances are actually in the interest of utilities, and they do recognize this. If they can't build new infrastructure to increase supply, they want demand to remain within their capability to deliver (and when done right, the base "connected" fee to the customers can be as or more profitable than more power to fewer customers). Finally, all the understanding and models of how electricity works in an interconnected grid is based on models assuming "roughly" steady state capable generators. Things like solar and wind have some problems in this, as they can contribute instability to the overall system - if the wind dies, you have to have hot standby power to keep voltage levels up. If everyone in a region has PV, and clouds move in, they will be demanding more power from the grid. On a "partly sunny" day, this result in weird spikes, again placing strange wear patterns on transformers and generators that are ramping up and down in response. Even the engineers I know who are all about this stuff are hesitant to just deploying it, because of all this technical challenge. Just like I would be hesitant to throw an unknown datastore into a stable working system without staging, testing, and otherwise slowly integrating it. It's even worse for the utilities, because they are in a "damned if you do, damned if you don't" position. What is worse - rolling slowly with the new technology and being blasted as obstructionists, or going head first, and being blasted when the unexpected happens and breaks a bunch of things, or finding a middle ground and making everyone unhappy? [1] at transmission levels, this isn't true, and in dense urban centers the topology is meshier, but this statement is still true for a (geographically anyway) majority of power distribution.

ahi 14y ago

At least here in Michigan, DTE Energy is pushing efficiency and solar. Part of this is a legislated requirement, but I think the big motivator is how the regulator calculates their profit margin. AFAIK, they don't make their margin on selling electrons, but on capital investment. Higher utilization of their generating capacity just means slimmer profit margins. Most of their plants are 40-50 years old so they have plenty of capital investment and profits headed their way even if solar cuts into demand. I could be wrong about any or all of this, since I'm working off memory and I'm not going to read 100 page regulator reports.

yessql 14y ago

This piece overlooks the fact that utilities can install solar power cheaper than a residence can. This will always be the chase. Electricity will drop in price accordingly.

fiatmoney 14y ago
But transmission losses will be lower when generation is closer to the point of use, and storage costs may be too (eg, hot water tank or "accumulated" AC in a well-insulated house, vs. expensive batteries).
toomuchtodo 14y ago
Generation and transmission are two different utility businesses. This article is about how people are not going to want to pay to be hooked to the utility "just in case".
- snowwindwaves 14y ago
  I believe people will. E willing to pay quite a bit, just in case, because that power is extremely valuable to someone when they are otherwise facing the prospect of having none.
khalstvedt 14y ago
Although the point of the article is to identify a snowball effect with distributed solar generation vs. fossil fuel, that angle leaves out a lot. Obviously utilities companies will (try to find a way to) pivot, and provide services or guarantees that a disconnected setup would not have. Hell, they may even install panels on your roof when your house is built in exchange for discount/free energy, and sell the excess for profit.

madaxe 14y ago

How long before the utilities (likely successfully) lobby to make PV/DER illegal, I wonder. Soon, I'd wager. As I see it, the purpose of this report is FUD, which is usually the opening move of any protectionist initiative. Edit: alternately, they'll push to tax it to high hell, or at least argue that they own sunshine (like water utilities do over rainwater collection) and should therefore be paid by PV users.

tedsanders 14y ago
I think that's an unfair and cynical view of the goals of utility companies. Some utilities may lobby to make distributed PV illegal, but I believe only to protect people and the integrity of the grid. -A former utility engineer
- madaxe 14y ago
  The goal is to enhance shareholder value. End of story.
  - tedsanders 14y ago
    That's not the end of story. The reality is that utilities are filled with thousands of employees. Not every employee has the sole goal of enhancing shareholder value. Anyway, enhancing shareholder value isn't necessarily at odds with allowing people to generate electricity with distributed solar. You can defer quite a bit of capital expense (e.g. power lines) if the load gets reduced by generation. Finally, for some regulated utilities, maximizing revenue doesn't mean maximizing profits. Sometimes regulations set the profit, and there are ways to game it that don't involve running the utility as a private-profit-maximizing firm.

MikeCapone 14y ago

Solar doesn't have to be expensive up-front thanks to companies that lease solar systems like SolarCity (who's chairman is Elon Musk, ran by his cousins).

robbrown451 14y ago

If they are regulated monopolies, it seems like any issue they complain about is directly addressable by adjusting the rates they are allowed to charge, so as to keep their profits reasonable.

cinquemb 14y ago

I wonder when CSP tech is going to be talked about in the mainstream. It seems like when it comes to solar, people just think of PV.

stesch 14y ago

Hello from the wasteland Germany. Everything is in ruins.

leashless 14y ago

The chapter and verse of the grid utility economics as they are impacted by solar and wind is in http://smallisprofitable.org http://smallisprofitable.org which was The Economist's Book of the Year 2003. (disclaimer: I helped edit this)

afterburner 14y ago

Excellent news then! I would certainly prefer more solar power, and it looks like the utilities agree it's possible.

