Wow, PV just dropped in price, will probably be my next project after my addition.
Last Post 06 Aug 2014 12:23 PM by Dana1. 47 Replies.
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jonrUser is Offline
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01 Aug 2014 10:39 PM
See here for a claim as to how solar is now reducing off peak revenues for the utilities (which tends to raise $/kw rates for most users) and is increasing (not decreasing) the amount of peak power that utilities have to design for. Some claim that the utilities should implement storage (and other things they don't have control over) to alleviate the problem, but that will also raise rates. Maybe they need to implement a hefty evening usage surcharge and use the money to encourage solar producers to implement storage. The days of good prices for mid-day solar energy production are limited.
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04 Aug 2014 02:56 PM
Posted By Bob I on 01 Aug 2014 06:30 PM
Dana - whats your take on the push for more new England natural gas pipelines?

Not really needed in most instances, but it's a matter of policy choices. Planned grid expansions in CT will be bringing natural gas to a lot of oil-heat users, but heat pumps have evolved to the point that it's something of a wash financially (but it's lower carbon to go with heat pumps at the current ISO-New England mix, and even lower still after New England states' Renewables Portfolio Standards are met.)  

The proposed expansions in MA are looking toward more combined-cycle gas power generation capacity going forward (and possible export of natural gas), but I'm skeptical (at best) that demand from the grid will EVER grow to anything like the proposed pipeline's capacity, given the renewables portfolio standards and the crashing costs of distributed solar (and storage.)

The February cold snap was something of a wake-up call for grid operators & regional power generators, as space heating competed with power generation for fuel leading to a very brief but severe price shock.  But that's a storage capacity problem, not a pipeline problem.
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04 Aug 2014 03:48 PM
Posted By jonr on 01 Aug 2014 10:39 PM
See here for a claim as to how solar is now reducing off peak revenues for the utilities (which tends to raise $/kw rates for most users) and is increasing (not decreasing) the amount of peak power that utilities have to design for. Some claim that the utilities should implement storage (and other things they don't have control over) to alleviate the problem, but that will also raise rates. Maybe they need to implement a hefty evening usage surcharge and use the money to encourage solar producers to implement storage. The days of good prices for mid-day solar energy production are limited.

The infamous CA-ISO duck curve raises it's ugly head (...drops it's ugly  belly? ...cranes it's ugly neck?)!

It's been fairly widely debunked by industry insiders as a theoretical worst-case, a worst case that is pretty cheap & easy to avoid.  Smart-charger mid-day electric car charging can fix the belly of the duck in a heartbeat, even without distributed dispatchable storage, fixing the ramp-rate problem on both ends.

Decreasing total grid power sales only raises per kwh costs to others if the sunk costs of existing plants (peakers in particular) are being rate-based. But that's not happening in CA, which was one of the earliest states to decouple utility revenue from kwh sales. In CA there is a variety of utility models in use- vertically integrated investor owned utilities will suffer a bit more in the financial stress of competition, but that doesn't mean the California Public Utilities Commission (CPUC) will allow them to soak the ratepayers instead of the shareholders/bondholders.  Capital costs in the power biz are constantly evolving- the net costs between alternative approaches to new generation meeting different needs are under constant evaluation by the CPUC, who has mandated 1.3GW of storage be implemented before 2020.

Storage as a solution is only an upcharge to the ratepayers if it's more expensive to the other solutions for grid congestion and ramp-rate problems.  No more than half of it may be owned by the utilities, and it's a competitive market.  Peak demand is already being stemmed by storage on the rate payers side of the meter in commercial buildings there, and it's cost-effective relative to the peak-demand charges.  This does not raise the per-kwh cost to other ratepayers- it lowers the peak demand, which lowers the marginal per-kwh wholesale price during peak hours. (Solar does too, but becomes a grid management issue after it becomes ~15% or more of the total grid power source, unless there are appropriate storage or smart-load solutions.)  The losers in this equation are those who own & operate peak generation assets- with competition comes a fall in their operational capacity, making them more expensive to operate on a per-kwh-shipped basis.  But the per-kwh cost to the ratepayers still shrinks, since the amount of peaker power used necessarily shrinks faster than the rising peaker-power per kwh cost. 

The CA duck curve problem is a complete non-starter, simply because it's still pretty far from becoming a true problem, and unlike Hawaii & Australia where this sort of thing already IS a problem, the CPUC is taking measures to keep that from happening, but are required to put the ratepayers' interests before those of the utilities'.

The CPUC's top-down approach isn't really all that nimble- having hearing after hearing on the merits of different approaches from stakeholders takes time, and it's not clear that they will be able to keep up with how fast things are changing, but maybe. Hawaii and New York (and to some extent Massachusetts & Minnesota) are undergoing major re-writes of the regulatory framework to deal with Grid 2.0, but there's no guarantee they'll be fast enough either.

