Monday, April 21, 2014

Sol Invictus



There is a lot of buzz about the effort by the Koch brothers and assorted conservative groups to end "net metering" for solar power. Kevin Drum and Paul Krugman think that it's mainly about conservative tribalism - conservatives have identified solar as something liberal, so they fight it on ideological grounds. Personally, I suspect that the current fight against net metering is mainly economic - utility companies stand to lose their government-protected monopolies if rooftop solar takes over, and of course the Kochs make their billions from the fossil fuel industry.

Anyway, the first thing to realize is that even if net metering gets killed (and if it does, it will only be in red states), it's not the end for solar. It's a slight delay. With costs continuing to plummet, net metering is only important in the short term; in a few years, we won't be talking about this. And in those states that do kill net metering, the main thing that (temporarily) replaces solar will be natural gas, not coal. With U.S. carbon emissions from electricity generation already falling, the main danger for the Earth's climate is China, which is doing its own thing policy-wise. Net metering may be important for the next few years of Koch Industries profits, but it's not a factor in whether or not the planet gets fried. So don't worry! Or at least, don't worry more than you were already worrying.

But anyway, Drum and Krugman do have a point, which is that lots of conservatives are fighting against solar instead of embracing it, simply because of tribal animus. Back in the 70s and 80s, solar was a hippie dream, and the only way it was happening was through heavy government subsidy and regulation. Meanwhile, conservatives had their own dream, nuclear, which was ready to go, and which could only be held back through government intervention. Which it was. The nuclear dream died because nuclear scared people. The solar dream lived on, and eventually - after decades of heroic technological advancement - it prevailed. Solar is the Dream That Won, and nuclear is, as The Economist puts it, the Dream That Failed. Conservatives are still mad about that.

They shouldn't be. Solar is a libertarian dream. The utility companies that states like Oklahoma are scrambling to protect are cozy government-protected monopolies (though eventually they too will survive by switching to solar). Rooftop solar offers a chance for independent homeowners to free themselves from reliance on a collectivist system. And solar is a triumph of human ingenuity, the kind of advance that Julian Simon believed would always save us from "limits to growth" - in the long run, oil and coal and gas will run out, but cheap solar will sustain capitalism. 

So it's time for conservatives to put aside their anti-solar animus and embrace the technology. Guys, don't let yourself turn into shills for industrial policy to add a few years to the business models of the fossil fuel barons. You are better than that.

54 comments:

  1. Anonymous9:29 PM

    "So it's time for conservatives to put aside their anti-solar animus and embrace the technology. Guys, don't let yourself turn into shills for industrial policy to add a few years to the business models of the fossil fuel barons. You are better than that."

    The last sentence is incorrect, and the previous assumes lots of stuff about epistemic closure.

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  2. I didn't see anything about the Kochs and metering. It just said they were against a "mandate in Kansas, which requires that 20% of the state's electricity come from renewable sources."

    This seems entirely consistent with their long-held free-market ideology. I don't see any need to try to explain it further. I'm not even sure it will help the Kochs financially anyway...what is the alternative, coal? Are the Kochs in coal?

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    1. Yep, the Kochs are in coal.

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    2. Koch Carbon LLC and Koch Mineral Services are both in the mining and transportation of coal and coke.

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  3. The high cost of energy storage limits the role of solar (for now at least). Yes its great at certain times of day for reducing peak loads but can't compete to supply base load power economically. Fossil fuels and nuclear provide more than just raw power at arbitrary times, they have energy storage built in.

    I'm no conservative, just a realist. Hopefully in time these obstacles will be overcome, but its worth noting that the diminishing price curve for energy storage has been nowhere near as steep as that for the PV cells themselves.

    Grid independence may be a libertarian idea, but perhaps there is something to be said for economies of scale that centralized power generation can provide. It is interesting that in another field, computing, early pioneers in the field initially believed a centralized model would eventuate. They were wrong, Moore's Law put the equivalent of many mainframes into the typical suburban lounge-room. Recently, however, the pendulum has swung the other way. People have realized they can't do as good a job as the invisible army of engineers who backup their data, update their applications and keep them safe from security threats. Home solar may not need the same level of active involvement, but it is still likely the case that it can be dome more efficiently by specialists with access to latest technologies at wholesale prices.




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    1. In 5 years this won't even be an issue. Utilities will be investing in solar on a large scale. At that point, rooftop solar becomes an issue of economies of scale vs. land and transmission cost from centralized power plants. Low installation costs for solar mean that hybrid systems - burning gas at night and using solar during the day - will be cost-effective for power companies...

