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How should net metering affect your electric bill?

234 pointsby snewmanover 3 years ago

52 comments

Dave_Rosenthalover 3 years ago
I just moved into a new construction house in Colorado with a substantial (23kW) solar installation. It’s been interesting to see how much, in the words of the author, ‘feeding bread to pigs’ I have ended up doing.<p>The solar installation (which is probably larger than optimal) is dictated by the policy for the house to be “net zero”, which in turn is dictated by a policy based on the size of the house. (In practice, solar is the cheapest way for the builder to get all the way to ‘net zero’ after the usual decent insulation, windows, etc.)<p>So that’s how I got solar, but now I want to turn it on. Well, this is not in the interest of the utility at all (they lose money), but they still by policy get to ‘approve it’. This required a many-month (and many phone call) process of reviews, approvals, etc. which concluded in the utility activating (installing a meter for) the installation. In total it was maybe 9 months from when the solar was all wired up and sitting in the sun until it was producing any electricity for the world!<p>Now the utility gives me a choice of two billing options. At the end of each month, excess energy I’ve generated can either be put in a kWh bank and rolled over as credit, or it can be paid out. However, the payout is hilariously low (like $0.01&#x2F;kWh) so of course everyone chooses the bank.<p>But now incentives are all screwed up! Since I easily generate more electricity that I will ever use (see above for why policies drove us to an installation larger that necessary) my household has no incentive to conserve at all. E.g. I am heating my garage with an electric heater because it costs me zero.<p>So the net effect of all of these policies intended to promote conservation are:<p>1) To drive up the price of housing in an area where that is already one of the big challenges the community is fighting<p>2) To completely disincentivize any actual conservation<p>3) To have new solar installations laying fallow for 6-9 months<p>I don’t know what the solution is, but the problems are pretty easy to see.
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carlhjerpeover 3 years ago
In Sweden there are 2 separate charges, one for infrastructure and one for consumption. The infrastructure bill scales with how big your breakers&#x2F;fuses (English) are while consumption scales with how many KWh you&#x27;ve used. You often have a different infra provider and power provider.<p>For someone living in a condo&#x2F;apt the infra cost is usually higher than consumption while in houses where heating often is powered by some heat-pump system(drill, air, ground) consumption is higher.<p>Houses with district heating can scale down their capacity to lower the infra price.
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epistasisover 3 years ago
One thing that&#x27;s missing from this is that with current California net metering, for new solar customers, you can&#x27;t dump a kWh on the grid at noon and then swap it for one at 7pm at the top of the duck curve.<p>New plans are all time-of-use rated, meaning that you can only swap kWh within the same time of use band. At least, that&#x27;s how it&#x27;s been explained to me, I have not yet been able to find any explicit rules on PG&amp;E&#x27;s site explaining how time of use and net metering interact. (And for that matter, PG&amp;E goes to nearly excessive length to avoid describing how anything works, what the actual rates and charges are, or generally putting the most useless pablum on their website.)<p>I think that all of these market designs and pricing schemes need to be made with an eye on getting to the lowest cost zero-carbon grid. Current best models are coming from Christopher Clack at Vibrant Clean Energy, and all his modeling shows that if we deploy lots of distributed solar and storage at meters, and upgrade distribution, we end up saving massive amounts of money over the decades. The reason is that by having distributed solar and storage, you can massively reduce other fixed cost parts of the grid as they age out.<p>So really we need net metering policy that encourages that sort of capital investments today, and not just in the wealthiest neighborhoods that have good credit scores or $20k to spend on home improvement on homes occupied by owners, but all over the grid, including rentals.<p>That&#x27;s going to take not only good net metering policy, but also new innovation in financing and entrepreneurship. Figuring out how to convince landlords to let you install solar and storage all over, and integrating that into a virtual power plant is a nut that somebody needs to crack. Maybe it won&#x27;t be entrepreneurs, maybe it will be cities making municipal Virtual Power Plants to meet their own ambitious climate goals. But there are a few key pieces missing from the best possible, most economical efficient, energy transition. And if we just let the utilities dictate policy, we will <i>not</i> be getting anything like the most economically efficient grid, we will get grids where they can make maximum profit.
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bmmayer1over 3 years ago
Good piece...putting on my econ hat here, it would definitely be more accurate to say that prices are <i>signals</i> that reflect the all-in cost of moving products and their dependencies through a supply chain and to the consumer. These signals can be disrupted by many factors, including competition or lack thereof, regulation or tax policy, etc, that often can make things inefficient. But in the examples the author uses, it&#x27;s not that the price is divorced from cost, it&#x27;s that the price of video tapes reflects the all-in cost of production, distribution, as well as the cost of fighting piracy. High medical prices reflect the incentives and constraints of the system that has been built around the service. High drug prices reflect the cost of R&amp;D, not the cost of pouring cheap compounds into a plastic mold.<p>Which is not to say that prices are not truthful per se -- just that pricing signals can be easily disrupted by factors not normally in the consumer&#x27;s direct field of vision, and can be exploited by &quot;loopholes&quot; (which are just another way to send a signal back to the firm that the price is incorrect).
