Article on grid defections

[Hasufel]

Just saw an interesting article on grid defections on slashdot. The basic premise is that with solar being popular and low-cost battery storage solutions on the rise, it's making more sense to "defect" from the grid. Using Arizona as an example, partial defections (where homeowners generate most of their electricity and use the grid as a backup) purportedly will make economic sense as early as 2020, while full grid defections will make sense by 2028. Other "solar-friendly" states like California, Nevada, and New York were kind of lumped into the same category (although when I read that I started singing "one of these things is not like the other..."). Anyway, food for thought--I know some folks here are using solar but has anyone gone completely off grid?

 

[begreen]

Seems similar to landline defections. At some point though that implies that the remaining, smaller customer base will be footing the bill meaning higher rates.

 

[jebatty]

With wind and NG out-competing coal, PV also or soon will be out-competing coal, and in the near future PV out-competing all other energy sources, energy costs should be dropping. Are we seeing rate reductions from the utilities? Also, wind and solar are easily turned "on" and "off." I look at my PV, installed at my capital cost and maintained by me without cost to the utility or other rate payers, as a money-saver for the utility and other customers. My system provides peak power during summer A/C periods, and also briefly during winter heating periods. It should be reducing utility demand for peak power from generating sources. That power is very costly to the utility and I provide that at $0.11/kwh rather than the many $/kwh that the utility pays for peak power. Customer owned PV should be leading to rate reductions, not increases.

 

[begreen]

Customer owned PV should be leading to rate reductions, not increases.

The difference being that yours is grid-tied and not defected from the grid. If say half the grid-tied customers defected and that grid was powered by a $10B debt, then the remaining customers are going to be picking up the tab.

 

[Where2]

I know some folks here are using solar but has anyone gone completely off grid?

Solar = YES, but firmly attached to the grid until my power company makes it unreasonably expensive. At the moment, (just after noon local time), I'm feeding ~1kW back into the grid (for my neighbors to use), while doing a load of laundry on an extra hot "Sanitize" cycle and while the electric water heater is recovering from what the washer is using. My array is actually producing around 3kW at the moment, and the house is using ~2kW between the ceiling fans, refrigerator and other typical electric loads.

If you're wondering how the water heater is using so little power to recover, my city tap water comes in at 77°,and I have a 1500W element as the lower element in my water heater. I intentionally swapped out the original 4500W element to the 1500W element because my house of two doesn't need super fast recovery times. The smaller element runs a longer duration, and that works well to help limit what I'm feeding back to the grid, further limiting my grid impact, no matter whether the sun is up or not.

My 3.5 ton A/C just kicked in. Now I'm buying ~1.5kW from the grid. That's a much lower impact to the grid than the 4.5kW I'd be pulling out of it if I didn't have a PV array on my roof.

Customer owned PV should be leading to rate reductions, not increases.

In South Florida, the grid customer base is still expanding as urban sprawl continues, but the power company continues to lobby the state Public Service Commission to be the sole provider of energy whether it comes from nuclear, NG, or solar sources. I see no great rate reductions on the horizon. The power company likes their present distribution of profit to shareholders position.

 

[WoodyIsGoody]

Electricity on the Island of Kauai is provided by a ratepayer owned co-op and they are steadily decreasing their rates in response to the cheaper electricity provided by an ever increasing number of large co-op run solar farms while they reduce electricity generated by oil. But yes, consumer owned solar systems can cause grid rates to rise (particularly in areas that have special net metering incentives paid by the utility). This is good because it drives faster adoption of solar.

 

[woodgeek]

The undiscussed issue is cost. There are still economies of scale at play....a utility might be able to field a very large PV array, a large stationary battery, get a sweet lease on a brownfield to locate it, and use an optimal (smaller/cheaper) battery size through a cheap (legacy) NG backup system and then...be able to make electricity a lot cheaper than a homeowner can, even factoring in (shortish-range) delivery.

If you were a partial grid defector....why wouldn't the grid charge you a premium (i.e. just less than homeowner genny power) when you do need juice?

Of course, you can argue that it is cheaper to take the bus than drive a car...and most people will take the car. But unlike that example, electricity from the grid versus your private grid....kinda invisibly different to the user, so long as both work reliably.

I guess I don't see the defecting model, en masse, unless utilities start price gouging, or refusing net-meter arrangements.

 

[jebatty]

I agree that individual en masse grid defections are unlikely, mostly because a large portion of users do not have highly suitable sites for efficient solar at a cost that would encourage defection. A greater defection likely will occur from commercial development of large, commercial/utility scale arrays which have the potential for reducing the cost of electricity as PV cell efficiency continues to rise and storage technology becomes increasingly cost competitive. Not to be overlooked is the fact of near $0 cost of operating a large commercial scale PV array. With an operating life span in excess of 20 years, no equipment and labor to mine, process, transport, store and load fuel, scrub the stack emissions, dispose of waste, and expensive turbine and operating maintenance, PV is very attractive.

