If we take the OP at face value, then, it seems to be declaring that solar energy is completely impractical, and can't survive without life support.
I realize that other forms of energy generation are all subsidized in various ways, so it's clearly not as serious as my above interpretation, but still, it doesn't speak well of solar.
So you need something to do with excess capacity. All by itself, units of power aren't all that expensive. But a solar installation is very expensive. You need to amortize the cost of the installation, the people putting it in, the company developing the technology, over around 30 years before it's really worth it.
Even then, normal consumers won't bother unless it's actually making their net energy expenditures lower. So you also need a finance company to come in and finance everything so the consumer isn't coming out of pocket for the installation.
All of this is viable, only so long as the power companies are paying retail rates for excess electricity. There's enough money so everyone gets paid. What this is all about is the power companies are suddenly deciding they want to pay wholesale for excess power. Why should they pay wholesale? They're not buying in wholesale quantities from each consumer.
This sucks enough profit potential from the industry that it makes more sense for them to go elsewhere to put together a workable business model than to stick around and deal with decimated revenues.
The power companies are using their political muscle to stamp out competition. If they were to play fair, then they'd be forced to compete with solar. They don't want to compete, so they're using lobbyists to warp the political process.
Why should they pay retail? As a consumer thinking about solar, I like that, but it makes no economical sense. What business can afford to buy and sell for the same price? You don't sell a car to the dealership for the price they will sell it for. That would be absurd.
My guess is that they're going to compromise at around 75% of the difference between retail and wholesale. Nobody, except the power companies, really wants to see solar disappear, so the solar side is going to have more political might in this fight.
If they are forced to buy the uncontrollably variable distributed solar energy, it will be at the expense of the peaking plant, and possibly even the baseload plant, if there is a large enough gap between peak solar production and peak energy consumption.
So it should pay, at most, the price it would have otherwise paid from the power plants if distributed small-time solar installations weren't forcing their excess production back onto the grid.
That means paying less than wholesale. So those solar installations end up paying a bit for the service of using the grid a like a storage battery--as they should.
If you're going to demand equal compensation for your solar power as the peaking power plant, you will have to install equipment on your end that allows the grid to control how much power it chooses to buy from you. Otherwise, it's like haggling over the price of a meal that is already eaten.
Locally operated municipal utilities, however, are less likely to be turning a profit, at least not one that benefits shareholders.
Edit: clarifications
I get all of my energy from a roof top solar system but to stay on the grid I have to pay a connection fee which in my mind covers transmission costs and infrastructure. Being that it's a utility I can see them charging for that stuff, some how, either by a fee or by arbitrage between wholesale and retail costs, that seems reasonable. It radically changes the value of solar though.
If you can sell energy at wholesale prices what's the argument for restricting your ability to buy it at wholesale? Could you buy it from a different provider and just use the utility to transmit it?
Obviously under completely free-market conditions, they wouldn't. But under those conditions, power companies would burn nothing but coal and nobody would have any solar. Coal is really cheap. Retail net metering is society actively meddling with the free market to mitigate a societal ill, and forcing big polluters to subsidize cleaner energy. I don't see a problem with that.
From my dominion bill:
Distribution Service 15.73$ followed by "Electricity Supply Svc (ESS)" which is based on usage and then several fees/taxes.
Your phone bill probably does the same thing if your regularly calling other countries your paying a connection fee plus a usage fee.
>>So you need something to do with excess capacity.
The simplest solution is to push it onto the grid. With net metering you can get the energy back later at not cost. It's like using the grid as a battery.
The alternative of course is to up the installation cost a bit and install an actual battery system in the home. Much like those available from Juicebox:
http://www.juiceboxsolar.com/home/
So this whole thing about net metering is really just delaying the problem the power companies are experiencing. Hardware prices will continue to fall, and at some point the solar installation plus battery will cost the same as today's installation and the demand will return.
At that point we're likely to see some fees just for connecting to the grid. And after that, we'll see larger batteries and more panels so that people can unplug from the grid completely.
That's effectively making the power company pay retail.
There is an additional charge for consumers, for 'electric grid distribution' charge. This distorts the symmetry of net metering. The result is that a grid company makes money even at retail prices.
The power companies (normally) have enough power to supply everyone; they buy that power at wholesale prices and sell it to the customer at retail prices. So why, if they can always buy power at wholesale prices, should they deliberately pay retail prices instead? Doing so increases their costs, which then potentially raises rates for others.
So, asking power companies to buy power back at retail rates amounts to having power customers pay to subsidize the solar power generated by other power customers.
Looking at it as a subsidy, though, suggests a useful way to bring it about. Many power companies have a program where you can pay extra per kWh for "green" power, paying for the use of wind, solar, geothermal, hydroelectric, and other renewable zero-pollution power sources. Why not use a program like that to allow customers to subsidize solar power if they want to, and use the resulting funds to pay customers higher-than-wholesale rates for solar power?
And in that same case, the power company is out some infrastructure and maintenance costs.
But either way, you state that as though power grids have some fundamental property that necessitates the same rates for purchase and sale, a property that most other exchanges do not have.
As I understand my bill, PG&E still bills you for that as a separate item.
> But either way, you state that as though power grids have some fundamental property that necessitates the same rates for purchase and sale, a property that most other exchanges do not have.
That property would be "legal monopoly".
Even markets with a legal monopoly have a bid-ask spread.
No. It is paid at the same retail rate that consumers pay. However, because the amount paid is low, the retail rate used is tier 0, which is basically a lifeline rate. But it still isn't wholesale.
The pay-out on the true-up statement is very clear about the 3.xx cent rate.
