It's an uphill battle to beat Dana here, he is OP.

I don't know why Dana keeps running deeper into left field, but I know for a fact that he is not smarter about the grid than the EE profs who study it.

xxx ...46 states and the District of Columbia have what are called “net metering” programs, which
compensate end users for generating their own energy at the retail electricity rate rather than
the wholesale cost of energy. 39
The difference between these rates is mainly the fixed cost of distribution (and, sometimes,
transmission), which is typically recovered by per-kWh charges. When an end user increases genera-
tion, the system saves only the wholesale cost of energy. Under net metering, however, the
end user saves both this wholesale cost and the per-kWh charge used to recover fixed
network costs. Thus net metering provides an additional subsidy to distributed generation
of all sorts that may encourage uneconomic penetration.
At low levels of penetration, distributed generation simply reduces the load at indi-
vidual substations. At high levels of penetration, however, distributed generation can
exceed load at the substation level, causing unusual distribution flow patterns with power
flowing from the substation into the transmission grid. The systems involved are currently
not designed to handle such reverse flows, however. In fact, this condition can produce
high-voltage swings, which can be detrimental to customer equipment. High levels of penetra-
tion can also add to the stress on electrical equipment, such as circuit breakers, and
complicate the ability to operate the distribution system, particularly during emergencies
and planned outages. Additional monitoring and new standards for operation, protection,
and control will be necessary to enable significant penetration of distributed generation.
Enabling such penetration in a cost-effective manner would require incremental investment
by the distribution utility, while distributed generation would reduce its sales. Current
regulatory frameworks do not provide incentives for such investments. xxx

https://mitei.mit.edu/system/files/Electric_Grid_Full_Report.pdf

And this is round one. Uncontrolled, it will get to the point where users dropping off the grid raise costs for those remaining, causing more defections, yet higher costs.... Granny isn't going like how that one ends.



One suspects that

Interesting. Thank you for the link.

IMO, anyone adding significant PV solar should consider that they may have to add their own storage to get a reasonable return on the power they produce. For example, air to water heat pumps and large water tanks. Anything else is betting on politicians and my guess is that they will side with the utilities (even if the facts don't support it).

And yet the Nevada PUC's own analysis concluded that net metering had not been a cost shift to other ratepayers (even if some of the other incentives may have been)...

http://puc.nv.gov/uploadedFiles/pucnvgov/Content/About/Media_Outreach/Announcements/Announcements/E3%20PUCN%20NEM%20Report%202014.pdf?pdf=Net-Metering-Study

http://www.greentechmedia.com/articles/read/costs-of-rooftop-solar-not-passed-along-to-others-in-nevada-study-finds

Lots of people have been looking at this over the past 5 years, not just the MIT folks. The Lawrence Berkeley economic analysts calculated a very modest at most net increase in overall rates (with no credits for externalitys not currently priced into the rate stuctures), but a very significant impact on the profitability of the utilities under a couple of different business model scenarios:

https://emp.lbl.gov/sites/all/files/LBNL%20PV%20Business%20Models%20Report_no%20report%20number%20(Sept%2025%20revision).pdf

The two states (Maine and Minnesota) that have done full-on value of solar evaluations for the purposes of deciding when and how to remove net metering have concluded that at current penetrations the value of solar is significantly higher than the residential retail rate, but both of those also included value for externalities not currently priced into the rates, such as the public health value of reduced emissions, etc.