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boringgover 3 years ago
I&#x27;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?<p>There&#x27;s no conclusion and no cohesive argument just that the world is full of pricing distortions or that what you pay in prices isn&#x27;t always exactly what you get (subsidizing some other development). Is it a take that NEM is flawed?<p>Is it him moralizing that the climate tech industry is taking advantage of subsidies? &quot;Don&#x27;t cling to a subsidy longer and harder than necessary&quot; --&gt; Please look at the on-going subsidies to Oil &amp; Gas - its absurd.<p>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&#x27;s incredibly complex and certainly not clear what you are paying for.<p>The top layer of how retail get&#x27;s comped for the generation (in California) is interesting and a long-term risk for the utility (if enough people&#x2F;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.
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jsightover 3 years ago
Honestly, this feels like a bit of a red herring. The net metering issue is getting more airtime lately, but it isn&#x27;t nearly as big of an issue as the proposed connectivity fee that is only targeted at solar customers and based on the nameplate capacity of solar.<p>That fee is directly designed to capture the benefits of solar for the utility and has little to do with real costs to the grid.
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surfmikeover 3 years ago
“In practice, it’s often politically difficult to argue for overt subsidies, and we resort to workarounds like net metering.“<p>The reason we have so many hidden subsidies (also: tax credits) is precisely the sentence above. It’s the difference between policy and politics. Few policies are designed well because the main force driving their creation is political support (or the lack of it).
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kelnosover 3 years ago
The annoying thing about this is that, if the new California metering rules do end up passing, I will definitely not be installing solar on my roof, because it will end up either costing <i>more</i> in the long run, or the break-even point will be so far out that it&#x27;s not worth it to me.<p>Now, as the article says (or at least hints at), maybe there are better things we can do as a society to reduce carbon emissions than have individuals install solar panels on their house, to the point that it doesn&#x27;t make sense to subsidize it quite as much as we do today. I don&#x27;t think I&#x27;ve heard regulators and utilities make that argument, though.<p>I do agree that the generation and transmission infra needs to be paid for, and if I&#x27;m giving the grid excess power instead of money, that reduces the utility&#x27;s ability to maintain their infra (and PG&amp;E is <i>already</i> lacking in that area). And if I do get much lower utility bills (from a solar installation), then that means that eventually utility rates will have to go up. And then essentially lower-income folks, who can&#x27;t afford solar panels, will be subsidizing people like me who can... which is not remotely fair.<p>However, if we <i>do</i> believe that residential rooftop solar is something that we need to be promoting and incentivizing, then the current&#x2F;old net metering rules need to stay. And to make up the difference on the infra side, one of two things needs to happen: 1) utility prices should go up, and the government should offer subsidies and credits to low-income folks, or 2) the government should just fund maintenance of the grid directly.
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microfenover 3 years ago
People have seen this net metering problem coming from far off. I wrote a very unpolished undergrad thesis on this a while ago. Some standout articles from back then showed how net metering leads to a positive feedback of solar adoption [1] because of how rates are structured throughout this country (and the world for that matter), and it was time to consider modifying the rate setting process [2]. My conclusion was that net metering ends up being a regressive tax on those who can&#x27;t afford the upfront capital to install solar themselves.<p>It&#x27;s been a while since I looked at residential solar tariffs, but there were a lot of ingenious solutions being proposed to deal with the downsides of net metering and poorly set feed-in tariff rates. Minnesota&#x27;s Value of Solar tariff [3] is the one that comes to mind as being pretty clever.<p>[1]: <a href="https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S0301421513006526?via%3Dihub" rel="nofollow">https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S03014...</a><p>[2]: <a href="https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S104061901400150X?via%3Dihub" rel="nofollow">https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S10406...</a><p>[3]: <a href="https:&#x2F;&#x2F;www.mnseia.org&#x2F;value-solar" rel="nofollow">https:&#x2F;&#x2F;www.mnseia.org&#x2F;value-solar</a>
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harterrtover 3 years ago
OP hints at this - but the problem seems to be net metering lumps capacity payments in with the cost of power.<p>Some markets run a separate capacity market that rewards power generators explicitly for their capacity - independently of whether they actually generate any electricity. (California&#x27;s market (CAISO) doesn&#x27;t do this)<p>A long time ago I was involved in setting capacity market prices if y&#x27;all have follow up questions.