Last week a viewed a 1 MW array installed under a PPA which provides a large percentage of power for a college. No employees present, just clean power being generated with just about nothing for anyone to do. My own 12.3 kW system is the same: just sits there and produces power on a one-time capital cost investment. Some quick calculations based on local utility retail kWh cost at $0.11/kWh shows that retail value of a one acre array is more than $50,000/acre/yr of land coverage and could approach $100,000/acre. Plus, with a little bit of thought and depending on the site, the ground on which the array is installed might also be usable for additional revenue production: small animal grazing, shade tolerant agricultural production, etc. Large arrays on suitable sites at utility or commercial scale already are economical and improving technology will make them irresistable.

 

[WoodyIsGoody]

If you were a partial grid defector....why wouldn't the grid charge you a premium (i.e. just less than homeowner genny power) when you do need juice?

Electrical utilities are regulated monopolies so they can only charge a premium if the regulator says they can. But there is already a "line charge" that is paid by everyone who is connected. This charge is a flat rate paid monthly and is billed before you use the first kW just for the right to be connected.

 

[jebatty]

The line charge also is regulated. Line charge + kWh charge = return to the utility. A low line charge and higher kWh charge encourages conservation because the user can take actions to minimize kWh usage. That cannot be done with the line charge. Some utilities claim that the line charge somehow should be the same for all meter customers based on the argument that it costs the same for all. Bogus. Those who use more kWh require a more robust distribution system, which means a greater cost distribution system than those who use minimal electricity. The distribution system is sized to meet the needs of the greatest users, including greatest peak users. Therefore, the right to be connected should be much higher for large users than for small users.

 

[woodgeek]

Electrical utilities are regulated monopolies so they can only charge a premium if the regulator says they can. But there is already a "line charge" that is paid by everyone who is connected. This charge is a flat rate paid monthly and is billed before you use the first kW just for the right to be connected.

Indeed, and important to remember. If defection becomes significant, wouldn't the regulators step in to 'protect' the utility, namely through allowing them a reasonable rate of return, by allowing a higher line charge or usage fee, to 'partial defectors'?

 

[Hasufel]

Just saw another interesting article about the economics of grid-based PV. Apparently California has so much excess capacity that it occasionally has to pay Arizona to take it, while at the same time Californians pay about 50% more than the national average for electricity! (LA Times article here.) Rather mind-boggling...

 

[WoodyIsGoody]

Indeed, and important to remember. If defection becomes significant, wouldn't the regulators step in to 'protect' the utility, namely through allowing them a reasonable rate of return, by allowing a higher line charge or usage fee, to 'partial defectors'?

In theory it's the regulators job to protect the consumer from monopoly power. If the regulator is acting in the public interest, they would be more inclined to grant an increase to the kW rate than to allow a higher line charge to solar producers (partial defectors). "Solar producers" or "partial defectors". Two different terms for the same thing. See how loaded words are?

 

[WoodyIsGoody]

Just saw another interesting article about the economics of grid-based PV. Apparently California has so much excess capacity that it occasionally has to pay Arizona to take it, while at the same time Californians pay about 50% more than the national average for electricity! (LA Times article here.) Rather mind-boggling...

Good article. My first impression was that California regulators are in the pockets of the power producers they are supposed to be regulating. And the arguments of the power industry didn't change my mind.

Too much energy is actually a good "problem" to have and an easy one to solve. Simply mandate that employers with more than 1000 employees (for example) provide smart charging jacks at every employee parking space. Then, millions of cars will be recharging from their morning commute with "free" electricity and CA won't have to pay Arizona to take the electricity. The money saved by the utility can help fund the smart chargers.

Problems like this are so much easier to solve when you don't give the private sector the power to influence decisions for their own profit motive. Yes, the utility companies interests (in being as profitable as possible and maintaining as large a market share as possible) are 180 degrees opposite the peoples interest. Someone needs to replace the CA regulators.

Good, common sense governmental regulation that blossomed in the 1930's is what made modern America great. People need to take an unbiased look at American history before they declare the problem is too much government. They will see the real problem is government working against the common interests of Americans (in favor of the moneyed interests of a few).

 

[Where2]

If defection becomes significant, wouldn't the regulators step in to 'protect' the utility, namely through allowing them a reasonable rate of return, by allowing a higher line charge or usage fee, to 'partial defectors'?

Why? How is a "partial defector" or "Solar producer with personal onsite storage" any different than a low consumption typical consumer?