Sadly enough for Hawaii, they waited until AFTER it became a problem, with backfeeding & overvoltage on some feeders where the mid-day PV output is more than 100% of the load.  The not-so-far-looking utility HECO even turned down a $6B buy-out offer a few years ago to folks with some vision and financial backing who saw the opportunity for remaking the Hawaiian grid into a new distributed renewbles paradigm, but the bankers opted not to take the hostile takeover route when rebuffed.  In retrospect that would have been a GREAT deal for the bondholders & shareholders in HECO, given that they may well go bankrupt after having screwed it up. Having taken to much of a business as usual approach to expansion of renewables to meet the state RPS, they got caught back on their heels when the installed price of PV to began to severely undercut the retail residential rates.


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04 Aug 2014 04:39 PM
Sounds like Hawaii proves that it is appropriate to circulate some worse case scenario graphs. Not as support for stopping solar, but for other changes that ARE needed to make it workable. A complete non-starter would be to proceed with solar without these changes.

One can force energy producers to absorb losses, but do very much of it and you will find that nobody is willing to invest in future needed infrastructure (at reasonable rates).
Dana1User is Offline
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05 Aug 2014 02:48 PM
Penetration of solar to about 15% of the grid total has effectively zero impact on the ability to regulate the grid. CA is nowhere near that now, but will be closing in on it by 2020. The duck curve is useful as a conversation starter as to how to use & develop the grid more intelligently, but it's not armageddon, there's no looming disaster there, not for the utilities, or anyone else. Some of the CA utilities tried to make a big deal out of the duck, at the same time that they were fighting to block rooftop PV owners from being able to install storage on the customers side of the meter (and losing.)

CA has about 1/5 the amount of distributed solar that Australia does, for a similar sized population. The problems with distributed solar in Australia are not about being able to manage the grid, and far more about erosion of kwh sales in a utility & regulatory environment with business models where all capital expenses are rate-based. By rate-basing the capital utilities have been incentivized to build-build-build more-more-more, even in the face of diminishing (or even negative) growth in grid demand. This has led to a WAY overbuilt grid infrastructure and seriously high per-kwh rates. (The average Australian residential customer is paying on the order of AU$0.33/kwh which is about 31 cents USD.) Even though Australia only net meters at wholesale (any power shipped to the grid is compensated at about 8 cents, the average wholesale price of power at the generator), Australians currently pay about $2.50/watt for grid tied solar, and it's well worth it for most people to put up 1-2kw of PV to offset their daytime use. Now that customer side storage is becoming available, it will be cost effect for many folks to simply defect from the grid. Without restructuring the regulatory environment & business models, grid storage (even without grid defection) will mean higher rates, which makes PV + storage (or grid defection) even more attractive.

This issue has been understood for at least 5 years now, and has been dubbed the "utility death spiral". CA regulators are trying to stay ahead of it by estimating and mandating certain types of solutions. HI regulators are trying to re-structure, but it may already be too late to save HECO. NY/MA/MN regulators are attempting to be more flexible and forward looking, and are relatively early into the solar growth curve than CA/HI or Australia. The daily load curves on the ISO-NE and ISO-NY grids have never resembled to the 2- humped camel of the CAISO grid, and will be able to tolerate higher PV penetration than CA before it becomes problematic.

The largest utility in VT is actively encouraging more distributed solar, up to a penetration where PV is delivering 15% of all power on their grids, at which point they will re-assess. It may well turn out that by the time that cap is reached, distributed storage & electric cars will reach the point where raising the cap to 25% incurs no additional management-hardware cost to the grid. (TBD.) But for now adding more distributed PV is reducing grid congestion, reducing grid peaks, and will reduce the average cost of peak power, since the wholesale cost of peak power is often greater than the net-metered residential retail rate.

It's true that new utility infrastructure is becoming more expensive to finance- Barclays has already downgraded the bond ratings across the entire sector. What's not true is that large infrastructure additions are necessary, or that the utilities will need to pay for them. Distributed generation & storage owned & operated and paid for by the ratepayers is lowering the loads along with the kwh shipped. A more intelligently operated grid that isn't ramping from 12GW to 25GW in 6 hours (like the ISO-NE summertime grid currently does) is already had sufficient capacity to manage more than twice the amount of gigawatt-hours if that power generation is distributed, and congestion & peaks are managed with distributed storage. This is where NY is hoping to go.