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HWR_14over 3 years ago
He omits the biggest issue with net metering. He claims &quot;the utility is acting like a giant battery.&quot; But it&#x27;s not. Power plants don&#x27;t turn off&#x2F;on with demand, at least not that rapidly changing a demand. And the grid doesn&#x27;t store electricity. The reason electricity prices have gone negative is that the grid needs to offload the power somehow. If everyone is producing tons of solar during the day, feeding back to the grid, and consuming at night, the utility is twice fucked over. They have to pay to dispose of daylight power, and then pay to generate and transmit night power, all while making no money.
ed25519FUUUover 3 years ago
This article carries way too much water for PG&amp;E. Sad, but I guess since we&#x27;re gearing up for a net-metering 3.0[1] fight we&#x27;ll see more and more articles like this one.<p>Here&#x27;s the places where I think it misses the mark:<p>* The energy generation costs listed by the author actually includes rooftop solar. PG&amp;E paid exactly $0 for you to spend $30k installing the panels, so that number is low for PG&amp;E for a reason.<p>* PG&amp;E turns around and sells your solar power to people enrolled in &quot;Solar Choice&quot; plans who will pay 50% more for electricity than what PG&amp;E net metered you.<p>* California has a green energy mandate and rooftop solar is one of the ways PG&amp;E can meet the mandate <i>while offloading the entire cost of the system onto the homeowners</i>.<p>* Net metering last for 1 year and after that PG&amp;E &quot;credits&quot; you the wholesale value of your excess electricity, which they value at approximately 1c&#x2F;kWh even though they charged other people $0.40&#x2F;kWh during peak time for that power you exported.<p>* The CA legislator mandated all new homes are installed with solar panels. Kind of makes sense why PG&amp;E was favorable of this bill. PG&amp;E again has offloaded the cost of installing green energy generation on someone else.<p>* The monthly non-bypassable fee that the author describes as &quot;pretty low&quot; is actually closer to $10&#x2F;month and expected to rise with NEM 3.0 to $50 a month or more. Keep in mind that PG&amp;E has 5.5 million customers, so this number is significant.<p>* Grid defection is illegal in most municipalities so even if someone wanted to install a battery and go off-grid they still have to pay the $10 a month non-bypassable PG&amp;E fees.<p>Net Metering 3.0[1] &quot;fixes&quot; the problem the author attempts to describe, but really it&#x27;s a rug-pull on everyone in CA who spent tens of thousands of dollars to install rooftop solar.<p>Customers installing solar panels at their expense is a subsidy FOR PG&amp;E, not the other way around despite what this spin attempts to portray.<p>1. <a href="https:&#x2F;&#x2F;www.solarreviews.com&#x2F;blog&#x2F;california-net-metering-changes" rel="nofollow">https:&#x2F;&#x2F;www.solarreviews.com&#x2F;blog&#x2F;california-net-metering-ch...</a>
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phkahlerover 3 years ago
&gt;&gt; Greenhouse gas emissions are a classic instance: polluters don’t pay for the carbon they emit. This is the ultimate distorted price: emissions have a high cost, but the price we charge polluters is $0. That price is a colossal lie.<p>I always say if you want to make someone pay for carbon emissions, the easiest way is to tax its extraction from the ground. Tax coal, oil, and gas extraction (or import) and call it a day. No sense creating artificial markets for carbon credits or other such nonsense that just encourages gaming a system and feeding middlemen.<p>The author IMHO totally blew it by digressing from the net-metering thing. Its a really good example of how pricing doesn&#x27;t match costs, but he offers absolutely nothing as a fix for that situation. Charging people a base rate for the infrastructure plus usage sounds nice, but that causes problems for poor people and kind of subsidizes large users. The current pricing scheme which increases costs with usage (progressive pricing?) seems more fair. Or what about splitting the bill into infra and usage portions, then solar installations would pay infra for power flowing in <i>either</i> direction. I&#x27;m sure there are plenty more ideas out there, but the author offers none.
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jmacdover 3 years ago
The (privatized) power utility in Nova Scotia, Canada just this week proposed a fee of $8&#x2F;kWh for solar power entering the grid. It was met with a pretty ferocious response to the point the government started re-writing the legislation that governs utility regulation.<p><a href="https:&#x2F;&#x2F;www.cbc.ca&#x2F;news&#x2F;canada&#x2F;nova-scotia&#x2F;premier-vows-to-protect-n-s-solar-industry-by-blocking-new-net-metering-charge-1.6336302" rel="nofollow">https:&#x2F;&#x2F;www.cbc.ca&#x2F;news&#x2F;canada&#x2F;nova-scotia&#x2F;premier-vows-to-p...</a><p>A very large solar industry has been established around these pricing discrepancies. Not easy to undo (and I guess not obvious if it should be undone).
