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Comment by kevinburke | Hacker News Reader

I'm the author here. The cost savings come from not having people who live in cities pay for undergrounding lines and maintaining power lines in rural areas. Maintaining the city networks is much cheaper.

This is why Santa Clara, Palo Alto and Alameda's power companies can deliver power for half of what PG&E can. You can just copy their cost structure.

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You said in the article "PG&E rejected this offer for being too low" but then proceed to use that as the baseline cost that drives the rest of the estimates, that doesn't make sense. If I offer someone minimum wage to do my job and they refuse, I don't start a spreadsheet to calculate my savings.

Boulder CO tried municipalization with Xcel and the gap between the city offer and Xcel position was very large. How do your figures look if you double the price and/or add in a decade tail of having to pay 25% of billing to PG&E?

The small munis you mention are in the same position as PG&E with respect to owning decades old poles and conductors with decades of life remaining. The incumbent has all the cards in this negotiation. An existing muni can do it cheaper for the obvious reasons you stated - legacy network, all the customers are close together. Buying the most profitable bits of the PG&E network at a price they would agree to would not be profitable.

This is why I adjusted SF’s offer for population and then multiplied it by 50%, then used 400 million as the base for financing.

Financing at 4% interest is not the expensive part though. Even if the price was $1 billion it would be 6 cents per kWh.

I agree it would be bad if they had to fight in court for a decade! But you have to start somewhere and as I mentioned you might get a good outcome just from threatening to do it. My hope is the CPUC would force them to accept some offer.

In Boulders case the goal wasn't to strand rural customers with resiliency costs but to reduce emissions. Xcel moved in that direction enough that Boulder didn't need to municipalize. Owning poles and jiggling electrons would have allowed the city to do things like let homeowners access the 4% muni borrowing rate for solar loans that stay with the property via a tax lien. With the existing structure of public regulator and local monopolies, Xcel can't easily do anything "special" for Boulder without forcing poor rural places to share the costs.

The problem is, if cities don’t pay for that, who will? Just abandoning electricity for rural areas isn’t _really_ an option, but it would likely be uneconomic without the effective subsidy from urban areas.

Story of America. There's a reason only this continent has excessive sprawl.

Ideally, rural areas pay up. Good forcing functions for change. Maybe people move closer together (similar to European villages) or they become energy-independent (solar panels).

If that's politically untenable, then I'd like to see the cost reflected as a city2rural subsidy. Cities get enough hate in the US. I'd like explicit recognition of their generosity.

I could not agree more. Hiding true costs of our choices in other things breaks the ability of the market to signal what is an economic choice.

It probably is an option to go to solar & batteries these days. Especially when the liability from rural power lines is huge due to fires.

Solar would make good use of the big advantage rural has, that land is dirt cheap and space is plentiful.

The area I live in has utilities that service the small town population centers and a utility that services most of the outlying rural area. The rural operator is expensive, but not unaffordable.

Density including the towns is about 3.2 people per square km.

Who paid for the infra, and how old is it? If it was inherited from a prior larger utility, this is the sort of thing you can get away with, for a while, until it needs serious maintenance. But ultimately spreading the true lifetime cost of electrical infrastructure over that sort of population density without subsidy is going to lead to absurdly high prices.

It formed from smaller utilities ~1950. We have harsh winters and some small thunderstorms, but that's about it for weather.

Looks like people end up paying close to $0.30 per kwh. There's probably some cross subsidies coming from the state, I don't know.

Yeah, I’d be _amazed_ if that isn’t subsidised in some way, whether via direct subsidy or risk equalisation fees from bigger utilities.

Cool. Now you’ve just undone 70 years of rural electrification in the United States.

Optimizing for factors other than universal service is completely valid, but I’m guessing each of those municipal power systems pre-dated rural electrification and thereby get to somewhat free ride on the system more than anyone would reasonably allow Walnut Creek to do in the year 2025.

Not just rural areas but places like Orinda and the Berkeley Hills where I will pay to underground lines at massive expense.

There is also a huge moral hazard problem where we make it cheaper than it should be to live in fire zones by subsidizing electricity and insurance. So people build a lot of houses in fire territory that burn down.

In the meantime we make it more expensive to live in the safe places. We should stop doing that

This is very close to the arguments Strong Towns make in favour of denser neighbourhoods.

https://www.youtube.com/watch?v=7Nw6qyyrTeI

The trouble is, if you end the subsidisation overnight, you have a big, big problem.

