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Comment by onlyrealcuzzo | Hacker News Reader

> If you believe burning carbon fuels is a big negative externality, then solar users are subsidizing everyone else.

If the energy company is paying you $0.12 to sell electricity for $0.09 - they're losing money. Not to mention, they aren't covering any of the costs of maintaining their network (which is a large chunk of the overall cost).

If they're forced to buy rooftop solar from homeowners at a loss - they are FORCED to transfer that loss onto other costumers - which means the other customers are subsidizing that.

There isn't anything tricky about who is subsidizing whom.

Your issues with "dirty" energy are entirely separate.

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You are stating a common misconception. That being that solar owners should be paying for anything other than the cost to push power into the distribution grid. The grid fees solar owners pay account for that. They should not be paid for supplying power at wholesale rates bc that assumes a wholesale power flow model, which is not physically applicable to solar owners who support the local distribution grid. If you look at the portion of the grid that a solar owner interacts with, how their power flows through it, the efficiencies of supplying that power locally are clear and should be at retail + distribution fees only. It’s the solar owners that are actually (marginally) subsidizing the non-solar owners in reality.

The utilities and ISO’s do not argue against this. They want to eliminate NEM 2.0 in favor of NEM 3.0 bc the difference in rates are to then be provided by alternative incentives such as battery pay-for-performance programs.

Disclaimer: I own an energy company that does C&I and Residential energy aggregation and participates in wholesale market energy supply and incentive programs.

Do you have a source for "The grid fees solar owners pay account for that"?

If you look into e.g. PG&E's financials, their expenses are dominated by operation and maintenance of the grid, not what they pay for electricity.

You appear to be claiming that the grid fees cover this cost entirely, but they're not high, e.g. $15/mo on some plans.

You're obviously very knowledgeable about the space, but I suspect you may be talking your book a bit here.

I'm not sure I understand how what you say contradicts what the previous poster said? Can you elaborate? I think the point implied in the previous comment was that pushing into a grid locally is much cheaper for the grid operator than distributing power from a far away power plant?

It's not an outright contradiction, just an explanation of why I doubt their claim. I am not myself making a claim.

Given that they are correcting a "common misconception", I think it's entirely appropriate to ask for a source.

My reimbursement for solar production takes about 6% for transmissions fees. I'm not sure which cost you are worried about but I make infrastructure payments. I don't think the electricity I produce travels more the 200 feet to my neighbors houses.

Well, my question would be whether retail minus 6% would be the prevailing rate in a free market with healthy competition, or is it a subsidy?

I'm not against subsidies. Germany pushing solar well before it made financial sense, enabling the economies of scale we see today, was one of the greatest wins of public policy in the 21st century. I paid a lot of tax when I lived there and was happy to contribute in some small way to that effort.

But subsidies risk turning into middle class welfare, continuing long after they make sense from a public policy point of view because interest groups form that don't want to give them up.

> Your issues with "dirty" energy are entirely separate.

It's not really, that's the entire idea behind economic externalities. Power generation using carbon sources brings with it a cost in the form of pollution and greenhouse gases not directly paid by the customer. That cost is effectively spread out evenly across society, so those who use less carbon intensive energy are more or less subsidizing those who use more. Or to put it another way, if the folks with rooftop solar were instead just using electricity from coal or gas plants like their neighbors, their neighbors would have an increased pollution/global warming cost even if they don't see it in their electric bill.

Of course the math may or may not actually work out since the net metering costs for rooftop solar are based on electricity rates rather than any pollution based externalities. But the idea that it's strictly an economic transfer from people without solar to those with solar doesn't seem entirely accurate. And the economic impacts of "dirty" energy are definitely not a separate issue.

Utilities already have mandates to buy X% of their power from renewable sources. They primarily do this by building/buying utility scale renewables because that is more cost effective than paying homeowners retail rates for their electricity.

Distributed generation is great because generation and consumption are next to each other, and this can theoretically reduce peak load on the grid. The problem is that the sun goes down every day at the same time, and we're back to the same peak load.

The lowered rates in NEM 3.0 actually incentivize homeowners to buy batteries and load shift, which does actually help reduce peak load. Batteries are still too expensive, though, and the hope is that falling battery costs make it economical.

Externalities exist, yes, but they only matter when they get priced in. Capital moves energy markets, not vibes.

At least in New York state, they've recently tried to deal with this discrepancy while still keeping the incentive to install solar. There's a flat rate fee for all electricity customers to be hooked up to the grid to support grid infrastructure. There's also an additional fee to those that have solar panels called the Customer Benefit Contribution that is based off your generation to help fund energy efficiency projects and low-income programs.

They’re also simultaneously selling it again for $0.12 ensuring that your surplus free electricity is used by your neighbors. Conceptually it’s a wash, because they then scale down the amount of power they generate. The real world consequence is that power generation is not easily scaled on demand.

"because they then scale down the amount of power they generate"

They spend 0.12 for power that would have cost them much less than 0.12 to generate. The consequence is that they make up for it by charging other customers more.

One way of thinking about this is in terms of kWh rather than cents.

If you supply a kWh to the grid at midday and then consume a kWh overnight, what should your balance of payments be? If you're getting the wholesale rate during the day, do you also get the wholesale rate at night?

What this is really about is, how should we pay for the fixed costs of the infrastructure?

There isn't an objective answer to that. You could say that everyone pays a fixed service charge and then there is no contribution per kWh, and then the per-kWh rate for retail and wholesale are exactly equal. That's the most economically efficient thing, but then people who don't use a lot of electricity are paying a high fixed fee.

Another high efficiency thing is to use time of day metering, so that the difference between the wholesale and retail pricing is highest when supply is most outstripped by demand. That also gets rid of your problem with solar because then they can get retail, but get retail based on the time of day, so supplying power when it's cheap and using it when it's expensive isn't going to net out.

But charging retail and paying wholesale to the same customers isn't ideal, because those customers also have a choice. If they're getting paid $0.04/kWh for generation during the day but then paying $0.12/kWh or more at night in order to pay for the infrastructure, they might find it more economical to install a battery system locally and then stop buying power from the power company at all on most days. And then they're still not contributing anything per kWh to the fixed costs of infrastructure, but now you've actually made it worse, because a local battery system is going to be configured to align with the needs of the owner rather than the needs of the grid. Instead of incorporating the battery system into the grid so it can dump its full capacity during the nasty part of the duck curve and then fulfilling the lower demand for the rest of the night from baseload generators, the homeowner has the incentive to sell nothing from their batteries to the grid at 7PM (because they're only getting wholesale) so they can have it left to use for themselves to avoid paying retail at midnight.

Then the grid still has to cover its fixed costs from the other customers and can't even affect their usage with time of day metering because retail off-peak is too close to wholesale on-peak.

> they are FORCED to transfer that loss onto other costumers

How does that figure?

I won't even insist you account for second order effects of having the solar panel, just that the consumer is only paying for their net draw of energy from the grid (which has decreased).

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