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OliverJonesover 3 years ago
Net bandwidth is somewhat similar.<p>During the first dotcom bubble back in the 1990s, the colocation companies (predecessors to today&#x27;s cloud companies) sold bandwith based on peak bandwidth usage. It was called the 95&#x2F;5 plan. It worked like this. They measured my egress data and stored it for every five minutes in the month. At the end of the month they&#x27;d calculate the 95th percentile of all those five-minute measurements and then charge me for that.<p>In other words, I paid for peak egress. Now AWS just bills US$0.09 per gigabyte. Their billing algorithm doesn&#x27;t care about my peak load. And I have to pay just as much for the rest of the year as I would pay on Cyber Monday, when Amazon&#x27;s bandwidth is spoken for by their own servers. That&#x27;s a dislocation.<p>Lots of stuff works that way. Electricity, water, sewer, highway tolls.<p>Regulated monopoly electric grid operators traditionally get their rates set as a percentage of the value of their accumulated capital physical plant: turbines, poles, cables, transformers, switches, the land they sit on, and all that. Part of that cost is fixed, but most of it varies with the amount of power they sell.<p>Net billing for domestic solar electric panels isn&#x27;t fair to the electric grid operator. When I connect to them on a net-zero tariff, I basically get 100%-efficient power storage for free. They&#x27;re my battery, and a fine battery they are.<p>The local grid has an excellent pumped-storage hydroelectric rig. It&#x27;s about 70% efficient, and it&#x27;s about 70 miles from here. Shouldn&#x27;t I pay something for all that if I use it? (The Northfield Mountain storage facility was originally built to store the Vermont Yankee nuclear plant&#x27;s overnight output for peak load, and it outlasted the nuclear plant.)
jupp0rover 3 years ago
The solution to the problem is real time pricing based on the grid&#x27;s requirements at any moment in time. The current model also disincentives battery installations.<p>If prices were adapted to grid requirements, we&#x27;d have negative energy prices during peak solar production hours so customers should be encouraged to charge their own batteries using their solar or even get paid for charging their batteries via the grid. During hours of high demand but little production, batteries should send energy to the grid.<p>Of course all of this requires infrastructure as well, which needs to be paid for somehow.
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sandworm101over 3 years ago
&gt;&gt; For instance, pricey CDs prevented lots of people from listening to music.<p>Nope. Nobody I knew in the 90s had this issue. In fact, higher prices caused <i>more</i> people to listen to <i>more</i> music. Unable to afford CDs, the kids turned to Napster. After that they had access to more music than any generation in history. This in turn forced the music industry to change, to create online delivery platforms. Napster might be gone, but those 90s CD prices are why we have streaming services today.
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vehemenzover 3 years ago
If some states weren&#x27;t captured by utility monopolies, then solar users would be legally allowed to disconnect from the power grid, potentially solving the first issue. It&#x27;s amazing to me that this is illegal anywhere.
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PaulHouleover 3 years ago
Right, the claim that renewables are cheaper than nuclear and other alternatives are a half-truth.<p>It&#x27;s true that renewables can be highly affordable when the sun is shining but when the wind is blowing but the reason why they work with the current grid is that natural gas is highly available and cheap and the capital cost of gas turbine generators (very similar to jet aircraft engines) is very low.<p>Hydroelectric can fill some of the gap but at an environmental expense: if you want to support a healthy ecosystem you need a relatively continuous flow in rivers. If it is starting and stopping a lot you are depriving the ecosystem of a valuable service.<p>The idea that consumers can match demand and supply is also limited in applicability. If you turn off power to an industrial facility like a microchip factory you can destroy days if not months worth of production. Wholesale electricity prices can range from negative to astronomical and it is outright cruel and unrealistic to expect ordinary consumers to be exposed to that.<p>Options for power storage have improved dramatically in the last decade thanks to the development of electric car batteries but they are still orders of magnitude too expensive. If they follow the same curve solar has they could come within reach but with any setbacks they could remain science fiction.
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apiover 3 years ago
This is why your bill should separate your grid fee from your generation fee. Net metering could apply to the generation fee but not the grid fee, and your generation cost should be determined by the time you are using power (due to peaking) not just the amount.<p>Want to escape the grid fee? Then you have to actually disconnect with full battery backup. That would promote independence and community microgrids, which would be a good thing for robustness and overall system efficiency. Someday I can easily imagine suburban and rural areas with no &quot;big&quot; grid connection and the grid becoming primarily a thing for industrial and high density areas.
maerF0x0over 3 years ago
It seems to me if it&#x27;s true that the cost of distribution is something like 77%, then it really argues in favor of more houses being off grid -- For the cost it may have been better to build self sufficiency, and&#x2F;or micro community grids rather than a giant regional one. The economy of scale in generation is lost in the costs of distribution.