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    2. Solar currently provides something like 0.1% of our U.S. grid electricity and maybe something like a percent or 2 during a hot summer day. The high cost of energy storage is *not* limiting the amount of solar we can use. We can increase the amount of solar on our grids by at least a factor of 10 before we come close to having to worry about storage.

      Meanwhile, California spends something like 7% of it's electricity pumping water to the tops of hills. That's not a particularly time sensitive operation and is currently done at night when electric supplies are cheapest. It could be mostly done during the day.

      Coal and Nuclear *only* provide base-load power which is partly why they are so cheap. You have to use the electricity when it is supplied and its difficult to turn off. Hydro is the most flexible, and solar is pretty damned nice because it is available when demand is highest. Meanwhile, solar and wind complement each other well.

      The thing about distributed residential solar, aka building-integrated-photovoltaics, is that it has a path that leads to free electricity. Shingles cost money to produce, distribute, and install. In the long run, PV panels shouldn't cost much more to produce, distribute, and install. Given that PV needs to capture a broad area, the centralized specialists are going to have their work cut out for them.

      And we can charge up a bunch of Teslas while the sun is shining...

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    3. Anonymous1:32 PM

      In 5 years, the sun will shine at night. Also, it will be no problem for gas plants to make the same money at night that they do running during both night and day. You heard it here first.

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    4. I do agree there is plenty of room for solar to expand but baseload remains out of reach for now. Its not just night time demand that needs to be considered but drastically reduced performance on overcast days and in northern states. So you have to incorporate a lot of redundant capacity into the network which, together with the higher cost of gas vs coal, is going to make the economic case far less attractive.

      Expect also the fossil fuel incumbents will respond to the threat and also move towards greater efficiency. Possibly this may include better environmental performance, which isn't a bad thing in any case. A similar response has been seen from traditional auto manufacturers, which has reduced the environmental and fuel efficiency advantages of EVs over ICEs.

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    5. Nathanael9:11 PM

      There's no more improvements to be made in fossil fuel electricity generation. They've pretty much hit the theoretical limit.

      The total nighttime load is going to drop, massively, with the switch to LED lighting (1/10 the energy of incandescents, or less).

      We've already got some huge hydro for nighttime, too.

      As for EVs versus ICEs, auto manufacturers have started doing what railroad locomotive manufacturers did a long time ago: they're building electric cars with gasoline generators. (No mechanical linkage between gasoline engine and wheels.)

      That means EVs have basically won. It now becomes a question of whether maintaining a small gasoline generator is worthwhile, or whether you should just plug in and let the grid do the work for you. That balance will tilt away from maintaining your own gasoline generator as time goes on.

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  4. Anonymous10:11 PM

    Noah:

    You talk about power utilities as if they extract significant monopoly profits. The reality is far from what you make it sound. Indeed, most make no more that 11% return on equity. There are procedures to force utilities to give back excess returns. The fuel costs are, of course, passed through but the way you, Krugman, et al are making it sound, it would appear that utilities are extracting significant monopoly profits by exclusively using fossil fuels.

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    1. Think about what the industry would look like without govt.-backed monopoly structure! Any thoughts?

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    2. Noah,

      I think there is a lot of confusion and misinformation over which aspects of the utility monopolies are government supported. In most regions in the US, the electric transmission and distribution lines are "govt. backed" monopolies, while the power generation assets operate in unregulated wholesale markets. The reason transmission and distribution companies exist is that they are natural monopolies; in other words, their capital costs create such high barriers to entry that first-movers are not subject to competitive pressure. So government does not create the monopoly is this case: the government regulates the monopoly, so that utilities can only charge for use of the transmission and distribution lines on a cost-plus basis. To answer your question, if the government allowed anyone to build transmission and distribution lines, we would be paying on a cost-plus basis for 5 different electricity lines. Which would be horribly inefficient. If the government decided to stop regulating the industry entirely, the provider of the current transmission and distribution system would charge exorbitant monopoly prices.

      So how does this relate to net-metering and solar installations? Sure solar undercuts owners of traditional gas and coal, and nuclear power plants. But that’s not what the net-metering debate is about. In markets like California, electricity generation is unregulated (remember the California energy crisis and Enron!), and nobody cares if the traditional generators get undercut. Rather, the issue is the with the transmission and distribution utilities. When you install a solar panel on your roof, net-metering allows you to be charged less to connect to the transmission and distribution grid. Which is great for rooftop solar panel owners. Imagine deciding that you decided you were going to only drive your car on Sundays, and as a result, you get a large tax refund because you aren’t using the road as much. Someone still has to pay for the road!!!

