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One of the few success stories to emerge from California’s ill-fated experiment with restructuring its power market is solar power. Over the last two years, installations of this clean non-polluting energy source have increased by 1,000 percent.
Poll after poll consistently ranks solar energy as the first choice of citizens when queried about what fuel source they prefer to generate their electricity. Given concerns over national security and the corresponding vulnerability of fossil fuel supplies, and the growing evidence confirming a link between fossil fuel burning and global climate change, increasing the nation’s reliance upon solar power has never made more sense.
Last year, utilities mounted a campaign to increase the cost and complexity of “net metering,” a policy pioneered in California that allows a owner of a solar energy system connected to the grid to barter with their utility. When the sun is shining, solar photovoltaics (PV) transform sunlight into electricity. If the owner of the solar system doesn’t need the power produced by solar panels, the electricity can be sent back to the grid under net metering. When the sun isn’t shining, the utility, in essence, returns the electricity back to the customer. The meter spins backwards and forwards until production and consumption is netted out on a monthly or annual basis.
Due to a last-minute grassroots lobbying effort by solar advocates and customers, proposed utility changes to net metering for large-scale solar systems were defeated in the closing days of the last legislative session. This year, the California Public Utilities Commission (CPUC) proposed what amounts to a new tax on customer-owned solar systems that would increase the cost of this non-polluting electricity source by up to 40 percent.
If California’s powerful private utilities – Pacific Gas & Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) – have their way, charges ranging from 2 to 5 cents/kWh will be added to each kilowatt hour produced by solar systems that, like energy efficiency measures, reduce the need to purchase electricity from other often more polluting and sometimes more often more expensive sources.
Why would the CPUC increase costs of solar power that would effectively wipe out a 40 percent subsidy granted to solar PV under other existing state programs?
Large industrial customers were recently authorized to retain electricity purchase contracts with outside parties even though small consumers are still required to continue buy overpriced and dirty long-term power supplies purchased by the State of California during the height of the energy crisis in 2001. In exchange for the right to buy cheap and dirty power, the CPUC will require these large customers to pay an “exit fee” or tax to help pay their fair share of the state’s investment in long-term fossil fuel supply.
PG&E, SCE, and SDG&E would now like to also charge individual customers who install a solar electric system on their facility the same (or higher!) charge on large industrial customers who entirely leave the system. This proposed charge is fundamentally unfair for several reasons:
- Individuals, companies and government facilities that install solar systems still buy most of their power from utilities. Therefore they pay the same overall higher rates to pay off state investment in power supplies as all other utility customers.
- Customer-owned solar power provides public benefits by delivering non-polluting electricity during peak demand periods, when the dirtiest electric generators often come on line to avoid blackouts. Large customers who entirely leave the system offer no comparable benefit.
- The proposed utility “solar tax” directly contradicts existing state policies designed to encourage expanded use of on-site solar power. On top of that, implementing the new solar tax will create administrative costs for utilities that will likely supersede the miniscule amounts of money collected from solar customer/generators.
Authored By:
Peter Asmus is an analyst with Pike Research and author of the forthcoming book "Introduction to Energy in California" to be published by the University of California Press in July, 2009.
Other Posts by: Peter Asmus
Microgrids: Smart or Dumb? - November 11, 2010
New Kinds of Hydropower Spark Buzz - June 24, 2009
Prop. 80: There is No Turning Back - October 31, 2005
How Green Does Green Power Have To Be? - May 09, 2005
LNG: Just Say Maybe - January 19, 2005
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Solar PV Needs More PR Power in Light of Subsidy Cuts By Kate Garratt
Ending India's Massive Power Grid Outages By Darshan Goswami
Tracking the Advances in Solar Charge Controllers By Mark Cerasuolo
Comments
April, 08 2003
Roger Clarke-Johnson says
The point the author fails to grasp is that 'net metering' presumes (or edicts) that the utility is willing (forced) to pay RETAIL rates for your solar power. They then get to pay the transmission costs to deliver your non-firm power to someone else, only to sell the power for the SAME rate they paid you. This is no way to run a railroad.