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samatmanover 3 years ago
I&#x27;m not sure where to start with this article.<p>Ok, how about here: there is no necessary connection between costs and prices, at all, and this is why some businesses go broke and others are worth a trillion dollars.<p>Starting completely over with the basic microeconomics correct, there&#x27;s surely an interesting question about public utilities which are paying prices for electricity which no longer line up with amortization and other costs of provision to be answered.<p>Everything said about clubs was not-even-wrong, though.
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cletusover 3 years ago
The author here would do well to and understand and use terms like &quot;fixed costs&quot; and &quot;variable costs&quot;. There are large fixed costs in the power grid and the author is complaining that the retail price of electricity doesn&#x27;t reflect the variable costs, leading to distortions and perverse incentives.<p>But this doesn&#x27;t make prices &quot;lies&quot;.<p>&gt; The current net metering system in California is pretty favorable to customers with rooftop solar; in effect, it’s a subsidy.<p>It&#x27;s quite an overt and deliberate subsidy to foster solar power technology (which has been wildly successful), reduce demand on the grid and to shift the pattern of power usage. Electricity use spikes during daylight hours [1]. This happens to be when the Sun is shining and solar power works. Peak demand is really the only thing that matters in powering a grid. Solar is highly effective at reducing peak usage.<p>I honestly don&#x27;t know why the author feels like any of this isn&#x27;t &quot;upfront&quot;.<p>[1]: <a href="https:&#x2F;&#x2F;www.eia.gov&#x2F;todayinenergy&#x2F;detail.php?id=42915" rel="nofollow">https:&#x2F;&#x2F;www.eia.gov&#x2F;todayinenergy&#x2F;detail.php?id=42915</a>
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dangjcover 3 years ago
A huge portion of electric bills are paying for wildfire damage&#x2F;hardening and for expensive transmission lines. Rooftop solar reduces both, but is not being credited for it in NEM 3.0.<p>When electricity is generated and consumed locally, it doesn&#x27;t need to be transmitted across huge distances using expensive transmission infrastructure. There&#x27;s also less wires that can trigger fires. But infra is the only way regulated utilities are allowed to make a profit.<p><a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;2021&#x2F;07&#x2F;11&#x2F;business&#x2F;energy-environment&#x2F;biden-climate-transmission-lines.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;2021&#x2F;07&#x2F;11&#x2F;business&#x2F;energy-environme...</a><p>These increased costs being passed to California consumers could kill electric cars. We&#x27;re paying $0.30-$0.40 &#x2F; kwh to PG&amp;E, which pencils out to over $9 &#x2F; gallon.<p><a href="https:&#x2F;&#x2F;www.caranddriver.com&#x2F;news&#x2F;a35152087&#x2F;tesla-model-3-charging-costs-per-mile&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.caranddriver.com&#x2F;news&#x2F;a35152087&#x2F;tesla-model-3-ch...</a>
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tempnow987over 3 years ago
One BIG issue with this article. You are often not allowed to just go off grid and use your own battery as a backup.<p>Does anyone know if they&#x27;ve changed that (zoning &#x2F; building code &#x2F; certificate of occupancy) requiring an interconnect with the grid?<p>That is my big issue here. We are getting told how we need to pay for them to build us a bigger &#x2F; higher power grid. What if I want to go off grid.
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irrationalover 3 years ago
&gt; If a house on average generates as much as it uses, the electric bill will be zero. (In practice there’s a minimum monthly fee, but it’s pretty low.)<p>This was the case in the last house I lived in. The solar panels generated enough power that there was never an electric bill other than the $12 fee to be hooked into the grid. And this was in cloudy, rainy Oregon.<p>I did think about this scenario. If everyone had panels like that house, how could PGE make any money?<p>Note: we lived in that house for about 10 years before installing panels, so we knew the average monthly electric bill. We paid for the panels with a loan and the monthly loan payment was lower than any of our monthly payments during the previous 10 years. It was cheaper to get panels and pay the loan than to pay the monthly electric bill without panels.
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gwbas1cover 3 years ago
The problem with Net Metering is that some politicians don&#x27;t understand how electricity (and energy) works, but feel like they need to &quot;do something&quot; in order to tackle climate change.<p>Net Metering was a great way to subsidize solar when it was a niche market. Now it&#x27;s not. IMO, we should stop subsidizing solar and start subsidizing home batteries. IE, only allow &quot;Net Metering&quot; if there is a battery, sized to match the panels, that the power company can control.<p>This way, we can make the system &quot;win-win.&quot; The consumer benefits from cheaper electricity, and the power company benefits because they can tap the generated electricity when it&#x27;s needed most.