graycat 14y ago

It's simple: A utility's costs for a customer are basically a fixed cost for a connection plus a variable cost for the power a customer uses. The fixed cost pays for the astoundingly expensive equipment needed for a connection, and the variable cost pays just for the actual power. In the US, the wholesale cost of power on the grid has long been about 0.5 cents per kWh, that is, relatively low. I have some figures from 2007 saying that the cost of power at the plant from coal is less than 3 cents per kWh and, nuclear fission, 2 cents. Now, if a lot of consumers put solar panels on their roofs but remain connected to the grid, then they will pay less to the utility which stands to fail to get back its fixed costs. So, eventually the customer will get an electric bill that itemizes a much larger fixed cost for the connection and a lower variable cost for the actual power. In the meanwhile, there will be a lot of 'politics' where people with solar panels want to pay not enough for the fixed cost of the grid which will mean that people without solar panels will pay too much. And the people with solar panels will want to be able to sell power back to the utilities which; such power will cause engineering problems on the grid, and the solution of these problems will raise the fixed costs. For the batteries, so far they are too expensive. Same for home electric generators. Generally a big problem with electric power is that storage is very expensive. Net, for generating electric power, super tough to improve on the results of the last 100 years in electric power engineering where the power comes from falling water, burning coal, or nuclear fission. In simple terms, for the grid, really no one wants power from unreliable sources such as wind and solar because (1) still need the fixed cost of the present system for when the wind is not blowing and the sun is not shining, (2) wind/solar variability can cause stability issues on the grid (to be solved by a 'smart grid', that is, more fixed cost for the grid), (3) the good wind/solar sources are generally too far from the major grid demands meaning long distance transmission lines (more cost). My guess is that if take the subsidies away from wind and solar, then for the grid wind/solar will fall like a lead balloon. Broadly, wind/solar for the grid asks us to pay for fixed cost twice, once for wind/solar and again for our current system for when wind/solar are not providing enough power. Heck, except for dress up, I have just one pair of shoes and wear them rain or shine -- I don't have separate shoes for rain and then shine. I have one computer for night and day and not separate computers for each. I want to pay for just one source of fixed cost of electric power, not one source on days with wind or sun and another source otherwise. Power from wind/solar may be useful, say, for smelting aluminum, generating hydrogen from water, providing energy to make gasoline for water and coal. Note something these three candidate uses have in common: The output is easily stored, that is, buffered. Then notice the problem of electric power for the grid: The means of storage are far to inefficient. For the grid, as far as I can see, wind and solar are just nonsense pushed by a 'wind/solar subsidy industry' that wants to talk people into measuring temperature not with thermometers but pictures of polar bears. There is another candidate, small nukes. So, from Japan can buy a 'box'. In a neighborhood, dig a hole in the ground, install the box, and cover it over. Connect the box to the grid of the neighborhood. Then the box, just buried in its hole in the ground, provides all the electric power for the neighborhood for, say, 20 years. The savings are maintaining the long distance power transmission from the power station to the neighborhood. Of course the interior of the box is a nuclear fission reactor. Now if my startup works and I get rich and build a nice place in the rural hills of, say, New Hampshire, then maybe I will be able to get such a box! Also for my 4 wheel drive truck to get around in the winters, use that power to make gasoline from water and coal! Maybe!

fnordsensei 14y ago

Decentralized power generation makes society as a whole far more resilient against sabotage and natural disasters. As for the business model, Heinlein has a comment: "There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back."

jusben1369 14y ago

I think this is a fascinating argument and makes sense. However, Is the EEI really someone we trust with a report like this? It seems - given their position - they have a lot to gain and little downside in trying to scare what are essentially politicians into helping protect them. Perhaps that's why the media ignored this report to begin with?

spenrose 14y ago
The report is interesting BECAUSE the EEI represents the institutions with the most incentives to resist change.

deleted 14y ago

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teeja 14y ago

Of course they might "destroy US utilities", which is why some of us appreciate them so much. Of course they won't destroy hydro or wind plants. There was a time when power generation "had" to be centralized, just as AT&T "needed" to have a telecom monopoly and we "need" to have ISPs. Technology is sweeping us past that necessity; those days are ending. Now that the utilities have stripped and burned most of the easily-stripped fossil fuel resources (leaving no such easy plundering for future generations) and kept the profits for themselves, we are all starting to enjoy getting a slice of the pie. Dear Utes: don't let the door hit you in the ass.

JulianMorrison 14y ago

A similar cycle will trash the gasoline car industry when electric meets the combination of [cheap, useable] that is sufficient to trigger a demand reduction / supply contraction cycle in the less fungible parts for gasoline cars.

jmspring 14y ago

One of the best tales regarding an entrenched utility, costs, and an individual wanting to hook into the grid. Ken Adelman has made his name known for a number of things, but his fight w/ PG&E was one of the more memorable ones -- http://www.solarwarrior.com/pgebattle.html http://www.solarwarrior.com/pgebattle.html

Stauche 14y ago

This article is the most long winded explanation to a fact I've ever seen on Hacker News. DUHHHH Obviously they could destroy U.S. utilities!

Stauche 14y ago

"rooftop solar fucks up the utility model even at relatively low penetrations" I couldn't have said it better(funnier) myself

dghughes 14y ago

Utility companies are in the power business I don't see why that means a giant plat full of machinery. Say a little old lady wants solar panels but is in no way capable of installing them anymore than she can install plumbing. Power utilities should offer solar panels, wind turbines, battery storage systems. Even electrical to hydrogen foe storage. The power company should be like an ISP only instead of modems they service power generating devices.