      In this case, someone still has to pay for the full cost of the electricity transmission and distribution system (remember, they are regulated on a cost-plus basis-they need to take in a certain amount of revenue each year just to maintain the system). So what do the utilities do? They make up for lost revenue by raising the rates on all of the people in the system who didn’t adopt solar. The subset of people who don’t put rooftop solar panels on their houses will end up being those who can’t afford the upfront capital expenditures required to install solar panels, namely the poor, small homeowners, and renters. So in a sense, net-metering is just a large wealth transfer from lower income non-solar adopters to the adopters - predominantly wealthy homeowners, and yes, commercial businesses.

      Guess what? We still need transmission and distribution lines, at least until energy storage gets a whole lot cheaper, or solar panels miraculously begin supplying electricity at night. In the mean-time, shouldn’t we find other ways to reduce carbon emissions and incentivize the development of clean energy without policies that are not only misunderstood, but also inherently regressive?

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    3. Anonymous8:15 AM

      Noah:

      The point is not what the power generation industry would look like in the absence of monopoly protection. The point is that the monopoly protection is not resulting in excessive profitability. There is a reason they are called "regulated utilities". To be sure, independent power producers play the markets like traders but their earnings are so volatile and so many of them have gone in and out of bankruptcy that it is not even funny (think of Dynergy, Calpine, etc.). Regulated utilities such as Con Edison, Southern Company, etc. don't make as much money as you, Krugman, et al allege. Look at their earnings growth trend. A huge portion of their earnings growth can be explained by "Rate Base" growth.

      Also, many regulated utilities are investing in alternatives / renewables. NextEra (f.k.a. Florida Power and Light) has one of the largest wind power initiatives. So even those with alleged monopoly protection are investing in renewables. For them, it is all about rate base and return on rate base.

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    4. most make no more that 11% return on equity

      If someone offered a government regulated 11% real return on my investments, I think I would put everything I had into it.

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    5. Nathanael9:07 PM

      Jeff: in the part of New York where I live, we have a $15 monthly fee for maintenance of the grid. All of us.

      No reason to penalize solar power.

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  5. Anonymous10:15 PM

    "Solar is a libertarian dream."

    I live in SoCal and got a quote from a solar leasing company recently that offered electricity at half what I pay to SoCal Edison.

    I researched how much it would cost to buy (not lease) a system. For me (I use 20 kwatts per year) even without any subsidies solar would come in cheaper than Edison.

    Its makes sense for me to make this investment - though as a libertarian voter I'm not sure if I should feel guilty about benefiting from a subsidy, or happy that the subsidy comes in the form of a tax reduction.





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    1. Nathanael9:05 PM

      Solar really is a libertarian dream. I totally have libertarian tendencies.

      I think that right-wing libertarianism is, in general, impractical idealism which depends on perfect humans and imagines that there are no crooks or abusers. Therefore I'm a socialist libertarian.

      But when you have something with such perfect libertarian characteristics as solar power -- gee, we should go for it!

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  6. Anonymous10:23 PM

    Thus Mr K: "For the Kochs, it’s partly a matter of financial interest. But for the conservative movement in general … it’s all about tribalism." Seems like you guys are pretty much on the same page, which leaves me slightly puzzled about your first graf. To the extent that the "conservative movement" is embodied in actual voters, surely most of them do not have an economic interest in blocking solar.

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  7. "in the long run, oil and coal and gas will run out" Only if we also run out of hydrogen and carbon. In the long run, especially given cheap solar energy, it's pretty cheap to manufacture methane; long chain hydrocarbons aren't much harder; and cross-linked long chains heavy on the carbon isn't *that* difficult.

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  8. Anonymous11:49 PM

    "nuclear . . . was ready to go, and . . . could only be held back through government intervention."

    Really? Last time I checked, what was holding nuclear back was the need for public financial backing due to huge costs and the risk of cost overruns, and the need for public subsidies in the form of limitations on liability for large-scale accidents.

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    1. Seconding. Noah, you might want to ask somebody knowledgable.