Let's say you had an ugly sweater in your closet that you'd never worn, perhaps one that was given as a birthday present from your Aunt in Milwaukee. Would you march down to Nordstrom in Chula Vista and demand they take it from you AND pay you the retail price of one of their sweaters? It IS a sweater, after all, and Nordstrom sells sweaters, don't they? Dream on.
Any reduction in load, whether due to solar-minded homeowners or industrial co-generators, does help the utility during peak load times, but it hurts them during off-peak times. After all, they need somebody to buy their power. Your retail rate is therefore an amalgamation of base and peak load power costs, plus the cost of delivery and maintenance of the system. In the good old days, this rate was set during negotiations between the utility and the CPUC, and was intended to provide grid stability, excellent power quality, and yes, a 'reasonable return on investment' for the utility. With true deregulation, all bets are off, on both sides. Under California's partial deregulation, the cards were intentionally stacked against the utilities and in favor of independent generators.
Be thankful there is still a subsidy on the purchase price of solar panel systems, and if the utility pays you anything over half the retail rate, be very happy about it.
April, 08 2003
Joseph Somsel says
The California PUC just voted (3 to 2) to exempt solar power systems from helping the rest of us pay off the $9 billion in state bonds resulting from the last energy crisis in the state. Who do these guys think they are, ELCON?
Add the above mentioned "net metering" and the tax credits on one's income taxes and solar enjoys multiple subsidies from both taxpayer and ratepayers.
Power plants have to be built and spinning reserve has to be spinning since those owners still expect the utility grid to support them if the clouds block their sun. The savings in fuel have some value but the fossil fuel component of my California electric bill is a small and shrinking component of the overall cost of electric service.
As taxpayer and a ratepayer who doesn't own a solar power system, I'm paying for some rich guy's hobby power plant and getting next to NOTHING in return. My only comfort is that that solar owner is enjoying little more than a trendy status symbol for his 10's of thousands of dollars "investment" in solar.
Making electricity for the grid from solar is a huge folly and an exercise at collective self-delusion - the kind that we Californians seem to excel at.
April, 09 2003
Robert Camporeale says
Net metering of solar energy installations can be a win-win for both the utility and the customer. The utility benefits by getting peaking energy that displaces high cost combustion turbines and can return the power at night with lower cost off-peak power. In effect a virtual pumped storage unit with 100% efficiency. The customer benefits by effectively shifting energy that would otherwise be wasted to offset his off-peak usage.
The concern raised that the net metered customers will not be paying “their fair share” of the capacity costs is a valid one if they are on an energy only tariff. This can be corrected by installation and use of a peak demand meter. The increased cost for the metering should be borne by the solar customer.
April, 09 2003
Joseph Somsel says
Here in California, the grid peak occurs several hours AFTER the peak solar insolation so that overlap is much less than commonly thought. Also, the hobbyists' will expect us to take their power on sunny Saturdays, Sundays and holidays - off-peak times.
As to "a virtual pumped storage unit," a REAL pumped storage unit is under the control of the system dispatcher and is not affected by externalities such as clouds or the earth's rotations. The big advantage of pumped storage is the control and flexibility it offers - solar offers neither advantage. This is a very weak analogy at best.
April, 09 2003
Randall Fortier says
In reply to some various comments, this would affect the rest of the country as far as Net Metering programs are concerned as well. That said, please note that the vast majority of net metering customers do not recieve any money for any excess energy supplied to the grid. Many states also do not provide any incentives for purchacing and installing these P.V. systems. The winners are the population recieving less polution and overall lower electric costs due to fuel charges. The bigger winners are the Utilities who actualy get to charge retail rates for the power they did not generate. Granted not many individuals can generate more power than they consume. If they could they would probably not connect to the grid at all and then save the costs that are charged for the connection and transmission (they would invest in off grid battery systems instead).
If I switch to a different electric provider my original provider can't charge me every month on all the power I produce, nor should they be able to charge me if I stay with them and continue to pay the other standard fees. After all, if they don't provide me a service they should not charge me as if they did.
April, 10 2003
W. Kenneth Davis says
I take exception to your claiming that solar energy is a "clean, non-polluting energy source" While this is at least generally correct, thought not completely, for operations it is highly misleading for the installation of the energy sources, windmills, etc., in the first place.