http://www.maine.gov/mpuc/electricity/elect_generation/documents/MainePUCVOS-ExecutiveSummary.pdf

http://www.utilitydive.com/news/is-solar-worth-033-per-kwh-inside-maines-valuation-debate/376364/

http://mn.gov/commerce-stat/pdfs/vos-methodology.pdf

http://ilsr.org/wp-content/uploads/2014/04/MN-Value-of-Solar-from-ILSR.pdf

Reverse flow on circuits & substations in Hawaii when PV output have exceeded local loads have been monitored and tested, and are now of lower concern than most had anticipated. Post-analysis of massive inverter monitoring data set collected and made available to NREL for anlaysis by the manufacturer Enphase concluded that the grid perturbations seen on those substations were not correlated to the PV output, and that in the presence of the PV had been a stabilizing factor. They also concluded that with a software update on the inverters for longer ride through the stabilizing effect could be even greater, a grid stabilty improvement no cost to the utility or ratepayers:

http://www.greentechmedia.com/articles/read/enphase-to-help-hawaii-ride-its-solar-energy-wave

http://www.greentechmedia.com/articles/read/how-heco-is-using-enphase-data-to-open-its-grid-to-more-solar

http://www.nrel.gov/docs/fy15osti/63510.pdf

http://www.nrel.gov/news/press/2015/16458

There are natural limits to the amount of rooftop PV that can go up quickly, such as the size of the available real-estate, but net metering would have negligible cost impact to the other ratepayers, but a larger impact on how the utilities can make money. All of the means of fighting off PV are being tried out in Australia, and mostly failing due to the high cost of retail power due to the over-expansion of their grid capacity. There is a LOT more distributed solar in Australian than anywhere in the US, and if PV at 20-25% penetration was going to destabilize the grid as some of the theoreticians might have feared, it would be happening in real time today, but it's not.

The devil is in the details, eh, Dana? LBL envisions slow growth, as you do. Indeed, my caution applies to great deals in sunny climes with high electricity rates, such deals sowing the seeds of their demise.

The Nevada study found no harm AFTER reforms that trimmed net metering beginning in 2014. The legislature pulled the plug instead, and I'm guessing PV homeowners feel just as screwed even though the villain is Darth Edison.

Solar City championed a study of smart inverters that ultimately restarted the Hawaiian market. Installed by homeowners, this equipment corrects overvoltage situations before, say, sending electricity upstream in a dead line to zap an unsuspecting lineman. Funny thing, the solar industry is fighting a smart-inverter mandate proposal in Calif, arguing among other things that this method of saving linemen is illegal. Methinks when sales don't hang in the balance, the industry wants granny to pay.

The irony of environmental arguments for solar is that the natural gas bubble, and subsequent retirement of coal generating plants, reduced carbon emissions at rates that are orders of magnitude higher than solar.

Australia is well on its way to completing a "self-healing" smart grid. The US needs upwards of $480B to get there. http://www.popularmechanics.com/technology/infrastructure/a9173/what-it-will-take-to-build-a-real-smart-grid-15683905/

Gotta say I'd rather the PUC decides who pays than the Solar Energy Industry Association.

Having the SEIA run the show isn't on anybodys card (really?), any more than letting the coal industry or other interest parties make all the decisions. The Nevada PUC is three appointed commissioners, which isn't exactly influence free or representative of broader interests.

To deal with varying rates of PV growth isn't hard- set the regulation step-back from net metering based on the penetration of the market &/or evolving value of solar to the city community rather than putting on calendar dates. That's what MN did, and while it injects some uncertainty into the market, the value of solar tariffs (VOST) apply for a fairly long period after the PV is installed. So an early adopter compensated on a VOST has some certainty about the financial outcome, and will be compensated dramatically more than an installation that happens when there is 25% market penetration. In MN they give the utilities the option to either net meter, or compensate via the VOST using the agreed upon calculation methodology in the legislation, but it's a binding (IIRC) 20 year decision- they can't switch once the new VOST drops below the residential retail rate.

The egregious aspect of the NV PUC decision is the claw-back removing net-metering on existing installations in a short time frame, and basing the step downs on the calendar, not the size or fraction of the installed PV base. That isn't just pulling the plug (the way they did in Hawaii), that's screwing the prior investors, and injecting huge uncertainty into the market. One can't make a 20+ year investment decision if three appointees can change the terms of the deal at any time.