Maybe the low consumption consumer is on a fixed income with more "free time" than monthly electric dollar budget and chooses to line dry their laundry, uses their air conditioning sparingly, has a gas stove and gas water heater and heats their home with oil, gas, wood or something other than electricity. Should we put the screws to those on a fixed income for not fully supporting the shareholders and profits of a regulated monopoly when demand for a monopoly regulated service starts to dwindle?

Maybe the low consumption consumer lives in a "tiny home" and follows a "greener living" lifestyle. Should a regulated monopoly charge a higher rate to someone who chooses to have a smaller carbon footprint than the "average American" around them?

When you call up to get electric service, the power company doesn't send someone out to go through a home and total up all the grid connected appliances in the home to determine how much to charge them as a "line charge" or "monthly base meter fee". If you have a gas stove, gas water heater (or solar water heater), and gas dryer (or clothes line), you don't get any cheaper monthly connection fee than the guy next door who has an electric stove, electric water heater, electric dryer, and electric baseboard heat. Why? Because you could swap those appliances at any time without requiring notice to the electric company, cancel your gas service and go all electric in an afternoon. The base meter fee assumes some generalities between the average household consumers.

If defection becomes significant, how is a "solar producer with onsite storage" any different than a neighboring low consumption consumer?

 

[EatenByLimestone]

Actually, there is a different rate schedule for those with electric heat.

 

[begreen]

If defection becomes significant, how is a "solar producer with onsite storage" any different than a neighboring low consumption consumer?

Interesting question. How is this handled in FL where many homes are only occupied in the cold months?

 

[jebatty]

Indeed, and important to remember. If defection becomes significant, wouldn't the regulators step in to 'protect' the utility, namely through allowing them a reasonable rate of return, by allowing a higher line charge or usage fee, to 'partial defectors'?

This assumes that the goal of regulation is to protect the utility, that is, provide a rate of return on investment. But that is not the real purpose of regulation, although the utilities would like to convince their customers and the public that this is the goal. In fact, the social welfare objective in the historical case of energy is to ensure low cost, reliable service, not to uphold the welfare of utilities themselves.

Rather than focusing on the return on investment, utilities, regulators, investors and customers all would be better served by focusing on the value of the service provided, just like any other business. The price the local gas station receives for gas sold is not based on investment return. It is based on the value of the gas and other products and services provided. Utilities would do well to do the same.

Instead of viewing ratepayers as passive sources of cost recovery, utilities would do well to view them as customers. The utility should offer its customers value: products and services that satisfy the customers' changing preferences. They could offer bundles of service and product to their customers, rather than have customers defect and acquire those desired services and product customers want from others. The utility could offer (or if necessary be allowed to offer) bundles of service and products: solar panels, energy storage and management, as well as grid electricity, etc.

[The ideas in this post are not all original with me, but collected from a variety of sources and edited.]

 

[begreen]

Unfortunately with corporate control the shareholder is the customer. FWIW, our regional power provider is now owned by an Australian holding company.

 

[iamlucky13]

The basic premise is that with solar being popular and low-cost battery storage solutions on the rise, it's making more sense to "defect" from the grid.

What low-cost battery storage solution?

If all of Tesla's claimed specs are accurate , especially the incredibly high 5000 cycle life (normal for lithium ion batteries is 500-2000 cycles to 80% - not clear what depth of discharge the 5000 cycle spec is), it adds $0.14/kWh* to the net cost to your home-generated electricity, not counting any time-value (interest on loan or alternative investment value) on the cost.

On-grid makes sense in many regions. Off-grid is something to do because you want to be independent, and it's not without compromises. It's also not the most efficient use of resources due to duplicated excess capacity to cover your high demand days.

Fortunately, increasing decentralization can help reduce the costs of maintaining the grid, helping keep staying interconnected economically viable. There is a significant potential role for home storage in this, in addition to its value for emergency use.

* Based on 5000 cyles to 80% DoD, 13.5 kWH capacity, no loss of capacity until end of life, 92.5% round-trip efficiency, price from Tesla website ($5500 + $700 "supporting hardware" + $800 install), 0 financing costs.

This assumes that the goal of regulation is to protect the utility, that is, provide a rate of return on investment. But that is not the real purpose of regulation, although the utilities would like to convince their customers and the public that this is the goal. In fact, the social welfare objective in the historical case of energy is to ensure low cost, reliable service, not to uphold the welfare of utilities themselves.

If carried far enough, at some point protecting the utility is protecting the social welfare.

Who's going to be the last demographic to be able to afford to lay out tens of thousands of dollars or get credit approval for comparably valued leases to go off-grid? The lower income households. If the cost of maintaining the grid is no longer shared with higher income (often also higher volume) households, the lower income households will see their electricity costs skyrocket.

But again, I think there's compelling reasons for the grid to remain long term.

