Randolph Kinney
Elite Member
- Joined
- Apr 7, 2005
- Professional Status
- Retired Appraiser
- State
- North Carolina
How close are we to peak electricity prices?
Residential rooftop solar enjoyed 50-percent annual growth in 2012, 2013 and 2014, according to the Solar Energy Industries Association. That rise of solar PV has eroded the energy sales of certain utilities.
In response, some are fighting back, proposing new charges to preserve revenue. One recently succeeded.
Salt River Project, one of Arizona’s largest utilities, finally succeeded Feb. 27 where nearly two dozen others failed in the past three years: It won the right to impose new demand charges — an average of $50 per month — on grid-tied customers who produce their own solar power. (Although a recent anti-trust lawsuit brought by SolarCity suggests forthcoming chapters in this ongoing story.)
Why the persistent push from certain utilities for such new charges? Because some see solar and other customer-sited technologies as a threat to their traditional business model — and they’re right to worry.
According to a new analysis from RMI with HOMER Energy and other partners, customer “load defection” — customers’ shift from getting electricity from their utility to getting electricity from solar panels on their roofs — could become much bigger in the near future, especially when solar is paired with battery energy storage.
“The increasing adoption of solar-plus-battery systems along with other customer-centric distributed energy resources is going to present a huge challenge to regulatory constructs and utility business models,” said Leia Guccione, a manager with RMI’s electricity practice and coauthor of the new report “The Economics of Load Defection.” “The future looks a lot different than the way utilities have served their customers for the past 100 years.”
At the core of this new analysis are two basic trends: retail electricity from the grid is getting more expensive; and costs for solar and battery technologies rapidly are declining.
But when and where in the U.S. might those two curves cross? And how many customers and how much in electricity sales is at stake? The answer: a lot.
RMI’s analysis shows that in the Northeast U.S. alone, up to 50 percent of residential and 60 percent of commercial electricity customers could be “in the money” with grid-connected, solar-plus-battery systems by 2030, just 15 years away. This would represent defection of 140 million kilowatt-hours (kWh) and $35 billion in utility energy sales per year if customer adoption followed optimal economics.
“The amount of load that’s at stake, the amount of kWh sales, it’s a lot of money,” said James Mandel, a principal in RMI’s electricity practice and another coauthor of the report.
“It can be scary to think about how significant that difference is,” added Guccione.
This new analysis follows on 2014’s “The Economics of Grid Defection,” which examined when and where it would be cost-effective for customers to cut the cord with their utility entirely through off-grid, solar-plus-battery systems. However, true grid defection is unlikely for many customers.
It’ll take more than pure economics to persuade them to make such a big shift in their electric service. That wouldn’t be an ideal outcome anyway for a whole host of reasons, including, for one, the extra cost of oversizing the system to offer standalone assurance and the inability to provide value and services back to the grid, as they’re no longer connected to it.
Beyond secondary values such as backup power, batteries have important benefits for rooftop solar grid integration, especially in places where customer adoption is high, such as California and Hawaii. And so “The Economics of Load Defection” explored a far more probable scenario: Customers will keep their utility, but they’ll also invest in grid-connected solar-plus-battery systems.
That grid connection is crucial to the equation. With the grid as a confident backup for customers, they can more optimally size the solar-plus-battery system, making it smaller, cheaper and thus cost-effective for more customers in more places sooner.
“That’s much more attractive to customers,” said Guccione. “It’s a lot more likely that they’re going to invest in that kind of system.”
Peak prices
But what does all this mean for an individual customer such as you or me? Simple: peak price (not to be confused with on- and off-peak rates for customers on a time-of-use rate structure with their utility).
If you’re like the overwhelming majority of electricity customers in the U.S. today, you pay a monthly electricity bill to your utility.
Meanwhile, because solar-plus-battery systems have rapidly falling costs and essentially zero operating costs over their 20-plus-year lifetime (the sun’s rays arrive on your rooftop for free), customers who invest in these systems can insulate themselves from rising retail prices, effectively locking in a peak electricity price.
http://www.greenbiz.com/article/how-close-are-we-peak-electricity-prices
If you are connected to the grid, no matter how little you use, there will be a rising minimum charge and a solar tax the utility will levy to make up for the revenue it needs to be in existence.
