California strikes another blow against rooftop solar | Hacker News Reader

California strikes another blow against rooftop solar

latimes.com

56 pointsmiguelazo53 comments

Electricity has always had two parts: production and distribution.

The problem with most places is that distribution is a natural monopoly: you don't want two or more lets of wires running to every house, so distribution monopolies are a natural consequence.

Production, however, is different; there's much more competition, which means that competitive pressure drives prices down.

Over time, distribution monopolies and other parties get more and more intertwined as they capture each other. The state uses distributors to levy taxes, unions parasitise the distributors and seek rents from their customers, companies capture regulators who set their prices, and that's why distribution is costly.

The beauty of rooftop solar is that you can completely disconnect yourself from the grid and thus the politics that drives prices up. It is true that giant solar farms in the desert and grid-scale batteries are more efficient, but they're captured and don't act in the customer's best interest.

In a world where distribution monopolies don't charge more than cost, where distributors are not agents of the state, rooftop solar would be more expensive than grid solar, but that's not the world we live in.

Part of being a distribution monopoly is delivering power to everyone, not just places where it's profitable. People in rural areas are able to afford grid electricity because the disproportionate cost of delivering power to them is subsidized by people living in cities paying the same rates.

Rooftop solar being cheaper overall than a grid connection for some people isn't that surprising. There are lots of other costs and externalities associated with running a grid that don't need to be contemplated for off grid home solar.

Rural electrification subsidies distort the cost of living in the middle of nowhere. This is the same problem as low-density suburban housing: the cost of their infrastructure far exceeds their taxes, so they're subsidised by urban core where infrastructure costs are low.

This is an even better argument against delivering power to everyone, all the time.

Electricity should be delivered to everyone, just like mail. It's not just a product, it's an essential public good.

In my country there is no obligation for power distributors to connect new customers to the grid if it is uneconomical. Those people are expected to sort their own off-grid installation. Stringing 5km+ of conductor for one customer makes no sense at all. In fact, many distributors are actively paying a small number of (willing) customers to install off-grid installations so their grid connection can be decommissioned as it saves everyone money.

Around here if you live in the middle of nowhere you’re on a septic tank system and not connected to a sewage system

It is unrealistic to expect the same amenities regardless of where you live.

A septic tank provides for safe and sanitary disposal of waste. The purpose of such sanitation is to prevent cholera outbreaks etc. That requirement is satisfied.

But it is not the same as being hooked up to a sewage system.

Nor are the houses always hooked up to a water main. And instead rely on wells.

The point is that they don’t have the same services, and it would incredibly expensive to provide them. The same for electricity.

They argument makes less sense now that rural people can install their own solar/wind power supply.

> you don't want two or more lets of wires running to every house

I do! I do! Very much like I do like several fiber optic cables running to the building where I live, for me to choose from.

The problem is. of course, that it's too expensive to afford in most places, and definitely too expensive in low-density suburbia, where rooftop solar makes most sense.

I think redundant infrastructure makes sense in dense urban areas for fibre, but probably not stuff like water and sewage. I've read many proposals for introducing market pressure into natural monopolies, but I haven't been convinced by any of them.

To me this situation has always seemed backwards.

Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage.

Yes, this doesn't encourage reducing electricity usage, which isn't as great for the environment.

But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar.

There's a similar issue with water usage, lots of locales have been so successful in lowering water usage in their communities that previous usage based fees don't cover the minimum operating cost of the utilities.

It's also happening with gas. Especially because switching to entirely electric is an alternative (and being pushed). So gas prices have to raise to make up for infrastructure cost, incentivizing individuals to move off gas to save money, repeat.

If the money earmarked for upkeep goes to upkeep, that sounds like a nice plan. Unfortunately, PG&E has a history of collecting upkeep fees and paying them out as shareholder dividends.

The situation is backwards because instead of taxing the sh*t out of everyone (including non solar homeowners) and give incentives to select few, people can simply afford solar (or whatever solution they want) if the government hasn't robbed them.

Sorry couldn't resist a side nitpick:

> if the government hasn't robbed them

Since dawn of times government robbed people (aka taxes). That's basically the definition of a state. It's actually the first and most important task of any state -- collecting tribute (the second is preventing other states doing the same).

So, if we're looking for a state that doesn't rob it's people, we should look for another universe perhaps.

