Solar panels could destroy U.S. utilities, according to U.S. utilities

More like: business model of utilities disrupted by distributed energy resources.

Also, peak demand in CA is at 9 pm, not noon: https://www.caiso.com/outlook/outlook.html

The underlying problem is the mismatch between the old business model:

    Generate, distribute, and deliver electricity;
    charge for connection to grid and for
    electricity delivered and consumed.

and the new situation:

    Generate *or* purchase electricity from various providers,
    including households with solar panels,
    distribute and deliver electricity,
    charge for distribution, delivery, availability,
    and for electricity consumed.

Consider the migration of television from broadcast to CATV to cable to the current YouTube / TiVo / Hulu / whatever model - basically, a shift from a hierarchical top-down head-end driven model to a widely distributed model.

Utilities are facing a similar disruption, and their challenges include restructuring their generation / collection / distribution system; the costing and billing to support that; the regulatory and funding environment to cope with all of that; and to do it with generating plant equipment that will have very long term costs. I wish them luck.

The culture of protecting existing businesses is becoming infuriating to read about. Businesses are there because they're the most efficient way to solve the needs of a group of people. If circumstances change and a better solution presents itself then both new and _existing_ businesses have an opportunity to take advantage of it. There's absolutely nothing to stop the existing utility companies being the companies that lead the charge with solar power.

Original report here: http://www.eei.org/ourissues/finance/Documents/disruptivecha...

I believe that distributed energy is the future, plugging your house into your car, charging your car with solar and selling power to the grid when your forecasted household demand is lower then your forecasted supply.

Because of the internet we now have distributed information and it is changing the world in every way. Anyone can share anything in real-time with the world. Everyone is a producer and consumer of information now.

The impact of everyone being both a producer and consumer of energy will also be profound.

I work in this space. I think it is worth noting that, yes this is true for some players, particularly at middle management and executive levels. However it is equally work noting that some of the resistance is just conservative engineering.

Would you just grab the latest 0.1 release of the hot new database and throw it up on your production systems because everyone keeps talking about the promise of it? This is a real concern at the engineering levels.

One of the problems with distributed generation is not that it eats away at grid profits - there is still profit from maintaining the grid that allows you to have power even if your solar panels break. There are price structures that allow this to be profitable for utilities (however everyone involved needs to look at it with fresh eyes -- homeowners need to stop thinking about it in just profit from unused kwh and utilities need to stop looking at it in terms of kwh pushed). The problem is that huge and expensive amounts of infrastructure are designed an manufactured with a one-way power flow in mind. Protection schemes are predicated on a star(ish) topology of distribution lines, where the assumption that power flows from the "hub" out.[1] Things like transformers are highly tuned for this type of flow, to the point where even small changes or running out of spec can seriously degrade the expected lifetime (usually thought out and planned on the time-frame of 30 years.) Power flowing the other way is a "break the line" event, period, to protect that equipment. A lot of substations don't have the type of capacity or equipment to handle power swings too far out of spec, because they designed that way for maximum efficience of the push model.

Something this article misses in it's analysis, is that power companies building infrastructure is absurdly expensive - getting right aways for power lines is a decade long, legally perilous, and highly prone to regulatory whim, endeavor (the NIMBY crowd is strong here). As such, once one is put in, the cost is amortized over 30+ year timelines, and efficient operation is actually strongly considered. Demand response and efficient appliances are actually in the interest of utilities, and they do recognize this. If they can't build new infrastructure to increase supply, they want demand to remain within their capability to deliver (and when done right, the base "connected" fee to the customers can be as or more profitable than more power to fewer customers).

Finally, all the understanding and models of how electricity works in an interconnected grid is based on models assuming "roughly" steady state capable generators. Things like solar and wind have some problems in this, as they can contribute instability to the overall system - if the wind dies, you have to have hot standby power to keep voltage levels up. If everyone in a region has PV, and clouds move in, they will be demanding more power from the grid. On a "partly sunny" day, this result in weird spikes, again placing strange wear patterns on transformers and generators that are ramping up and down in response.

Even the engineers I know who are all about this stuff are hesitant to just deploying it, because of all this technical challenge. Just like I would be hesitant to throw an unknown datastore into a stable working system without staging, testing, and otherwise slowly integrating it. It's even worse for the utilities, because they are in a "damned if you do, damned if you don't" position. What is worse - rolling slowly with the new technology and being blasted as obstructionists, or going head first, and being blasted when the unexpected happens and breaks a bunch of things, or finding a middle ground and making everyone unhappy?

[1] at transmission levels, this isn't true, and in dense urban centers the topology is meshier, but this statement is still true for a (geographically anyway) majority of power distribution.