With considerable experience in the engineering construction business I have to tell you that the actual cost of the installation, regardless of how it hidden by subsidies, grants, etc,. represents large amounts of cement/concrete, reinforcing cars and structural steel, manufacturing and processing, etc. as well as man-years of effort. These not only consume energy but produce pollutants depending on the source of the energy as well as the processes being used. These cannot be "swept under the rug" because they were incurred prior to operation.
I believe about the best that can be done with windmills is about $ 1,000 per peak capacity. If these run at 25 % of peak the cost per true peak capacity is then $ 4,000 per KW. In addition, the "system" has to provide for peak capacity in case the sun is out during a peak which would add a few hundred more dollars to the cost and related energy consumption and pollution. You can hide the costs but they are still there and they are real.
Rough comparable costs might be $ 1,200 for coal-fired plants, $ 1,500 for nuclear, $ 600 for combined cycle gas, etc.
The only reason the public strongly favor solar energy is the misinformation provided on the costs, environnmental impacts, energy balances, etc., leading to the visualization of a "free" and infinite source of clean energy. It just ain't so!
W. Kenneth Davis 10 August 2003
April, 11 2003
Joseph Somsel says
To expand upon Mr. Davis' wise insights, EPRI did a study a few years back where it was revealed that if solar cells were absolutely free, the cost of power conditioning, support structures, interconnects etc. would still result in busbar power costs that were uneconomic compared to nuclear.
So if the Tooth Fairy leaves some solar cells under your pillow, make him (or her) take them back - that Fairy did you no favor. Unfortunately our governments seem to want to persist in playing electrical Tooth Fairy.
April, 11 2003
Jeremy Smithson says
Tut, tut. Mr. Somsel, apologist for the nuclear industry, has glossed over the fact that many nuclear costs are buried from view by subsidies, not the least of which is the huge cost of decommissioning and disposal of waste. But enough of that. My reply to the amazingly mean-spirited posts previous to mine is this:
As a solar designer and installer (we are not hobbyists) I can appreciate the problems associated with being a slave to the solar cycles. These problems are especially apparent when designing solar thermal systems in northern latitudes! I realize that these vagaries do not mesh well with the highly controlled delivery of electricity on a modern grid. The solutions, however, are at hand and with a little imagination, which seems to be sorely lacking in the group which has previously spoken here, we can work it out. A few of the many solutions being developed NOW (but chiefly not in the U.S.):
Hydrogen production by solar or wind powered electrolyzers.
Giant batteries.
New ways to synchronize loads with the solar cycles.
You guys can be dinosaurs if you wish, but please tone down the rhetoric. Some of us are actually working out the glitches in renewables and one day you will have to eat your acidic words, my friends. Have a Nice Day.
-Jeremy Smithson
April, 15 2003
Carl Runng says
It seems the above discussion is revolving around the basic problem - sustainability of the planet - but this important fact is not being addressed by the gentlemen who deride the valid effort to achieve some contribution to electrical generation via alternative methods. Obviously, if your job today is to generate and/or deliver electricity via current methods, it is an inconvenience to have to deal with what will be required in the future, namely, decreased dependence on polluting, dangerous fuel sources. For polluting, think carbon dioxide, etc., in the atmosphere. For dangerous, think nuclear wastes and thousands of years. Both of these by products of current methods have been and are, indeed, still susbsidized by society. If the true costs of messing in our planetary nest were included in billing rates, would that not shift the economics more favorably toward alternative fuels? Society is waking up to the fact that there are cleaner technologies under development, at the same time that the planet is heating up. Society is becoming less inclined to continue paying the hidden costs which have benefitted the past methods of generation.
Yes, it will stretch the system(s) to move to cleaner generating methods. Yes, they will be costly, inconvenient and a hassle for entrenched interests. (By the way, I have nothing against making a profit by generating electricity - I just see a need for us to do better by our children and their children, etc..) This is all merely a continuation of the Industrial Age. Remember those pictures of London during the coal-fired textile boom? We have moved away from such excesses, thankfully. Now it's time to do more to clean up the process. Onward!
April, 15 2003
Joseph Somsel says
The two major barriers to the adaptation of solar power are:
1) Physics 2) Biology.