With politicians involved, there is no 20-year decision that can be made with certainty. And who says solar owners should be exempt from the laws of supply and demand? The folks stripping off tax credits are not moms and pops. In 2014, 72 percent of installations were investor owned, and paid through leases or purchase power agreements with homeowners. It is an accepted rule in the investing world that the big boys should know what they are doing, and if they don't, tough cookies.

And who says utility companies should be exempt from competition? Would it be fair to the utility investor for the PUC to decide to compensate capital investments at say, 3% instead of 8%, even on the already sunk costs?

Policy decisions that have implications broader than the narrower interests of the utility companies are usually made at the political level, not left up to a few appointed commissioners. While legislative action can also change the deal mid-course, it's a process with much more deliberative, with broader input more avenues of recourse than rulings by PUC commissioners. Minnesota was proactive on this, Hawaii not so much, and Nevada, well...

Now that they've pissed off everybody from the Green Party to the Tea Party with the claw-back it could be a volatile election season in NV this year.

And the fun begins:

http://mediaassets.ktnv.com/document/2016/01/15/nv_energy_lawsuit_30012233_ver1.0.pdf?_ga=1.178286883.641677843.1452892886

No. 1 The Nevada legislature directed regulators to do in net metering. State houses are the source of much mischief, and fall under less scrutiny each year.

No. 2 In most states generating companies are unregulated. You can choose your power supplier just as you do long distance service. Lots of competition, in other words. Rooftop solar differs in that the grid must take it and must pay an artificially high price for it. Kinda the opposite of competition, eh?

No 3. The bargain in regulation is that providers of essential, monopolistic services agree to play by the rules in exchange for a fair profit. Tax shelter investors by definition exploit rules (tax loopholes.) In this case they are taking advantage of solar incentives. That's the nature of incentives: something for nothing. Until the something goes away. .

I guess we'll be finding out how the judge interprets the legislation, relative to the PUC commissions interpretation of how that was to be done, eh? The short description of the recent legislative action is that they abdicated making decisions on how the non PV customers were to be protected from unfair cost-shifting, leaving it up to the PUC to come up with something.

Net metering is not a tax shelter.

Stick to engineering.

http://www.theenergycollective.com/davidbelden/43366/how-do-solar-leasing-companies-make-money

I guess even NV Energy sees the sense in grandfathering in existing systems for 20 years rather than spending years in litigation with both private stakeholders AND the Nevada Bureau of Consumer Protection, to be followed by a tsunami of defections by a customer base that feels ripped off and left out, some of them (like casinos) with deep enough pockets to outright defect from the grid entirely (which nearly happened recently.)

http://www.utilitydive.com/news/nv-energy-proposes-grandfathering-existing-rooftop-solar-customers/412719/

http://www.utilitydive.com/news/nevada-puc-to-reconsider-grandfathering-provision-in-new-net-metering-pol/412505/

Net metering still isn't a tax shelter. WTF?

Sure the 30% tax credit is a salable commodity but a tax credit not net-metering, is it? Since way back in middle ages (2010) when that Energy Collective blog went to press the leasing companies have figured out how to securitize and sell the revenue streams from their leases to investors in via separate "yieldco" company as a means of raising inexpensive capital. That's not net metering either. The solar companies make money all sorts of ways taking advantage of available regs, so what? None of that turns NET METERING into a tax shelter.

http://cleantechnica.com/2015/07/20/solar-pv-yieldco-is-a-gamechanger/

The economics don't work without the net metering subsidy. No net metering. No tax shelter. No yieldco. I am not sure how you find it comforting that Wall St is printing money by selling tax shelters and high-yield debt with zero regard for the underlying investment basics. Bad things happen when it's 99 percent financial engineering and 1 percent economics.