The flip side of forcing the utilities to write down their assets is to make the grid charges for PV & storage operators so onerous that grid defection is inevitable. Yes, this IS disruptive, and the re-making of the utility business models WILL be pretty rough in some places, and yes, there will be a lot of stranded assets if they screw it up as badly as they have in Australia, with far more grid infrastructure and far more baseload generation that they will need for many decades to come (if ever.) The "when & where" of financially-rational grid defection in the US based on pricing trends has been laid out fairly well by the folks at RMI:

http://www.rmi.org/electricity_grid_defection

...and more...

http://blog.rmi.org/blog_2014_03_11_why_the_potential_for_grid_defection_matters

Morgan Stanley's analyst are also showing concern about how utilities and regulators constraining distributed solar & storage too much may drive grid defection, hastening the utility death spiral:

http://forms.greentechmedia.com/Extranet/95679/Morgan%20Stanley%20Solar%20Power%20&%20Energy%20Storage%20Blue%20Paper%20July%2029%202014.pdf

Whether the regulatory environment is fully rate-based or decoupled, this is a financial problem for the utilities, but there is no way to avoid the oncoming competition from cheap storage & cheap solar. A century ago there were economies of scale to power generation that made regulated monopolies with rate-based compensation for the capital investment cheaper than 10,000 co-generators and disparate disconnected mini-grids. That advantage is evaporating, and we will all have to deal with it.
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06 Aug 2014 12:55 AM
Well at least here in VA they sell energy every summer to surrounding states like Delaware at a premium. Energy is cheap by comparison to NY and NJ. In fact they launched a program that I did for a short time, forget the name, that advertized that they could cycle your AC system for a period of 4 hours on a week day. What in reality happened, was they waited until the hottest days and just flat out cut it off. I came home one time and my second floor was 85 deg with the dog upstair sweltering because they killed my heat pump and the fan kept cycling air through the air handler in the 130deg attic. I have since increased my attic insulation but I got rid of their green grid thing. They could also declare an emergency event and screw you for 6 hours or more even on weekends. I checked and this year they used every single event / emergency event that they were allowed to by law all in the hottest times of the day on the hottest days. So in short it was learned that it was not peek demand in Virginia but these were times of peek demand in other markets that they could sell our power to.

At this point anyway solar will just line the power company's pocket in areas where there are cheaper rates. I dont have a problem with this since it will save me money. However, I want the payback period to be reasonable.
jonrUser is Offline
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06 Aug 2014 10:54 AM
But note that if you had storage (thermal or electric), the interruptable service would have worked well. But few people are going to invest in such things unless policies are clear, stable and implemented well in advance.
Dana1User is Offline
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06 Aug 2014 12:23 PM
Of course the peak loads ARE going to happen on the hottest days of the year, which is why they'll pay you to cut back on AC for those days.

Demand-response programs in other places have been much better implemented than that, duty-cycling it with only 15 minute or 30 minute off times rather than 4-6 hour complete lock-outs.

"Reasonable" payback varies with location & season, and over time. The publicly owned utility in Austin Texas uses a very thought out "value of solar tariff" (VOST) approach, which gets periodically (annually?) adjusted, and in the early years will pay rooftop PV owners MORE than the residential retail rate. The regulators in MN reviewed Austin Energy's approach, and adopted a similar approach statewide, but rather than cramming it down the throats of utilities, they give the utility the option for either net-metering at retail or calculating and paying VOST. So far all utilities have opted for net-metering, since the VOST using MN's formula is currently higher than net-metering, but since the option is a 20 year contract at the time the PV is installed, the speculation is that as PV installations ramps up many will take the VOST approach, since over time the VOST will cost the utility less than residential retail (as the retail rates are expected to rise in MN.)

Low electricity rates in VA are primarily due to the comparatively low operating costs of TVA legacy nukes (38% of all power shipped in VA in 2013). As the aging coal-fired generator fleets and nukes are retired, new stuff will eventually have to be built, and when rate-based the costs relative to net-metered rooftop PV may not look as rosy anymore. The inflexibility of nukes & coal (another ~25% of all power in VA) baseload power means they either have to power-dump or export overnight when the local grid load is below the output of the coal & nuke fleet, making VA a net exporter of electricity. The ramp-rates on thermal coal & nukes are nowhere near fast enough to track load, and during the high peak-loads of summer they have to keep them running at above the overnight load in order to meet the afternoon air conditioning peaks. (France has this issue in a HUGE way, and has at times had to PAY both Spain and Italy to take power overnight, to avoid the fines of overheating the rivers by power dumping.)

Dominion Virginia Power (like other incumbents) are looking for gouging PV operators for fees using the same tired cross-subsidy argument, despite the excruciatingly minute solar fraction in VA's grid. It's probably too much to expect them to have a serious adult conversation about how to restructure things equitably just yet... Competition has simply been beyond the ken of utilities under old-school rules, and it's tough to make those changes.
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