As to physics, a fissioning uranium atom releases 200,000,000 electron volts. The average photon of light that makes it to the earth's surface is maybe 2 electron volts in a 300 deg K world. Since making commercially useful power depends on energy differences, nuclear energy is clearly favored from the most fundamental first principles.
As to biology, as living creatures, humans in industrial societies need energy in large quantities under human control as to when and where. Solar only produces under the right conditions of meteorology and astronomy. Humans have struggled for millennia to escape the limitations of living in pre-technological solar-powered economies. Human desires and solar limitations do not match.
I do wish the advocates of solar power success and will support a reasonable expenditure on R&D for solar cells via my tax dollars although private investment is the preferred route. Just don't clog our functioning electrical grid with your product until you can deliver what people really want and don't befuddle the complicated economics of electric supply and distribution systems with subsidies and preferments. I'll stand by my assessment of people who own residential solar electric systems as "hobbyists" - no way is such a purchase a sound business decision. This title need not apply to those who build hardware for them. "True Believer" may well apply to both.
Come back when you have something to sell in a free market. Selling hope to politicians who are spending OPM is too easy.
As to "hidden subsidies" to nuclear power, waste disposal costs are fully recovered in electric rates as are funds for decommissioning. Frankly, nuclear power has paid back it's initial R&D investment many times over and is now a tax cash cow for governments besides producing the cheapest, cleanest electricity (other than existing hydro). With all these hidden costs floating around, the US must be a completely improvished society!
Call me "mean spirited" if you will, but the solar lobby is wasting my money and deluding our citizens about solar's realistic chances of success. The solar advocates depend on compelled inequities for any market penetration - since I'm on the paying end of those inequities I have a right to be indignant.
April, 15 2003
Carl Runng says
If nuclear power has "paid back its initial R&D investment many times over" why are nuclear wastes accumulating in "temporary" containment ponds at utility sites all over the world? Has this been paid for? Ask the people of Nevada, whom the nuclear industry in the USA expect to sit on this waste for thousands of years. Perhaps the people of Nevada would say "Come back when you don't leave me with the costs of cleanup after you've taken your short term profits." Or was waste disposal not part of the initial R&D?
April, 16 2003
John K. Sutherland says
Mr Running, once again you are being overly emotional and conservative with the facts (see my comments in the next article - ninth oil crisis). The reason nuclear wastes are accumulating in temporary ponds is that former president Carter decided to stop reprocessing spent fuel in 1977, and thus ensured that a 30 times greater volume of nuclear spent fuel would then be treated as 'waste', while he effectively stabbed the entire industry in the back, all for some dubious political purpose that history shows was not achieved. And it certainly is NOT 'waste'. You are correct about the 'temporary' part of the storage, as after 7 to 10 years that material can be safely stored in above ground dry storage silos. Previously, it had been held in the ponds for about 5 months before being reprocessed. The nice thing about this waste (don't choke), despite the politics and your phobias, is that it is such a low volume. The entire spent fuel of the world for one year is about 15,000 tons of solids, all of which is 100% managed. If rendered to its smallest volume this is about 2,000 cubic meters or the volume of a single very small municipal building, or most homes. This is why it is so easily managed, again, despite the politics. In comparison, the amount of carbon dioxide and solid wastes from fossil fuels for the same year amount to about 25 billion tons and about 500 million tons of toxic solids respectively. None of the former is managed, and little of the latter is controlled; much of it ripping out as fly ash. Furthermore, the amount of uranium and thorium sent out with the solid bottom and fly ash (about 10,000 tons each year, worldwide), is almost the same as the uranium actually used for energy. We are, in fact, losing more energy in the fly ash than we extracted from the coal. The initial R&D was based upon a rational use of the U resource and did not allow for the idiocy of political interference to boost wastes by about 30 times, extend management time frames to tens of thousands of years, instead of 300 years for the separated fission nuclides, wasting energy by disposing of 95% of the resource as 'waste', and pile safety systems and environmental paranoia, and costly delays upon every new construction. Welcome to the world of politics. But we, in our broader society, will continue to pay the price, and wonder why we are not able to afford the level of health care and education that should be adequately funded.
