{"id":2927,"date":"2013-04-12T09:51:18","date_gmt":"2013-04-12T13:51:18","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/?p=2927"},"modified":"2018-04-12T11:09:40","modified_gmt":"2018-04-12T15:09:40","slug":"solar-could-burn-utility-business-model","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/04\/solar-could-burn-utility-business-model.html","title":{"rendered":"Solar could burn utility business model"},"content":{"rendered":"

\r\n\r\n\"Exhibit<\/a>\r\nUtilities say that like it’s a bad thing.\r\nThe same utilities that\r\n\r\nleft millions without power<\/a> in the U.S.\r\n\r\nrepeatedly<\/a> last\r\n\r\nyear<\/a>, and that\r\n\r\ngouge ratepayers for 10% or more profits<\/a>.\r\nMoore’s Law continues\r\n\r\nto drive solar costs down and installations up<\/a>,\r\nwith increasingly more each like compound interest.\r\nUtilties need to adapt or get out of the way.\r\n<\/p>\r\n

\r\nLast November Moody’s reported that solar and wind were eroding\r\ncredit for coal and gas power plants, and were already having\r\n\r\n\u2018a profound negative impact\u2019 on the competitiveness of thermal generation companies<\/a>.\r\nThat was in Europe.\r\nDavid Roberts wrote for Grist yesterday,\r\n\r\nSolar panels could destroy U.S. utilities, according to U.S. utilities<\/a>,\r\n<\/p>\r\n

\r\n

\r\nThe thing to remember is that it is in a utility’s financial\r\ninterest to generate (or buy) and deliver as much power as possible.\r\nThe higher the demand, the higher the investments, the higher the\r\nutility shareholder profits. In short, all things being equal,\r\nutilities want to sell more power. (All things are occasionally not\r\nequal, but we’ll leave those complications aside for now.)\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nAnd they want to produce that power\r\n\r\nfrom big baseload power stations<\/a>\r\nfor their economy of scale while the monopoly power utilities\r\nget guaranteed profits, not to mention huge ratepayer and loan-guaranteed\r\n\r\nboondoggles like the new nukes at Plant Vogtle<\/a>.\r\n(Electric Member Cooperatives are somewhat different.)\r\n<\/p>\r\n

\r\n

\r\nNow, into this cozy business model enters cheap distributed solar\r\nPV, which eats away at it like acid.\r\n<\/p><\/blockquote>\r\n

\r\n

\r\nFirst, the power generated by solar panels on residential or\r\ncommercial roofs is not utility-owned or utility-purchased. From the\r\nutility’s point of view, every kilowatt-hour of rooftop solar looks\r\nlike a kilowatt-hour of reduced demand for the utility’s product.\r\nNot something any business enjoys. (This is the same reason\r\nutilities are instinctively hostile to energy efficiency and demand\r\nresponse programs, and why they must be compelled by regulations or\r\nsubsidies to create them. Utilities don’t like reduced demand!)\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nIn Georgia, most excess rooftop power is utility-purchased,\r\nsince by the antique\r\n\r\n1973 Territorial Electric Service Act<\/a>\r\nyou can’t legally sell it to anybody else.\r\nBut first non-excess power usually\r\ngoes directly to supporting the establishment with the roof.\r\n<\/p>\r\n

\r\n

\r\n\r\n\r\n<\/a>\r\nIt’s worse than that, though. Solar power peaks at midday, which\r\nmeans it is strongest close to the point of highest electricity use\r\n— “peak load.” Problem is, providing power to meet\r\npeak load is where utilities make a huge chunk of their money. Peak\r\npower is the most expensive power. So when solar panels provide peak\r\npower, they aren’t just reducing demand, they’re reducing demand for\r\nthe utilities’ most valuable product.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nSo sad!\r\nBut according to for example\r\n\r\nGeorgia Power’s mission statement<\/a>,\r\nutilities should be glad, not sad:\r\n<\/p>\r\n

\r\nAs a company, we want to be judged not only by\r\nthe service we provide, but also for what we do\r\nto improve the quality of life for all people in the places where we\r\nlive and work.\r\n<\/blockquote>\r\n

\r\nAs a regulated monopoly, Georgia Power is supposed to be doing that.\r\n<\/p>\r\n