"At least 15 yieldcos have held IPOs since early 2013, raising more than $12 billion, according to Bloomberg New Energy Finance. Because the model relies on consistent growth, there’s concern the boom in yieldcos has created too much demand for new clean-power plants, driving up prices, NRG Energy Chief Executive Officer David Crane said in August."

http://www.bloomberg.com/news/articles/2015-09-17/sunedison-s-yieldco-overreach-stirs-angst-among-solar-companies

NV Energy just signed a 20 year deal to buy commercial solar at 3.87 cents/kwh. Last year it did a commercial solar deal at 4.6 cents. By contrast it is paying net metering customers 9.2 cents, down from 13 cents. Seems to me if you want renewables to fly you wouldn't pick a winner with miserable economies of scale that forces changes on a grid a;ready in sad shape.

It's presumptive to say the least to posit that I personally "...find it comforting that Wall St is printing money by selling tax shelters and high-yield debt with zero regard for the underlying investment basics..." It's a moving target, and Wall Street get's it wrong all the time, so? I personally would never invest in solar companies or yieldcos, since I don't understand the thinking of those who do, and wouldn't be able to predict when it was time to sell (or buy.) If solar companies can re-package the revenue streams and make money selling it to institutional investors it's no skin of the ratepayer's butt what the investors think the yieldco price should be. I'm not surprised at all that yieldcos are sensitive to the growth rates of PV, which is in turn sensitive to subsidy levels. This isn't going to bring down the market, and eventually yieldcos will have the volatility component priced into them just like other financial market constructs. (Derivatives, anyone?)

BTW: You probably noticed that the shareholders didn't necessarily share David Crane's vision of the future and gave him the axe, right?

The 3.87 cent contract was AFTER the 30% tax incentive. What? Benefiting from a tax shelter? It was also a 20 year contract, unlike what the PUC did to the others.

The 3.87 cent power from the utility scale PV project is less valuable to other ratepayers than distributed solar, since it doesn't relieve grid congestion on the far side of the substation or lower the loads on the local distribution grids. Whether the additional value is worth the extra 5-9 cents per kwh to the ratepayers at large would have to be analyzed. ( Most distributed solarvaluations performed by disinterested third parties in NV and elsewhere indicate that it's worth it at current penetration levels.) Distributed not-utility-owned PV is not usually worth the extra money to the monopoly utility when their business model and regulatory environment bases their return on capital, since it lowers maintenance cost and defers upgrade investments, but that's not to say the value isn't fully there for the other ratepayers until/unless the penetration levels reach Hawaii- type proportions and higher. Distributed solar is also more stable than utility-scale solar, avoids the potentially large distruptions in the broken-cloud fly-by scenario.

Even NV Energy is now calling for the PUC to grandfather the existing PV owners for 20 years. (Guess it didn't occur to them that the PUC was going to go after the existing base of distributed PV, and don't want to come off as Darth Utility?)

http://www.utilitydive.com/news/nv-energy-proposes-net-metering-grandfathering-provision-in-new-filing/413313/

But that doesn't seem to make a difference for those who feel it's time to change how the regulated monopoly model of running the electric utilities in NV works:

http://www.utilitydive.com/news/nevada-ballot-initiative-seeks-to-break-nv-energy-monopoly-with-retail-choi/413370/

Wall St doesn't give a sh*t about getting markets right. If the ducks quack, feed them. There's the old favorite, tax shelters, plus the reason the housing market blew up: investors hungry for yields higher than 1.7 percent earned on 10-year T bonds. The guys selling this stuff probably have no idea what net metering is.

Perverse incentives it's called. In sunny climes with expensive electricity, it's a recipe for a solar bubble.

I'm thinking granny would take 3.87 cents/kwh over 9.2 cents and some mushy theory that the guy down the street with a brace of Priuses is saving the grid.

And again, I can't see how you find it comforting that Caesar's Palace can tell NVEnergy give me my net metering (screw granny) or I'll take my chips and leave.
I have $100 says that the casinos' agreements have a clause like the one in yieldco deals saying there is no guarantee the rate structure will stay the same.

Love it.

When in comes to Politics, science doesn't have a chance.

When you get desperate, be it to kill coal, nuclear, fossil fuels of any kind, you are bound to make mistakes. In economics is all about resources and exposure. National programs can't address local markets with the agility required.