April, 22 2003
Carl Runng says
Mr Sutherland, as an EE, I grant that you have a rational argument which may or may not be feasible. As a human being, however, one must deal with "political idiocy." The "political purpose" President Carter was acting upon was the simple fact that no-one wants this waste in his or her backyard. That's still the political reality on the ground. Ultimately, industry exists to serve society. When industry comes up with a "solution" which requires storing toxic and dangerous wastes well into the future, and I don't consider even a "mere" 300 years to be insignificant, society will eventually resist this basically illogical approach. It's one thing to provide a service today and clean up the mess today; it's altogether another issue to leave the cleanup to future generations. If all of this waste can be rendered to a small volume and be "easily managed" why is the enormous boondoggle of Yucca mountain the best that the country has come up with? (Have you seen the recent Scientific American article on Yucca mountain - including the governor's oath that the waste will not be allowed into the State?)And why do you not mention that the industry has not been able to convince any succeeding president of the wisdom of your approach? Our society is made up of many types of people, and the vast majority is not convinced that industry can be trusted to do the right thing when dealing with such dangerous processes. That's the situation as it exists today. In the meantime - those wastes are accumulating. So, given this reality, how is the industry going to deal with cleaning up the mess that exists today? Making statements about your opinion of my presumed emotions and phobias is not particularly helpful. How about coming up with a plan which the public will support and which will solve the problem? Unfortunately, the public appears to be unwilling to support a solution which requires building reprocessing plants. This little detail appears to have been overlooked or misjudged in the R&D phase, so what do we do now? Those plants are approaching their designed lifetimes and someone is going to have to deal with it. Who will this be, who will pay for it and what do our children inherit?
April, 25 2003
John K. Sutherland says
Mr Running, Thank you for your reasonable response. To deal with the major issues as you raised them: You said 'President Carter was acting upon (was) the simple fact that no-one wants this waste in his or her backyard' No he wasn't. He was so concerned about nuclear proliferation that he decided that the US should set an example for all other nations to follow. By saying that the US would not reprocess, he hoped others would follow. His actions did nothing to slow proliferation, as the easiest way to build Nuclear weapons is by enriching uranium, not by building a reactor. His political actions effectively sabotaged the energy future of the US, for a few decades, though one rarely sees the outcome of a path not taken, except that the energy crises that we seem to be regularly placed in, do give some indication. We would certainly have been less dependant upon fossil fuels in general, and certainly upon oil and gas. You also wondered why other presidents did not reverse what he did, if he acted wrongly. President Regan did consider putting reprocessing back on the map, but by then the relative expense did not justify it, considering how CHEAP uranium was then and still is, and that is why it is still not considered here, but is nonetheless happening in Europe and elsewhere. In fact, about one third of the worlds total spent fuel IS reprocessed in the rest of the world. You remain overly concerned about a 300 year management time frame for the much dreaded nuclear fission waste. All of which is solid, managed and secure. It harms no-one and it is entirely contained, and is about 5% at most of all of the 15,000 tons of spent fuel discharged from ALL of the world's nuclear reactors each year. I find this tonnage to be remarkably small considering the energy delivered. However, at the same time, you seem to have no comparable concern over the 25 billion tons of carbon dioxide, billions of tons of nitrogen oxides, millions of tons of fly ash and hundreds of millions of tons of bottom ash (plus all of the many truly toxic elements of infinite half life) dispersed willy nilly into the environment from fossil fuel use each year. None of it is managed. Most is thrown into the atmosphere, and all of it directly affects our health and the environment. If you are so concerned about what our children inherit, perhaps you should broaden your perspective a little and do some risk comparisons. Yucca is almost entirely a political issue, manipulated by politicians for political gain and political points. It is not dealt with as a scientific issue at all. I do not believe that Scientific American is a reliable source of scientific information in this case, but has an agenda, just as they did when they lambasted Lomborg. The bottom line is surely the relative risk rankings of our energy options, assuming that we have choices. The IAEA, and the Paul Scherrer Institute and other reliable sources of risk information have defined (not opined), that in considering all risks to humanity and the environment, Nuclear power is very much safer than coal, oil, gas, or hydro, and it is certainly safer than wind or solar sources of energy which are dilute and unreliable. I hope I have given you enough to mull over. John K. Sutherland.
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