FYI, this creates a perverse incentive for the utility to create as high costs as they can plausibly get away with.

It’s a big issue with military contracts too, or any ‘cost plus’ arrangement.

They are not incentivized to be efficient anymore, rather the opposite.

> based on the actual costs to the electric provider

They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.

That's a very extreme example not representative of day-to-day operation.

I’m not sure you would have such a cavalier answer if you had suffered the same consequences as those people in Texas. The situation has to be accounted for.

Yes but there is no universe where I want to expose myself to capped upside and unbounded loss.

Or stated more generally over a large population building in the insurance is favorable to you because you will never collect on those five figure residential bills, charging ruinous amounts of money for the average family are just loss.

A fair amount of the EU market is also on it, it's not a special Texas company thing.

> They tried this in Texas. During the 2021 winter storms consumers who opted for cheaper rates tied to the actual generation costs ended up with $20k+ power bills.

That's not necessarily because grid costs + generation costs were separate.

If you want to isolate yourself from the volatility of hourly electric price, the power company can still do that by buying insurance / hedging in other ways on behalf of the customer. The insurance cost can be billed separately, or included in the variable rate (depending on the underlying cost structure of the insurance).

It sounds like you’re literally describing what companies already do. They charge you a fixed rate or sometimes variable rate that isolates you from the volatility of the actual real time pricing market. What is different here? The power companies are essentially self insuring. Which generally is cheaper than buying a third party insurance product, all else equal.

No, what they did in Texas was to price it on demand, like a marketplace. That is very different then pricing based on cost.

when supply is limited, there isn't really a difference between demand and cost. when supply went low, demand, and thus cost to the middlemen went way, way up. the middleman was just applying a markup and passing their cost on to consumers.

Equivocating cost from the middleman based on a markup and cost to produce the electricity is quite a move.

No, it wasn't cost "from" the middleman. I said cost "to" the middleman. The middleman was just passing along the higher cost.

I think it makes sense for peak electricity usage to have to pay more for upkeep and infrastructure. Building everything out for peak usage is where the higher costs come from. If my usage during peak is 1kw and my neighbor's is 10kw, our local grid will have to be able to support 11kw. How should those costs for infrastructure be split?

> Instead of charging per KW/hr, charge based on the actual costs to the electric provider. A fixed monthly cost representing the cost of upkeep and being connected to the grid, and a variable cost portion that actually reflects usage.

California recently adopted a version of this.

> But if solar is getting large enough that this is becoming a problem for the utilities, then the answer is to fix the pricing issue - not to stop putting up solar.

California has adopted mandates for solar on new construction; reducing separate incentives is not a decision “to stop putting up solar”.

New Zealand has recently directed distributors to change to cost reflective pricing, which resulted in big increases in the fixed daily charge, and moderate decreases in the variable charge. Lots of people hated it, but it's clearly the right thing to do.

Isn’t that the case everywhere? I get charged per day and per kWh separately.

I was on the previous incentive for solar generation and my bill last month was $0 (I only look at the summary emailed to me and let autopay handle it).

I assume I generated more than I consumed and that offset my gas consumption.

CPUC is full of cronies tied to Sacramento and Newsom. Guarantee the solar changes in this article are being pushed by the energy companies.

PG&E is putting all this money into preventing the next wave of wildfires caused by their negligence and passing it on to consumers.

This feels like the power companies getting in front of shrinking revenue to stop backlash from raising rates for non-solar customers. I can’t imagine power companies continuing to pay outrageous executive salaries while everyone switches to solar and lowering revenue.

>CPUC is full of cronies tied to Sacramento and Newsom.

This-- with a revolving door to industry. And all of their rationales for this proposal are literally Investor-Owned Utility talking points. The most ridiculous part is that CPUC will say that rates are getting too high, provide zero data to show that solar is causing a real cost shift (independent study by Lawrence Livermore found negligible, if any), make zero effort to investigate the utilities' General Rate Case in any serious way, then approve the rate increases that they're now blaming on solar. And keep in mind, this is just the beginning-- they're also ramming the fixed charge (utility tax) other posters were advocating as an alternative down our throats very soon. This will result in far fewer rooftop solar installs, which will mean more giant solar farms in our open spaces that require far more expensive infrastructure/maintenance, which, surprise-- is what really drives up rates up (beyond the obscene waste you'll find at IOUs).