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    2. Anonymous10:04 AM

      Point well taken about the public limitations on liability... it's worth asking (1) if those subsidies are necessary because insurance companies are not charging a fair premium given the actual safety history of nuclear facilities and (2) why that subsidy, which was in place well before nuclear construction in this country basically stopped, didn't continue to promote nuclear power. The first point is speculative and is something I don't usually discuss because it's tied up in the debate over the use of LNT radiation risk modeling, but I've always wondered given the safety record of nuclear facilities what insurance companies' estimates of tail risks and costs are, especially given that their payouts are backstopped on one end by a nuclear industry-wide fund and on the other end by the government.

      On the other hand a ton of the costs associated with nuclear power plants escalated wildly from 1970 to 1980; a plant of given capacity built in 1973 for $170 million costed $1.7 billion in 1983 and up to $5 bn by the end of the 80s. Inflation played a role but not THAT big a role, and if the explanation is that all large projects are built by bungling incompetents then it fails to explain how plants were being built so cheaply prior to this wild cost escalation. The three major factors in escalating costs were wildly increasing labor costs, extended construction time and "regulatory ratchet," where regulations enacted in the 1970s caused materials costs to escalate rapidly. The last factor was estimated to have increased materials costs by about 4X compared to earlier reactors, and despite findings that overall safety feature creep produced minimal benefit or were more harsh than required by standards these regulations were not ever relaxed. Regulatory changes also dilated construction time and contributed to the increasing cost of labor because they occurred while plants were already under construction. And, of course, antinuclear groups gleefully took advantage of new public hearings and legal requirements to intervene and obtain injunctions against new construction, successfully delaying if not halting construction for years.

      http://www.phyast.pitt.edu/~blc/book/chapter9.html

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  9. "The nuclear dream died because nuclear scared people. The solar dream lived on, and eventually - after decades of heroic technological advancement - it prevailed."

    I disagree strongly with this sentence. I think it has much more to do with costs. This is partly due to technology, making solar much less expensive. But also partly about pricing in externalities, something that is done more now than in the past (though IMHO still much too little.) Solar has large positive externalities (that's why it's subsidized), while nuclear has large negative externalities (that's why safety procedures and insurence are so expensive.) I would have expected an economist to recognize this.

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  10. There are no viable alternatives to coal & gas. It's not really a partisan issue; it's reality. Nuclear has too much upfront costs and regulation. It's cheaper to make existing coal & gas less polluting than replace them with alternative power sources. Individuals can buy solar and many do, but it doesn't work on the scale of cities.

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    1. Anonymous4:01 PM

      I'm positive this is inaccurate. Large solar installations like Ivanpah in rhe Mojave are already cost competitive with coal. If we build a national 'smart' transmission grid, it would unleash a boom in wind and solar power plants, and essentially make the need for batteries non existent. Read "Re-Inventing Fire" published by the Rocky Mountain Institute. Our biggest problem is lack of accurate information.

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    2. MaxUtility12:56 PM

      You're assuming there exists a way to make coal (or gas) non-polluting. In real terms there is no way to do this at ANY price. Sure you can make them "less" polluting. But what does it cost to make a coal plant as low emissions as a solar plant?

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    3. Nathanael9:03 PM

      Solar, hydro, batteries, insulation, LED lighting. It's trivial, in engineering terms, to convert the world to fully renewable energy, on the scale of everything.

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  11. I think I heard Ann Coulter say solar has a pro-gay agenda, so that settles it!

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    1. Anonymous8:24 AM

      Without the sun, there'd be no rainbows, so you may be on to something...

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    2. I had the sudden urge to pull out my wallet and hand you dollar. A business idea has been born. A forum that people can +$1 people's comments. Incentivise people to comment and participate more. Noah, find a way to set this up. I suppose people could have their avatars lead to a paypal one time donation to the users account. Mmmmm. I'm changing my username to "Click2Give MeBuck".

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    3. Anonymous3:39 PM

      Reddit has bots that perform this feature. I don't know what all currencies it allows, but I do know you can tip people in Dogecoins and Bitcoins.

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  12. Maybe, maybe not. Neither the utilities nor the environmentalists are correct here. Someone does have to pay for the grid - ancillary services, congestion management, transmission, etc. Like roads, even if you have an electric car. wind and solar do create externalities in terms of ancillary services because a power plant must be kept running in case the sun goes behind the clouds. Wind is net carbon negative because of the gas plants we need to keep hot to stabilize the grid when the wind stops. The tax subsidies for wind really need to go. The real problem with tax subsidies like those on ethanol and wind is that we never pull the plug, it becomes another industry to lobby for its share of corporate welfare.