 

[Where2]

Interesting question. How is this handled in FL where many homes are only occupied in the cold months?

For seasonals: If your house in FL uses 0kWh per month, your bill is $7.87. If, like most seasonal residents, you leave the A/C running to keep the humidity from forming mold inside the residence, then the seasonals pay whatever the electric usage actually was, at the tiered pricing structure in effect. Tiered pricing works as follows:use under 1000kWh per month is cheaper, and use above 1000kWh per month trips into a different pricing structure for both fuel (generation) and delivery (transmission) charges.


Along the reverse of your "How's it work in Florida" thought, I got a rather compelling reason to install my second PV system in today's mail. $0.42/kWh (all in) for power to my farm in a rural town Northern Maine. No wonder my neighbors have been asking me what they have to do to build solar setups...

 

[Hasufel]

What low-cost battery storage solution?

If all of Tesla's claimed specs are accurate , especially the incredibly high 5000 cycle life (normal for lithium ion batteries is 500-2000 cycles to 80% - not clear what depth of discharge the 5000 cycle spec is), it adds $0.14/kWh* to the net cost to your home-generated electricity, not counting any time-value (interest on loan or alternative investment value) on the cost.

On-grid makes sense in many regions. Off-grid is something to do because you want to be independent, and it's not without compromises. It's also not the most efficient use of resources due to duplicated excess capacity to cover your high demand days.

That may be true in today's environment but the point of the original article is that, if the diminishing cost of battery storage continues, then there will come a time when it does make sense to partially or fully defect from the grid. Those living in states more favorable to solar power allegedly will hit the break-even point in three years for partial defections or 11 for full.

 

[georgepds]

Re batteries

They are great for daynight load levelling, but useless for summer winter load levelling (they'd have to be too big)

I don't see defections happening until there is a seasonal storage solution. But then I'm from the northeast.. things may be different in the southwest

 

[woodgeek]

Why? How is a "partial defector" or "Solar producer with personal onsite storage" any different than a low consumption typical consumer?

If defection becomes significant, how is a "solar producer with onsite storage" any different than a neighboring low consumption consumer?

I guess I got a bit of attention from my little statement. I will try to explain.

Some answers:

If I am a partial grid defector, I have invested a chunk of change in a battery system presumably with an economic rationale....

Maybe my state doesn't have a good net meter arrangement. Maybe I put in solar, and my state removed the net-meter arrangement afterwards, leaving me underwater on the PV (these are hypotheticals). In that case, I buy a battery, and use it to store most of my diurnal production for my later use, minimizing the amount I buy from the grid, but mostly to avoid selling any power to the grid at a loss.

Maybe my state has time of use rates, and my PV/battery can't keep up in low season (like winter), so I still have to buy some power. In that case, I program my system to buy all of it during the cheapest TOU period. From a grid operator point of view, this is great. From a generator POV, I never buy their power except when its almost free....they make no profit on me at all.

I am free to do this in an deregulated electricity market place if I have batteries and a grid connection....I am not saying its bad.

As for the utility regulators, sure, they are put there to protect consumers from the 'natural monopoly' of the electrical utility. But in practice, this does NOT look like ...how do we minimize costs to grandma on a fixed income or the consumer en masse....and DOES look like a cmte looking over the utilities operating expenses balance sheet, capital investment and repair budget, the utilities request to pay a reasonable, historical dividend to its shareholders, and then saying that they are allowed to charge enough to cover those expenses.

In other words, the regulator will not prevent them from charging enough to stay in business. If the business is evolving in a manner that is hitting their bottom line, the regulators will allow them to upcharge enough to stay afloat, even if the remaining customers are up in arms about the cost/rate structure.

In this context, if I were the utility, I would argue to the regulators that the folks with the batteries are wealthy customers that are arbitraging my system, and then I would calculate an all in cost for me to keep them on-grid assuming no $/kWh profit from them, and argue I should be allowed to put that on the line charge of anyone putting in batteries. And I suspect the regulators would let me do it too.

 

[woodgeek]

In theory it's the regulators job to protect the consumer from monopoly power. If the regulator is acting in the public interest, they would be more inclined to grant an increase to the kW rate than to allow a higher line charge to solar producers (partial defectors). "Solar producers" or "partial defectors". Two different terms for the same thing. See how loaded words are?

I am using them differently....a solar producer on a net-meter arrangement is very different than a partial defector that sells no power to me, and only buys (maybe in a surge) when the TOU rate is at a minimum. A solar producer is giving me power at a retail rate during peak periods when generation may cost more than retail (I would otherwise have to buy from peakers)...and I make money then. The partial defector....its like they're not there at all...and then swoop in when I have some excess generation and take the power and pay me almost nothing.