It's the article's title, for sure, but it feels misleading to call a reduction in incentives from a successful program (rooftop solar generating 11% of California's power is amazing) a strike against the goals of that program.

LEDs/CCFLs being subsidized until consumers switched over to them (I know the story is more complex than this) made sense too.

California's grid already has so much power during peak solar that energy is exported to other grids. So adding more solar is diminishing returns.

https://www.eia.gov/electricity/gridmonitor/dashboard/electr...

And yet they're still running natural gas plants during those peaks and have an aging nuclear facility that accounts for much of their clean energy that was scheduled to close in 2025.

Because natural gas plants don't just turn on and off. They're engines that take time to ramp up and down. If you can't ramp up fast enough to meet demand when solar ramps down as the sun sets, you have power outages. Adding more solar makes this problem worse. They call it the duck curve: https://en.wikipedia.org/wiki/Duck_curve

Yeah. Another reason why gas plants will soon be obsolete.

https://www.reuters.com/business/energy/giant-batteries-drai...

This is also a positive given the trajectory of EV adoption and projected increases in demand.

We need to stop government incentives and let the market price solar. The government incentives are driving up prices by a ridiculous amount. The solar installation companies are dependent on them. The incentives are affecting the business structure of these companies making them brittle. The companies have to offer warrantees to justify the prices they charge but most can't manage to stay in business. It's a mess and most people are going to learn the hard way, which is not going to drive solar adoption. Roof top solar is going to end up with a really bad reputation for no reason.

We stepped on the gas pedal and left the damn car in first gear.

Why didn't California dissolve PG&E and turn it into a public utility?

What public utilities in California are doing such a good job that you feel that kind of drastic action would be justified?

Are there any right now? PG&E has done a pretty poor job, burned down half the state and then went bankrupt. Partially despite/because of heavy regulations. Why not nationalize them altogether and remove the profit seeking middlemen and just let the state run it?

> Are there any right now?

Yes, several, e.g., SMUD in Sacramento (PG&E spent a boatload lobbying against SMUD expansion to some of its territories a while back.)

How are they?

From reporting I have seen Sacramento SMUD is generally 25% cheaper than PG&E with faster outage response and more green initiatives. Supposedly carbon neutral. Potentially 35% of power generated from natural gas which replaced decommissioned nuclear. Generally considered superior across the board.

The profit seeking middlemen already extracted the profit. What’s happening now is massive expenditures to get the old infrastructure with shitty/faked documentation less shitty.

Nationalizing them now would just ‘socialize the losses’ as the state would be on the hook for all the crap.

>Why not nationalize them altogether and remove the profit seeking middlemen and just let the state run it?

Because profit maximizing organizations are generally cheaper for consumers and provide better services than state run enterprises. State run entities are beholden to political rules, not economic ones.

Well, in California, they're kinda in the worst of both worlds right now: not state-run but heavily state-regulated, while still trying to make a profit. It's not really working out. They have the burden of state rules without full state support, and can't utilize normal economic rules because of the state limitations. It's just this weird, uncomfortable no-man's land. Between the wildfires and renewables, their rates went up nearly 2x in the last few years and they still went bankrupt.

I think some might argue for full privatization, but does that ever work out with a natural monopoly (the transmission portions at least, not so much with generation)? It's like if Comcast provided electricity.

I don't think I'm far left enough to want to nationalize everything as a matter of course -- the state bureaucracy, as you imply, isn't great at staying nimble -- but something as mundane and essential as basic infra? Sure, why not.

From an equitable services standpoint, right now they're basically charging everyone (via rates) to pay for the actions for a few (solar homeowners), while shrugging off the wildfire situation with no real accountability. As a state enterprise they'd have to have more transparency and accountability (unless they're the Pentagon), and would be subsidized by the existing taxation structures that are already progressive. Right now, the skyrocketing electricity costs in the state are pretty terrifying to behold (I don't even live there), especially if they want to move everyone to EVs. It's just a mess...

Brought to you by CPUC/CAISO (was CAL-ISO) who brought you Enron rolling blackouts.

Note: There is no mention of Enron on CAISO's revisionist history Wikipedia page.

I like how reducing subsidies is somehow a blow against the premise.

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