Our first year we didn't go negative so we had a payment to make at the end of the year. Now that I know the return rate is so low I'll try to stay positive, switching some appliances to electric if I have to.
So there's the whole story. They do not refund your credit balance at the end of the year.
Rates: http://www.pge.com/en/myhome/saveenergymoney/plans/tiers/ind...?
People that drive 'green' cars are inherently rewarded with paying few taxes at the pump, because they are buying less fuel. Though they may be using the roads and travel infrastructure (which are partially funded by gas taxes) as much as 'non-green' drivers..is this fair for all? Not really, but imagine the fallout of charging Prius drivers more per gallon in order to increase their contribution to the infrastructure that they're using.
In many places, people using solar energy ARE charged more per kilowatt, for the exact scenario above--Increase their contribution to the infrastructure they're using--which is the opposite of what you proposed.
In your proposal to punish the folks that haven't jumped on the solar power band wagon--who receives the benefit$ of their 'punishments'?
More than one jurisdiction has actually attempted a hybrid/electric surcharge with that exact purported justification: http://abcnews.go.com/Business/nc-lawmakers-propose-50-100-f...
The money collected from the punishments can be used wherever is needed. Maybe to partially fund the roads, thus benefiting users of roads with lower tolls. Maybe to support free health and education, thus benefiting everyone.
I realise that might sound "crazy" because lots of well paid PR people are telling you the opposite, but it's true.
The generation is distributed, which saves on distribution and transmission costs.
Planning for expansion is also based on peak loads, which as noted above, solar reduces saving yet more money.
There's some worked examples for Minesota here:
https://www.nrel.gov/tech_deployment/state_local_governments...
It is worse. Wholesale prices vary during the day. If you force them to buy at average price at times when wholesale prices are low and sell at average price when they are high. That will cost them money, potentially lots of it (nowadays, wholesale prices can go negative when there is a lot of supply from wind or solar farms)
By paying wholesale when you have excess yet charging retail when you don't they are effectively charging you _their_ profit margin on _your_ own electricity.
Solar customers already pay the grid maintenance charges. Even if we assumed the utilities were entitled to some compensation for providing this service to solar customers it certainly wouldn't be the spread between wholesale and retail rates.
That is ANCIENT Solar Technology. If you care to read this it actually is
Energy payback estimates for rooftop PV systems are 4, 3, 2, and 1 years: 4 years for systems using current multicrystalline-silicon PV modules, 3 years for current thin-film modules, 2 years for anticipated multicrystalline modules, and 1 year for anticipated thin-film modules
http://www.nrel.gov/docs/fy04osti/35489.pdf
I think you need to re-research solar technology.
Companies like SolarCity can make the math more complicated. And in all fairness they can probably take advantage of various breaks and subsidies I may not have access to as a consumer. However, it's like a car purchase. I'm skeptical that some lease agreement suddenly makes a purchase sensible that wouldn't be with a straightforward cash on the barrel buy.
Doesn't the Tesla home battery change all of that ? Solar on the roof and one or two Tesla batteries in the house and ... no grid usage whatsoever, correct ?
The cheapest power to generate is the base load - long running gas, nuclear, coal, whatever. These are plants that take days or weeks to spin up and down and produce the most cost effective, efficient power. Since supply on the grid must exactly meet, always, these efficient plants can only be used to provide the base load - the amount of load below which the grid never drops.
Any power required beyond the base load comes from generation designed to be used periodically. It's not as efficient. There are stages to this too - you can have generators which take hours to come up which are more efficient than those which take minutes.
Residential power generation can cause the base load to drop, and require more peak load generation, increasing the production cost of power.
The power which customers generate must also go through transformers, rectifiers, and all that good stuff to be usable by others, and that equipment isn't free either.
Whether the company buys in wholesale quantities doesn't really matter, since the costs incurred from supporting residential net-metering aren't zero. It makes sense that they pay less for power they buy than what the sell, otherwise, that cost is shifted to someone else.
As long as it is always above your household needs it would still be OK, but that's not the case, is it?
Build a smaller, energy efficient house, get lots of batteries, and stop wasting so much electricity.
You also don't have to go 100% solar all at once. You can get panels and kits off of Amazon or from Home Depot and incrementally add capacity. Actually I believe with current prices and so many individuals out there that you can hire to help do installs now, at this point you should start small and go incremental rather than getting a loan. Otherwise you are wasting money, and just feeding into the racket that solar installers have set up.
Your information is outdated.
I defy you to find a low-margin business that can actually survive a ten-fold reduction of per-sale revenue.
If solar had even a tenth the subsidies that coal and oil have gotten for the past decades, it'd be on every rooftop by now (especially the nice flat commercial rooftops) and we'd have as many concentrated-solar facilities as coal plants.
You have to invest money to install solar panels; the expectation is that you can make that money back either by saving on running costs or by selling back electricity. If your running costs are projected to be the same (not worse, the same) and selling back is not profitable, then the fixed installation costs make the investment overall unprofitable, and the industry dies.
Unless they have to, power companies are not going to buy your excess solar power from you at all. So yes, regulation is required to prevent monopoly (or oligopoly) providers from abusing their position.
The question is more like, why should I be in a privileged position related to these other suppliers, and why should I be able to freely exchange something cheap (off-peak, unpredictable power) for something expensive (peak, on-demand power)? This is of course assuming that my usage of the grid is fully accounted for in fees, otherwise there is a separate issue there.
Ultimately, since public utilities are not exactly an investor goldmine, this comes down to the question of how much other electricity consumers should spend to subsidize those with solar installations.