    As for solar, the cost of solar panels right now is somewhat irrelevant to the economics of rooftop solar for me (Maryland). Even if they were *free* it would be uneconomical, absent subsidies, because of the cost of labor of installing them. The panels are <$1/W, the labor is $1.50-$2/W.

    Partly that's a function of the fact that the standard panels are only about 15% efficient. Sunpower has a 21% efficient line, but its around $6/W installed. Fewer panels, less installation cost, less rooftop area.

    And: nuclear was dead before Fukushima. It died because of cheap shale gas. Completely uneconomical now, at least the mega reactors they want to build. I would keep your mind open to the smaller reactors (<125 MW) and thorium reactors. There are about 100 aging nuclear reactors than need to be replaced in the next 15 years. Somebody needs to take the risk of developing these, we should encourage it. Solar and wind will never provide baseload power.




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    1. You have a good point about the problems of ending tax subsidies. Look at how heavily coal and petroleum are subsidized with no end in sight. (I'm not even counting the Iraq invasion or our need to maintain a large military to stabilize unstable oil producing areas.)

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  13. Good article Noah.

    It would be interesting to read an article of yours strictly on ethics and morality. A lot of economic policy is created on how people behave currently and in the past. It's my belief that 90% of rules and regulations exist because people lie, cheat, and steal.

    From what I read in, "The Better Angels of Our Nature" by: Steven Pinker, the data shows a significant drop in crime and violence.

    How do you think economic policy would change if we lived in a moral society? I think the model that Ebay and other online transactors use is a great start. Seller and buyer reviews.

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    1. Getting people to be moral is a difficult thing to do. But of course it would be a good thing.

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  14. The problem with net metering appears to be the price being paid for the power going back into the grid. If the utility can produce or buy interruptible power for $0.05 per kilowatt hour but they are forced to pay solar enthusiasts $0.50 per kilowatt hour then someone is going to have to absorb that $0.45 difference and ultimately there is only the consumer. The optimal strategy for any individual state is probably to free ride and let someone else subsidize the commercial development of solar.

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  15. In the very long run solar is a failure too. But by then we will have other things to worry about.

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  16. Anonymous3:07 PM

    Krugman: "Something really good is in reach, so the usual suspects are trying to kill it."

    Really? That's his explanation? Funny, it just sounds like the age old free rider problem to me.

    Does Krugman really think that this is a case of pure evil at work in the world, of being opposed to something that is good because it is good?

    That's like, a joke, right? He doesn't really believe that the free rider critique is nothing more than the forces of darkness at work in the world trying to extinguish the presence of goodness from humanity?

    Well, he has a Nobel Prize so he must be right. I suppose if you disagree with Krugman the only possible explanation is that you worship the dark master. Now we know. All hail Krugman, bringer of the light!

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    1. Nathanael8:59 PM

      This is a case of pure evil at work -- or if you prefer the economic term, "rent seeking"!

      Why? Because there are some guys who have a nice income stream from the current "coal and oil" power system -- "rent", in economic terms. They don't want to see their free money go away. The free market is destroying their source of income, so they're campaigning to tax their competition.

      This is classic rent-seeking, we see it in every industry, it's totally normal -- and economists usually consider it "pure evil".

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  17. This is a great piece Noah. Part of the problem is the widespread perception that solar costs will always be higher than gas and coal, and the U.S. EIA actually contributes to this perception -- check it out: http://policyintegrity.org/publications/detail/annual-energy-outlook-projections-and-the-future-of-solar-pv-electricity/

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  18. Noah, what is your economic model for the grid? My simplistic view is those who use it should pay for it, whether that's pulling all their power from the grid, some of it, or selling power back in to the grid.

    Perhaps in the future all generation will be distributed and it won't be a problem. In the meantime, you may want to subsize people putting panels on their roof. That's one argument. I don't necessarily agree, but forget that for a moment. What's your case for that subsidy being paid for by other power users rather than say via general taxation?

    You seem to be ignoring the regressive distributional effects of people who can afford the up front capital investment of a solar installation being subsidized by those who can't. But it's the Koch brothers who are the evil robber barons?

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    1. Horace Greely4:12 PM

      the grid in new england works in reverse? and in alaska they pay the energy in gold?

      if you live in nevada you're fine and go nevada for free energy?

      go south young men go south?

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    2. Solar power is already changing the power market in Germany. According to Bloomberg late last year, night time power used to be cheap, but is now more expensive than power during the day. Needless to say, the load schedulers are probably tearing their hair out. Despite solar power being only a modest fraction of all generation, it has restructured the market.