Residential rooftop solar enjoyed 50-percent annual growth in 2012, 2013 and 2014, according to the Solar Energy Industries Association. That rise of solar PV has eroded the energy sales of certain utilities.
In response, some are fighting back, proposing new charges to preserve revenue. One recently succeeded.
Salt River Project, one of Arizona’s largest utilities, finally succeeded Feb. 27 where nearly two dozen others failed in the past three years: It won the right to impose new demand charges — an average of $50 per month — on grid-tied customers who produce their own solar power. (Although a recent anti-trust lawsuit brought by SolarCity suggests forthcoming chapters in this ongoing story.)
Why the persistent push from certain utilities for such new charges? Because some see solar and other customer-sited technologies as a threat to their traditional business model — and they’re right to worry.
According to a new analysis from RMI with HOMER Energy and other partners, customer “load defection” — customers’ shift from getting electricity from their utility to getting electricity from solar panels on their roofs — could become much bigger in the near future, especially when solar is paired with battery energy storage.
“The increasing adoption of solar-plus-battery systems along with other customer-centric distributed energy resources is going to present a huge challenge to regulatory constructs and utility business models,” said Leia Guccione, a manager with RMI’s electricity practice and coauthor of the new report “The Economics of Load Defection.” “The future looks a lot different than the way utilities have served their customers for the past 100 years.”
At the core of this new analysis are two basic trends: retail electricity from the grid is getting more expensive; and costs for solar and battery technologies rapidly are declining.
But when and where in the U.S. might those two curves cross? And how many customers and how much in electricity sales is at stake? The answer: a lot.
RMI’s analysis shows that in the Northeast U.S. alone, up to 50 percent of residential and 60 percent of commercial electricity customers could be “in the money” with grid-connected, solar-plus-battery systems by 2030, just 15 years away. This would represent defection of 140 million kilowatt-hours (kWh) and $35 billion in utility energy sales per year if customer adoption followed optimal economics.
“The amount of load that’s at stake, the amount of kWh sales, it’s a lot of money,” said James Mandel, a principal in RMI’s electricity practice and another coauthor of the report.
“It can be scary to think about how significant that difference is,” added Guccione.
This new analysis follows on 2014’s “The Economics of Grid Defection,” which examined when and where it would be cost-effective for customers to cut the cord with their utility entirely through off-grid, solar-plus-battery systems. However, true grid defection is unlikely for many customers.
It’ll take more than pure economics to persuade them to make such a big shift in their electric service. That wouldn’t be an ideal outcome anyway for a whole host of reasons, including, for one, the extra cost of oversizing the system to offer standalone assurance and the inability to provide value and services back to the grid, as they’re no longer connected to it.
Beyond secondary values such as backup power, batteries have important benefits for rooftop solar grid integration, especially in places where customer adoption is high, such as California and Hawaii. And so “The Economics of Load Defection” explored a far more probable scenario: Customers will keep their utility, but they’ll also invest in grid-connected solar-plus-battery systems.
That grid connection is crucial to the equation. With the grid as a confident backup for customers, they can more optimally size the solar-plus-battery system, making it smaller, cheaper and thus cost-effective for more customers in more places sooner.
“That’s much more attractive to customers,” said Guccione. “It’s a lot more likely that they’re going to invest in that kind of system.”
Peak prices
But what does all this mean for an individual customer such as you or me? Simple: peak price (not to be confused with on- and off-peak rates for customers on a time-of-use rate structure with their utility).
If you’re like the overwhelming majority of electricity customers in the U.S. today, you pay a monthly electricity bill to your utility.
Meanwhile, because solar-plus-battery systems have rapidly falling costs and essentially zero operating costs over their 20-plus-year lifetime (the sun’s rays arrive on your rooftop for free), customers who invest in these systems can insulate themselves from rising retail prices, effectively locking in a peak electricity price.
http://www.greenbiz.com/article/how-close-are-we-peak-electricity-prices
If you are connected to the grid, no matter how little you use, there will be a rising minimum charge and a solar tax the utility will levy to make up for the revenue it needs to be in existence.