Johnny555over 3 years ago
Large commercial customers typically pay capacity costs -- i.e. if you need 1MW of power, you pay for that 1MW of capacity on top of your actual demand costs.<p>If they did this with residential customers, it would make residential energy storage (i.e. batteries, but maybe thermal or other storage) more attractive, so instead of paying for a 200A circuit to meet your peak demand, you pay for a 50A circuit to keep your home battery charged and that battery kicks in to meet your peak demand.<p>And once you have that battery, you may as well add solar as well.
PaulDavisThe1stover 3 years ago
Here in New Mexico, when I connected our 6.6kW PV array to the grid, I had the choice of net metering or not. But there was a wrinkle: if I chose net metering, the power company could use our installation to count towards its own state and federally mandated shift toward renewables.<p>Being a cantakerous old geezer, I said hell no, and opted for no net metering. Works out OK from my perspective: still pay small electricity bills for the excess that we need for 3-4 months a year, and just the $7.70 connection charge for the rest.
georgeecollinsover 3 years ago
One of the most common &quot;lies&quot; is price windowing where you charge multiple prices for something that costs you the same. Like when Intel used to sell a 486SX at a lower price because the math co-processor was deactivated on the same chip as the more expensive 486 DX. This pricing &quot;lie&quot; allowed Intel to get more total revenue and sell more total units because they could charge more and less at the same time. Airline ticket prices also work like this sometimes.<p>Why I put &quot;lie&quot; in quotes is that prices always reflect more than cost. They also reflect the utility to the purchaser. Some people are always willing to pay more or less. Beyond cost, price also reflects utility. It&#x27;s true the price of electricity is manipulated to shape behavior, but its also true that 200 kW hours is twice as useful as 100kW hours and the purchaser may be willing to pay twice as much for it.
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jplr8922over 3 years ago
As an ex-power trader active in the californian market, his analysis is incomplete.<p>The pricing of wholesale market depends on many factors, including 1) the amount of electricity consumed at time T (quantity) 2) the variation on that amount at time T (delta of your quantity) 3) the location (delivery fee for your quantity)<p>The problem with solar in californa is that electricity is produced when the market does not need it, and that it stops production when the demand increases. The current reality is that &#x27;green&#x27; power generation increases the dependance on &#x27;brown&#x27; power source for reliability reasons. Your can read more about this here : <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Duck_curve" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Duck_curve</a><p>That &#x27;&#x27;net metering&#x27;&#x27; thing is to electricity prices what Santa Claus is to christmas presents.
kevindongover 3 years ago
In NYC at least, electric supply charges are distinct line items from electric delivery charges. Consumers do have the option of choosing who supplies their electricity (e.g. namely if you want to buy your electricity from a green source). But the local monopoly is always entitled to charge you for the service of actually delivering said electricity to you.<p>Both charges fluctuate from month to month. When I still lived in Indiana, the local monopoly lumped together supply and delivery charges into a single line item which, interestingly enough, was significantly lower than what I pay for just delivery now.<p>The following prices are for roughly April.<p>NYC (ConEd) delivery charge is ~$18&#x2F;month + ~$0.123&#x2F;kWh. Supply is usually something like ~$0.115&#x2F;kWh.<p>Indiana (Duke Energy) total cost (including both supply and delivery) was ~$9&#x2F;month + ~$0.115&#x2F;kWh.
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hbarkaover 3 years ago
The ultimate answer to this is to go self-powered. The sun will never raise its rates, and PV panels+batteries are getting cheaper.<p>Utilities are not admitting that independent power generators contribute to creating a more resilient grid at no cost to ratepayers&#x2F;full cost to the homeowner.
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giantg2over 3 years ago
I only want solar&#x2F;wind&#x2F;etc if I can be off grid.