And, bureaucratic "rules" that bypass the legislative process are premature, if not immature, giving the voting public a bad taste in their mouth being left entirely out of major policy decisions. The free market, where ever you might find it, is still the honest engine of positive change.

http://www.epa.gov/cleanpowerplan

"Free market", and "utility" don't really belong in the same sentence together. The regulated monopoly structure of the utility business, and the amount of subsidy that has traditionally been (and continues to be) given to the fossil fuel and nuke biz stands the whole notion of a free market on it's head.

As far as central-powerplant energy costs go, in places with perhaps less subsidy distortion utility-scale PV has been beating coal fired power pricing even in (coal-subsidized) India, and even beaten oil fired power (even at a subsidized $10/bbl) in places like Abu Dhabi.

http://timesofindia.indiatimes.com/india/Rs-4-34-a-unit-Solar-power-tariff-drops-to-record-low/articleshow/50643394.cms

https://www.nbad.com/content/dam/NBAD/documents/Business/FOE_Full_Report.pdf

These energy markets aren't necessarily freer than in the US and the cost of the grid infrastrucure necessary for getting it to granny isn't built into the pricing, but even with a thumb on the incumbent fuel scale PV is winning.

The cost of 3.87 cent utility scale PV power to granny is more than the raw 3.87 cent energy pricing, since it requires more grid infrastructure to get it to granny than it does to get it from the roof of the house next door. Even the NV PUC's analysis from last year showed that at current penetration rates there's no case to be made that granny is subsidizing distributed PV- it's the other way around. The legitimate concern was for what happens going forward, at much higher levels of distributed PV. One can quibble about the details of what should be done to address it going forward, but screwing the owners/operators of the existing base wasn't fair to granny (particularly the granny with the PPA for the solar on her roof) or anybody else.

The grid itself is over-built on capacity in many areas for a distributed generation model, which is the major fraction of Australia's current problems with PV. It's currently cost-rational to unplug from the grid in many parts of Australia (where there is no net-metering at retail) already, and will be even more so as battery product competition heats up there. If by some calculus the modest load-defection of grid-tied PV is gonna screw granny, it's going to be a party compared to what happens if/when greater numbers of out & out grid defection. If they hadn't overly encouraged the build-out of the grid with generous ROI guarantees on infrastructure under a presumption that grid demand would increase forever (as opposed to the flat to slow decline they're seeing in the face of near world-record electric rates) they wouldn't be in this pickle. But as the cost of PV declines this movie will be playing at a utility near you within a couple of decades if not sooner.

The presumptions on toddm's part about what I personally do & don't find comforting are completely in his own mind. (Time to get a better crystal ball or tarot card deck or wherever those whispers are coming from.)

Nobody says that the transition away from the traditional utility monopoly model is going to be comfortable or easy, but it's pretty clear that it's inevitable. There's going to be quite a food-fight in the process, and it could drag on for decades, and the question is really how to manage it. NY is addressing it head on to try to limit the damage, but it remains to be seen how successful they will be in that endeavor. Rooftop PV in un-subsidized FL is coming in at $2.50/watt now (before the federal tax kickback), and will be half that in less than 10 years. The notion that the economy of scale of utility scale PV is big enough to beat those economics is misguided. Slapping on high connection fees for PV owners to "pay their fair share" is driving folks off the grid in Australia- the tactic for stalling or slowing PV in the US are following a familiar and largely unsuccessful track.

"Nobody says that the transition away from the traditional utility monopoly model is going to be comfortable or easy, but it's pretty clear that it's inevitable. There's going to be quite a food-fight in the process, and it could drag on for decades, and the question is really how to manage it. NY is addressing it head on to try to limit the damage, but it remains to be seen how successful they will be in that endeavor. Rooftop PV in un-subsidized FL is coming in at $2.50/watt now (before the federal tax kickback), and will be half that in less than 10 years. The notion that the economy of scale of utility scale PV is big enough to beat those economics is misguided. Slapping on high connection fees for PV owners to "pay their fair share" is driving folks off the grid in Australia- the tactic for stalling or slowing PV in the US are following a familiar and largely unsuccessful track."