Is this a problem though? Utilities will become more expensive for rural properties, but if those people are producing product that people need, they can just slightly bump prices to cover their electricity costs, which the consumers can cover with their new found savings on utilities.

The real benefit is that the people who don't have any reason to actually be rural, say remote software developers, will now have to either cover their costs rather than externalising them, or move to the city.

Thing is, it wouldn’t be _slightly_. If you’re a power company who just does rural customers, you’re probably going to be looking at charging rates so high that people simply can’t pay them.

They are currently being paid right now though. So it's possible for the population to fund it. The products being produced would go up roughly the same as the discount you got on power.

It's probably more efficient for society to subsidize micro grids using solar and wind and batteries for rural electrification than to bury all the power lines that it'll take.

A $100 million project to bury the lines to 1000 houses is $100k per house which just ain't worth it. Not saying this is a real number but it could easily be if it's costing $0.20/kWh to do distribution.

Rural electrification was needed at the time. In many cases, it no longer is (distributed generation, microgrids, etc vs large, distant generators having to transport power to residential load centers).

This is very similar to how Africa will leapfrog the legacy model with cheap solar and batteries.

In Australia, they have a model of colocating stationary battery storage in neighborhoods to balance buffer solar production locally for time shifting purposes (vs shipping that power far only to bring it back in the evening).

In Australia that policy was rolled out basically this year and is still in the trial stage.

The fundamentals are proven (energy arbitrage, grid services, grid forming, all with battery storage). In Australia, the economics are very favorable considering high rooftop solar penetration rates. The trial will be successful, the debate is how successful.

this is entirely wrong. There is no world in which rural areas can substitute the power grid with anything you described. It is not possible - in the absolute sense - to match the power grid's reliability and stability with a bunch of local solutions. The cost is another matter but take Canada - the lowest electricity rates in the OECD.

The local solution to solve local problem absolutely works, but that is not what you are describing.

Africa is not going to substitute a continental scale grid with solar and batteries. That's just pie-in-the-sky levels of delusion.

You..clearly know nothing about power grids, because utilities are deploying batteries precisely because they increase reliability an ease maintenance. And microgrids exist all over the US - a bunch are in Alaska and other very rural areas. Those communities have started adding battery storage systems to account for sudden load changes their generators can't handle, generator failure or maintenance, and so on.

Without them the grid is like a bunch of dominoes where a failure can cascade unless grid operators, or automated systems, react fast enough. Battery systems are like power firewalls; if the main grid goes down, the battery keeps right on chugging.

If circuit protection devices or an equipment failure happens on a main transmission line, the utility has hours to fix it, and meanwhile everyone has power. Ditto for maintenance. Need to replace that big huge switch that feeds part of the county? No problem, just...shut it off. Long as you're done before the battery bank runs out, everything's fine.

Right now you can end up with situations where a power plant will "trip" and go offline, such as when a large amount of load is disconnected due to a transmission line failure or substation failure. The grid frequency goes up if the power plants on the grid can't throttle back fast enough, and instead, to keep the grid from going over-frequency, the plant goes offline entirely.

If a lot of areas are on battery - those systems can be commanded to start charging to stop the plants from speeding up. If the grid goes dead, it's not nearly as big a deal, because the grid operators have more time to do things like sequence the re-connection of all those areas.

I'd imagine that with a bunch of battery systems distributed around a grid, they could potentially be able help black-start a plant if needed.

Battery systems also reduce the need for a transmission line upgrade; when demand is higher than the line's capacity, the battery system steps in. When demand is below the line capacity, the battery system charges.

i'd be careful telling someone that they don't know about power grids.

All the microgrids you describe provide basic needs. None power serious industry anywhere.

Batteries are a good solution for certain situations, not as a fix-all. All the batteries in the world can power a large power system like California or Quebec for minutes. That's right - minutes.

https://www.sciencedirect.com/science/article/pii/S2211467X2...

https://www.undp.org/energy/africa-minigrids-program

https://www.worldbank.org/en/news/press-release/2023/02/26/s...

https://www.esmap.org/mini_grids_for_half_a_billion_people_t...

https://www.nrel.gov/reopt/projects/case-study-sub-saharan-a...

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