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cwal37over 3 years ago
ctrl+f &quot;missing money&quot; no hits.<p>A lot of this is actually a very well explored problem in electricity markets, particularly at the wholesale level, and part of why, e.g., capacity markets exist in most deregulated market sin the US (outside of Texas). I know this post is focused on retail, and net metering, but this concept extends pretty broadly across electricity generation and sales.<p>For a little more explanation on the capacity market side of things I&#x27;ll quote from the Independent Market Monitor for NYISO, ERCOT, MISO, and ISO-NE in a FERC filing from last year (disclaimer, I used to work there)[0]:<p><i>The purpose of the capacity market is to satisfy resource adequacy requirements. Because an efficient energy-only market would generally sustain a long-term capacity level far below the planning requirements of the Eastern RTOs, additional revenues are needed to sustain capacity levels to satisfy these requirements. The capacity markets, therefore, set prices that reflect the marginal cost of satisfying these planning requirements and provide the “missing money”. This marginal cost or “missing money” in the long-run is equal to the cost of investment minus the operating revenues from the sale of energy, ancillary services, etc.<p>If resources are under-compensated for energy and ancillary services, it will tend to increase the missing money and raise capacity prices. Importantly, if flexible resources are systematically under-compensated, it will inefficiently shift revenues into the capacity market and shift incentives in favor of investment with less flexible characteristics. For this reason, we have repeatedly sought to promote energy and ancillary services market reforms that will reduce the need for out-of-market actions to maintain reliability, which while necessary in the short-term, are particularly harmful to incentives for investment in flexible resources.</i><p>[0] <a href="https:&#x2F;&#x2F;www.potomaceconomics.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;03&#x2F;FERC-RA-Tech-Conf_PE-Comments_Final-alt-1.pdf" rel="nofollow">https:&#x2F;&#x2F;www.potomaceconomics.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;03&#x2F;...</a>
pabs3over 3 years ago
Probably switching to transparent pricing is the way to go. Calculate the costs of things ($X&#x2F;year for maintaining transmission lines and other over Y customers = $Z infra fee) and charge separately for each of them.
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yholioover 3 years ago
Rooftop solar was always form of green subsidy: you get the same flat price for energy you dump into the network as the price the utility charges you. But what you put in at random times of your own choosing is much, much less valuable than a guaranteed power feed at any hour or season. At times it might have negative value, the power you put in costs the utility money. That simply cannot scale.<p>The only way I can see the two prices equal is if you provide power in the network on request from the utility, at specific time intervals from your own storage. But then you wouldn&#x27;t need a power utility.
caseysoftwareover 3 years ago
I bought a giant solar array this fall and finally got it activated last month. The initial way I thought &quot;net metering&quot; would work was:<p>If we buy &amp; consume 2000kWh but then produce and sell back 2000kWh, then the total bill should be near-zero.<p><i>That&#x27;s not even close.</i><p>When we buy power, we pay $0.115&#x2F;kWh but when we produce excess power, they only buy it at $0.027&#x2F;kWh.<p>Therefore, they bill us for $230 (0.115 * 2000) and credit us $54 (0.027 * 2000) so our bill is still ~$176. In order to zero out our bill, we have to sell back 4.25x more than we consume.
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Fr3dd1over 3 years ago
Kind of different in germany. I work as a dev team lead for a company that develops billing software for the german energy sector. Its super regulated by the government. For example, depending on the year you got your soloar, the amount of money you get for your energy you bring back into the grid, is different. All has its pros and cons tho
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dismalpedigreeover 3 years ago
Fine. I get the need for the need to cover my offload, downtime and night time when grid tied. What really grinds my gears is that many states REQUIRE you to be grid tied and pay those fees. I would like to go it on my own. Not a legal option.
kube-systemover 3 years ago
Many energy deregulated states charge supply, transmission, and distribution as separate line items. Is this not the case in CA? Seem strange that it wouldn&#x27;t be, how else would you handle billing when someone chooses a different supplier?
gennarroover 3 years ago
I&#x27;m shocked by how easily electricity prices are easy to find yet no one knows what theirs is! Example: <a href="https:&#x2F;&#x2F;utility.report" rel="nofollow">https:&#x2F;&#x2F;utility.report</a>
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TameAntelopeover 3 years ago
Shouldn&#x27;t the people who use the resource more pay more for its maintenance and upkeep? Seems silly to force everyone to equally maintain a resource that not everyone equally utilizes.
seventytwoover 3 years ago
The grid phase needs to be maintained as well, and I don’t know how that would happen without a giant, centralized set of turbines somewhere.
paxysover 3 years ago
Cool article, but this is literally the first chapter of any Econ 101 textbook. Nothing new or groundbreaking is happening in California.
dzhiurgisover 3 years ago
At which point is it for utilities to install batteries than to maintain grid?<p>Or is it never since grid maintenance is their bread and butter?
zbrozekover 3 years ago
What compels someone to elect a NEM plan? It seems increasingly favorable to avoid them and set your equipment to zero-export.
StillBoredover 3 years ago
Really, in deregulated markets, a similar concept should apply to wind&#x2F;solar generators. They should be forced to guarantee 100% reliable production, which means that they are responsible for the batteries or gas plants as well.<p>Then they won&#x27;t get to financially destabilize the reliable power producers by shifting the costs of having a plant sitting around idle for most of the year to some other org that has to balance the books.