Amen,

Ma Bell had a similar problem until it was broken up, by government, and Tsunami we now know as cellular communication made the whole argument moot.

http://www.beatriceco.com/bti/porticus/bell/whatkilledmabell.html

I like the strategic potential of rooftop power, but...

http://dailycaller.com/2015/12/25/top-11-problems-plaguing-solar-and-wind-power/.

The comparisons between what's happening to the utility biz and Ma Bell breakup then cell phone companies have been long discussed, often with the spectre of the a "utility death spiral" (google it), but there are still important differences. But the economies of scale that exist with nukes and coal fired plants are simply not there with PV, which is infinitely scalable within a cost factor of about 2, and as the costs continue to drop it has reached the point of inevitability that a LOT of distributed PV on the ratepayer's side of the meter will be coming on the grid in coming decades, and it will for the most part be relieving capacity requirements of the grid. That cuts into the bottom line of utilities who need to continue to make capital expenditures to grow- both on the power generation and grid infrastructure capex. It's a problem, and a sticky one.

Could you build & maintain a mini-nuke or coal powered plant that can operate in your house at the same efficiency & safety as only 2x the lifecycle cost that a utility company could for a big 'un? Even the tiny modular nuclear reactor designs on the drawing boards suitable for powering up a neighborhood will cost more than PV does today. Some (such as Transatomic ) may still have financial rationale as a means of reducing the stockpile of spent fuel rod sitting around in casks & cooling ponds at legacy nuke sites, but would probably not be cost-competitive with load-sited PV at 2025 prices.

The dailycaller article is stuck in 1916 thinking about how to operate the grid. The notion that you need a lot of grid scale storage to manage a mostly variable renewables grid is not well founded. Smarter load management is cost effective even at the micro scale. In Australia it's common for PV owners who get charged 30+ cents for grid imports but remunerated at 0-8 cents for exports can amortize the cost of a controller to dump any excess into the heating element of a hot water heater to prevent grid export pretty quickly. With further electrification of the personal transportation sector there is a built-in smart load for managing the infamous "duck curve" in an excessive solar scenario. Now that FERC Order 745 has been blessed by the Supremes automated demand response is poised for exponential growth, even with aggregated residential market participation. The variablity problem is a red herring. Yes massive grid storage for managing variable renewables would be very expensive, but the amount of storage it takes to actually manage that variability is orders of magnitude smaller than most people think (or how it is usually presented by fossil fueled competitors.)

Sure, natural gas is cheap today, but it's also highly volatile in price over time (and the gas biz is also subsidized in several ways.) Even in cheap-electricity MN solar farms have been beating gas peakers in the past couple of years as a means of relieving peak capacity constraints on substations, in direct head-to-head proposals. You may argue that it's the 30% subsidy that made that possible, but the pre-subsidy cost of those solar farms will be more than 30% cheaper than they were in 2015 by the year 2020.

http://www.startribune.com/massive-solar-plan-for-minnesota-wins-bid-over-gas/238322571/

The fundamental difference between variable renewables and fossil fuels is that renewables are technology, technology that is still on a rapid manufacturing learning curve (about 25% cost reduction per doubling for PV, still double-digits for large scale wind), and fossil fuels are commodities, commodities that are shrinking in availability over time (the current frack bubble notwithstanding.) Like wind & solar, batteries are also technology on a double-digit learning curve. The fact that renewables are anywhere even close in cost to today (subsidy or not) doesn't not bode well for the longer term future prospects of the gas-fired generation biz. (It's pretty much killed the hopes of my brother-in-law's coal seam gas project coming to fruition in Zimbabwe- the combined cycle gas plant will never be built, since locally owned micro-grid solar is now cheaper than building out the grid along with the capitalization of the combined cycle power plant.)