Two of Musks companies have partnered to build just that very system described in this article:

http://www.solarcity.com/residential/energy-storage.aspx

Of course its marketed as backup power right now, but once battery costs come down this will be very viable.

Something that would be interesting: a map estimating the areas in which a typical suburban home roof covered with PV panels would produce enough energy to power a typical suburban home's worth of electrical usage, assuming some level of battery technology.

I'm not actually sure what it'd look like. Seems like there might be a tradeoff between hotter areas, which have both higher PV output and higher peak electricity usage (due to A/C running flat out on hot days), and cooler areas which are lower on both. I guess the ideal situation would be something like SoCal within a mile of the coast: tons of sun yet ocean-moderated mild temperatures. But not sure about the rest of the country.

Not to mention lumen per dollar increase rate of LED lighting, tablets that consume 4 watts, refrigerators that use half the power of the average installed fridge, etc.

The falling prices of solar PV panels has been incredible. Most expected the price of $0.72 per peak watt to be reached in 2028, not 2013.

I doubt most people can afford enough solar and battery storage to power all the air conditioning needed for the longer, hotter summers we are having.

We'll just use less coal which is a great thing, until the coal industry starts getting subsidies to stay alive in a few decades (which is certainly going to happen considering their political power).

Grid-tie is a much better answer for people and utilities though. Solves the daytime demand problem.

Hello from the wasteland Germany. Everything is in ruins.

The chapter and verse of the grid utility economics as they are impacted by solar and wind is in http://smallisprofitable.org which was The Economist's Book of the Year 2003. (disclaimer: I helped edit this)

Decentralized power generation makes society as a whole far more resilient against sabotage and natural disasters.

As for the business model, Heinlein has a comment: "There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back."

Of course they might "destroy US utilities", which is why some of us appreciate them so much. Of course they won't destroy hydro or wind plants.

There was a time when power generation "had" to be centralized, just as AT&T "needed" to have a telecom monopoly and we "need" to have ISPs. Technology is sweeping us past that necessity; those days are ending.

Now that the utilities have stripped and burned most of the easily-stripped fossil fuel resources (leaving no such easy plundering for future generations) and kept the profits for themselves, we are all starting to enjoy getting a slice of the pie. Dear Utes: don't let the door hit you in the ass.

One thing that may save utilities for a while is the rise of the electric car. There will be a need for charging stations to charge these cars when away from home and solar may not be practical in all locations. This could be especially true in cities where there may not be enough room for all the solar panels needed. Electrified roads that charge up cars as they drive on them would be even better and would be a natural extension of existing utility services. If utilities were smart they would focus on helping to accelerate the transition to electric vehicles.

It's simple: A utility's costs for a customer are basically a fixed cost for a connection plus a variable cost for the power a customer uses. The fixed cost pays for the astoundingly expensive equipment needed for a connection, and the variable cost pays just for the actual power. In the US, the wholesale cost of power on the grid has long been about 0.5 cents per kWh, that is, relatively low. I have some figures from 2007 saying that the cost of power at the plant from coal is less than 3 cents per kWh and, nuclear fission, 2 cents.

Now, if a lot of consumers put solar panels on their roofs but remain connected to the grid, then they will pay less to the utility which stands to fail to get back its fixed costs.

So, eventually the customer will get an electric bill that itemizes a much larger fixed cost for the connection and a lower variable cost for the actual power.

In the meanwhile, there will be a lot of 'politics' where people with solar panels want to pay not enough for the fixed cost of the grid which will mean that people without solar panels will pay too much.

And the people with solar panels will want to be able to sell power back to the utilities which; such power will cause engineering problems on the grid, and the solution of these problems will raise the fixed costs.

For the batteries, so far they are too expensive. Same for home electric generators. Generally a big problem with electric power is that storage is very expensive.

Net, for generating electric power, super tough to improve on the results of the last 100 years in electric power engineering where the power comes from falling water, burning coal, or nuclear fission.

In simple terms, for the grid, really no one wants power from unreliable sources such as wind and solar because (1) still need the fixed cost of the present system for when the wind is not blowing and the sun is not shining, (2) wind/solar variability can cause stability issues on the grid (to be solved by a 'smart grid', that is, more fixed cost for the grid), (3) the good wind/solar sources are generally too far from the major grid demands meaning long distance transmission lines (more cost). My guess is that if take the subsidies away from wind and solar, then for the grid wind/solar will fall like a lead balloon.