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jonahbentonover 3 years ago
This piece doesn&#x27;t go nearly far enough.<p>Blue pill: prices are economic signals reflecting supply and demand and play five distinct roles in capitalist economies...<p>Red pill: prices are a statement of relative power between and among interacting entities that occasionally take economic factors into consideration, but only occasionally.<p>Subsidy irrationality and many other artifacts mentioned in this piece that are difficult to reconcile in a blue pill world make complete sense in a red pill world.
ridajover 3 years ago
Wait until this person realizes that money is a lie anyway, too!
nathiasover 3 years ago
prices as prices aren&#x27;t lies, they just don&#x27;t have any immediate relation to costs
lkrubnerover 3 years ago
About this part:<p>&quot;Maybe Some Lies Are Necessary?&quot;<p>In his book &quot;10% Less Democracy&quot; the economist Garret Jones pointed out that politicians make terrible decisions during election years, therefore, if we had longer terms in office, and therefore fewer elections, we&#x27;d have better government.<p><a href="https:&#x2F;&#x2F;www.amazon.com&#x2F;10-Less-Democracy-Should-Elites&#x2F;dp&#x2F;1503628973&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.amazon.com&#x2F;10-Less-Democracy-Should-Elites&#x2F;dp&#x2F;15...</a><p>Likewise, in 1787, Alexander Hamilton insisted that the USA President should be elected &quot;for life, on good behavior.&quot; He imagined that having a leader commit to a country for life should lead to good governance, so long as the person could be easily removed if they behaved badly.<p>&quot;Democracy For Realists&quot; rounds up some of this thinking. While Achen and Bartels don&#x27;t explicitly endorse longer terms in office, they do quote a lot of people who feel longer terms in office would lead to better government, and also more honest government.<p>I&#x27;ve been studying this issue and using a Substack as the dumping ground for my research notes. If you&#x27;re interested, here is an excerpt where they talk about the struggle to add fluoride to municipal water, and the pushback the political leaders got:<p><a href="https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part-8-of" rel="nofollow">https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part...</a><p>Here is an excerpt about the damage done by referendums, of the type that dominate in California:<p><a href="https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part-10-of" rel="nofollow">https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part...</a><p>&quot;<i>La Follette was eventually the 1924 Progressive candidate for president, but the anti-party spirit of that movement is already apparent in these remarks two dozen years earlier. As Key (1942, 373-374) put is, “The advocates of the direct primary had a simple faith in democracy; they thought that if the people, the rank and file of the party membership, only were given an opportunity to express their will through some such mechanism as the direct primary, candidates would be selected who would be devoted to the interests of the people as a whole.”</i><p><i>Some canny political scientists were immediately skeptical. For example, Henry Jones Ford (1909, 2) noted that</i><p><i>“One continually hears the declaration that the direct primary will take power from the politicians and give it to the people. This is pure nonsense. Politics has been, is, and always will be carried on by politicians, just as art is carried on by artists, engineering by engineers, business by businessmen. All that the direct primary, or any other political reform, can do is to affect the character of the politicians by altering the conditions that govern political activity, thus determining its extent and quality. The direct primary may take advantage and opportunity from one set of politicians and confer them upon another set, but politicians there will always be so long as there is politics.”</i><p>I include my own opinion in the Substack, which is that longer terms would help make for most honest government.<p>Achen and Bartels also offer a detailed look at a region of Illinois in which the public was invited to vote on the budget for the fire department. The public voted for the cheapest, least expensive budget they were offered. The public saved themselves a total of just $0.43 cents per family a year, while having to suffer from very slow response times from the fire department. This seems to be a clear example of the public sabotaging its own interests, when invited to vote on issues directly:<p><a href="https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part-12-of" rel="nofollow">https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part...</a><p>Finally, here is the part where Achen and Bartels come close to suggesting that longer terms would allow politicians to be a bit more honest. They make the point that it was the politicians close to an election who were most likely to pander:<p><a href="https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part-13-of" rel="nofollow">https:&#x2F;&#x2F;demodexio.substack.com&#x2F;p&#x2F;democracy-for-realists-part...</a><p>&quot;<i>For lower-level offices, however, a good deal of variation in term lengths remains, and it seems to have just the sort of consequences suggested by Hamilton and by Canes-Wrone, Herron, and Shotts’s analysis. For example, elected officials facing the issue of fluoridating drinking water in the 1950s and 1960s were significantly less likely to pander to their constituents’ ungrounded fears when longer terms gave them some protection from the “sudden breezes of passion” that Hamilton associated with public opinion. Figure 4.3 shows the dramatic difference that longer terms made to mayoral support for fluoridation. Many political leaders, not caring deeply about the topic, ducked; but those with longer terms had more political leeway to do what was right, and a significant fraction of them used it.</i>&quot;<p>It seems likely we could get a more honest kind of government if politicians were elected for a single very long term, of perhaps 15 or 20 years. The top judges in Britain are appointed for 18 years, so perhaps that is the ideal number when you want to ensure someone&#x27;s independence, while still allowing the regular churn of generational change.
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