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    3. Nathanael8:57 PM

      Yes, the Koch brothers are the evil robber barons. It's their practice of buying politicians which is the major problem.

      As for the cost of the grid, I pay $15/month flat fee for that, before I start paying for electricity. There is no reason to charge people extra for having solar panels.

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  19. The issue is more about centralized power, such as coal, nuclear and natural gas, and dependency on current utility business models vs. decentralized power and a disruptive model, such as roof-top solar and net-metering. There are probably reasonable solutions, but not one that maintains the old status-quo. It's understandable why the Kochs and others that have profited from the centralized power business model would fight to maintain it, that doesn't mean we have to accept it. Old dinosaurs are slow to fall.

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  20. You may have had a point if it wasn't for the fact that time is of the absolute essence when it comes to mitigating climate change. Each year of business as usual raises the risk of passing irreversible tipping points.

    By the way, 90 % of solar development in the 1970s and 1980s was done by oil majors like Mobil, Arco and Amoco. Hardly hippies

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  21. louis3:45 PM

    What's the value of an electricity grid? We expect access to electricity at all times in whatever quantities we wish to use it, which means even those who generate solar will . Historically the local grid (a natural monopoly, as there are huge economies of scale involved) is limited to what it can charge by government regulation. Rates are tied to cost of service: actual operating cost, plus return on regulator-approved investment, divided by usage. Someone must pay the costs of running the grid, investing in its reliability, and giving the regulated utility its contractually promised rate of return. If net usage declines because some people generate their own solar power, then everyone else's rates will need to rise to pay the grid costs.
    Think of it another way: we fund highway construction with a gasoline tax. If half of the cars on the road are plug-in electric vehicles, perhaps we'd need to supplement the gas tax with tolls or something else to account for those who use the road but not much gasoline.

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  22. This comment from the article seems completely correct: "The power industry argues that net metering provides an unfair advantage to solar consumers, who don't pay to maintain the power grid although they draw money from it and rely on it for backup on cloudy days. The more people produce their own electricity through solar, the fewer are left being billed for the transmission lines, substations and computer systems that make up the grid, industry officials say."

    Pure net metering, where someone who produces as many kWh as he consumes has a zero electric bill, is unsustainable. There's a reason why it's being cut back in Europe as well. There's an argument for it as a transition to encourage solar power, but it's not sustainable.

    Now, you can argue that the grid should be paid for via a flat fee on electric bills, and net metering for all the variable costs of electricity beyond that, but isn't that pretty regressive? I'm not in general a fan of fixed flat fee utilities and taxes, though they are common especially in local government.

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    1. 1) There is a fixed grid connection fee in California on the order of $5/month.

      2) At the current time, in California, I sell electricity to the grid at tier 1 retail rates on hot sunny summer days when electricity is most valuable and wholesale prices are well above tier 1 retail rates. I buy electricity from the grid at nighttime and winter rates when wholesale electricity prices are lowest.

      So, currently net metering is advantageous to PG&E. There's certainly a hypothetical scenario that things might be different in 10 years. If that actually happens, then we should change what we charge in 10 years to be more fair. But we should not use a hypothetical case that might occur in the future to determine what prices should be charged today.

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    2. Nathanael8:55 PM

      NY also has a fixed grid connection fee, on the order of $15/month.

      That's high enough.

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  23. If people who want to do solar really insist on being able to connect for the grid for free (and pay net zero dollars if they produce exactly as much in a month as they consume from the grid on other days), then they're just another version of Cliven Bundy.

    They should get at least the wholesale price, yes, but not the full retail price.

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    1. The connection to the grid is not free. You pay for the new meter, and you pay a monthly connection fee.

      So what we are arguing over is whether or not net metering customers are buying electricity from the network and selling electricity to the network at fair prices.

      And remember that PV being sold into the grid is reducing the spot wholesale price of electricity. PG&E can't just go out and buy an arbitrary amount of electricity from British Columbia on a hot sunny summer day. They can only buy as much as transmission lines will hold. And transmission lines are at minimum capacity on hot days. So PV is providing electricity when it is most needed, at the location where it is needed. If you get rid of the net metering, then everyone gets to pay higher costs for additional transmission lines.

      So, take the wholesale price that electricity would cost if PV wasn't being injected into the system, including the cost of additional transmission lines, and pay that price for PV injected electricity.

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  24. Thanks for sharing this great idea.system

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