Broadly, wind/solar for the grid asks us to pay for fixed cost twice, once for wind/solar and again for our current system for when wind/solar are not providing enough power. Heck, except for dress up, I have just one pair of shoes and wear them rain or shine -- I don't have separate shoes for rain and then shine. I have one computer for night and day and not separate computers for each. I want to pay for just one source of fixed cost of electric power, not one source on days with wind or sun and another source otherwise.

Power from wind/solar may be useful, say, for smelting aluminum, generating hydrogen from water, providing energy to make gasoline for water and coal. Note something these three candidate uses have in common: The output is easily stored, that is, buffered. Then notice the problem of electric power for the grid: The means of storage are far to inefficient.

For the grid, as far as I can see, wind and solar are just nonsense pushed by a 'wind/solar subsidy industry' that wants to talk people into measuring temperature not with thermometers but pictures of polar bears.

There is another candidate, small nukes. So, from Japan can buy a 'box'. In a neighborhood, dig a hole in the ground, install the box, and cover it over. Connect the box to the grid of the neighborhood. Then the box, just buried in its hole in the ground, provides all the electric power for the neighborhood for, say, 20 years. The savings are maintaining the long distance power transmission from the power station to the neighborhood. Of course the interior of the box is a nuclear fission reactor.

Now if my startup works and I get rich and build a nice place in the rural hills of, say, New Hampshire, then maybe I will be able to get such a box! Also for my 4 wheel drive truck to get around in the winters, use that power to make gasoline from water and coal! Maybe!

This is nice if it leads to a switch to cheaper localized non monopolistic electricity. However, I wonder if the chain reaction could lead to widespread utilities bankruptcies and maybe even cascate to another debt crisis affecting the already fragile financial and government sectors.

At least here in Michigan, DTE Energy is pushing efficiency and solar. Part of this is a legislated requirement, but I think the big motivator is how the regulator calculates their profit margin. AFAIK, they don't make their margin on selling electrons, but on capital investment. Higher utilization of their generating capacity just means slimmer profit margins. Most of their plants are 40-50 years old so they have plenty of capital investment and profits headed their way even if solar cuts into demand. I could be wrong about any or all of this, since I'm working off memory and I'm not going to read 100 page regulator reports.

Utility companies are in the power business I don't see why that means a giant plat full of machinery.

Say a little old lady wants solar panels but is in no way capable of installing them anymore than she can install plumbing.

Power utilities should offer solar panels, wind turbines, battery storage systems. Even electrical to hydrogen foe storage.

The power company should be like an ISP only instead of modems they service power generating devices.

I think this is a fascinating argument and makes sense. However, Is the EEI really someone we trust with a report like this? It seems - given their position - they have a lot to gain and little downside in trying to scare what are essentially politicians into helping protect them. Perhaps that's why the media ignored this report to begin with?

One of the best tales regarding an entrenched utility, costs, and an individual wanting to hook into the grid. Ken Adelman has made his name known for a number of things, but his fight w/ PG&E was one of the more memorable ones --

http://www.solarwarrior.com/pgebattle.html

A similar cycle will trash the gasoline car industry when electric meets the combination of [cheap, useable] that is sufficient to trigger a demand reduction / supply contraction cycle in the less fungible parts for gasoline cars.

Actually, it looks like it's according to one consultant that one of the utilities hired. But it's about long-term trends that are interesting enough. A summary by a more careful writer would be appreciated.

If they are regulated monopolies, it seems like any issue they complain about is directly addressable by adjusting the rates they are allowed to charge, so as to keep their profits reasonable.

This piece overlooks the fact that utilities can install solar power cheaper than a residence can. This will always be the chase. Electricity will drop in price accordingly.

Solar doesn't have to be expensive up-front thanks to companies that lease solar systems like SolarCity (who's chairman is Elon Musk, ran by his cousins).

Ironically widespread availability of solar power could lead to increased pollution. Purely hypothetically, if somehow it became popular for people to generate some, but not all, of the power they need from solar panels then perhaps people would pay less money to the power companies. Power production becomes less profitable and there's less demand for expanding supply. Meaning that the cheapest power production that requires the lowest capital investment will win out. And that's coal.

I wonder when CSP tech is going to be talked about in the mainstream. It seems like when it comes to solar, people just think of PV.

Excellent news then! I would certainly prefer more solar power, and it looks like the utilities agree it's possible.

How long before the utilities (likely successfully) lobby to make PV/DER illegal, I wonder.

Soon, I'd wager. As I see it, the purpose of this report is FUD, which is usually the opening move of any protectionist initiative.

Edit: alternately, they'll push to tax it to high hell, or at least argue that they own sunshine (like water utilities do over rainwater collection) and should therefore be paid by PV users.