\r\nBack to the Grist article:\r\n<\/p>\r\n

\r\n

\r\nBut wait. Renewables are limited by the fact they are intermittent,\r\nright? “The sun doesn’t always shine,” etc. Customers\r\nwill still have to rely on grid power for the most part. Right?\r\n<\/p>\r\n

\r\nThis is a widely held article of faith, but EEI (of all places!)\r\nputs it to rest. (In this and all quotes that follow,\r\n“DER” means distributed energy resources, which for the\r\nmost part means solar PV.)\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nUpdate 2018-04-12:<\/strong>\r\nrehosted Disruptive Challenges report<\/a> after it disappeared off EEI site<\/a>.\r\n

\r\nEEI is\r\n\r\nEdison Electric Institute<\/a>, “The Association of Shareholder-Owned Electric Companies”,\r\npublisher of the January 2013 report,\r\n\r\nDisruptive Challenges:\r\nFinancial Implications and Strategic Responses to a Changing Retail Electric Business<\/a>,\r\nfrom which the Grist article quotes:\r\n<\/p>\r\n

\r\n
\r\n

\r\nDue to the variable nature of renewable DER, there is a perception\r\nthat customers will always need to remain on the grid. While we\r\nwould expect customers to remain on the grid until a fully viable\r\nand economic distributed non-variable resource is available, one can\r\nimagine a day when battery storage technology or micro turbines\r\ncould allow customers to be electric grid independent. To put this\r\ninto perspective, who would have believed 10 years ago that\r\ntraditional wire line telephone customers could economically\r\n“cut the cord?” [Emphasis mine.]\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nIndeed! Just the other day, Duke Energy CEO Jim Rogers said,\r\n“If the cost of solar panels keeps coming down, installation\r\ncosts come down and if they combine solar with battery technology\r\nand a power management system, then we have someone just using [the\r\ngrid] for backup.” What happens if a whole bunch of customers\r\nstart generating their own power and using the grid merely as\r\nbackup? The EEI report warns of “irreparable damages to\r\nrevenues and growth prospects” of utilities.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nHow, then, would\r\n\r\nAlabama Power CEO C.D. McCrary get his 50% raises<\/a>,\r\ncurrently up to $8 million a year in total compensation?\r\nHow would\r\n\r\nSouthern Company CEO Thomas A. Fanning get his 62% raises<\/a>?\r\nShouldn’t you worry about that when you pay your electric bill?\r\nShouldn’t that stop you from installing solar panels on your roof?\r\n<\/p>\r\n

\r\nI don’t think it should stop you.\r\n<\/p>\r\n

\r\nThe utilities of course think it should.\r\nThe EEI report claims rooftop solar will require utilties to raise rates,\r\nbecause solar generation at peak load cuts demand for utilties’ most\r\nexpensive power, causing utilities to have to raise rates.\r\nThis utility canard is why\r\n\r\nGaSU’s solar bill HB 657 insists it’s about lowering<\/em> rates<\/a>.\r\nHere’s a better idea:\r\nreduce utilities’ guaranteed profit margins!\r\n<\/p>\r\n

\r\n\r\n<\/a>\r\nSure, that might make investors less willing to pay for big baseload\r\npower plants.\r\nOh, wait!\r\nThat helps solve the real problem, which is a big baseload model\r\nin a distributed rooftop world,\r\nmuch like\r\n\r\nIBM still pushing mainframes after PCs took off<\/a>.\r\nThe EEI report makes a detailed unflattering comparison to the\r\ntelecommunications industry.\r\n<\/p>\r\n

\r\n\r\nRenewables are winning, nukes are dead, and coal is crashing.<\/a>\r\nIf utilities want to survive, they need to get out in front\r\non solar power, generating enough themselves, and providing\r\na smart grid customers want to pay for.\r\nUtilities may still have to downsize.\r\nAnd maybe some of those executives getting 50%+ raises\r\nwill have to get a job.\r\n<\/p>\r\n

\r\n -jsq\r\n<\/p>","protected":false},"excerpt":{"rendered":"Utilities say that like it’s a bad thing. The same utilities that left millions without power in the U.S. repeatedly last year, and that gouge ratepayers for 10% or more profits. Moore’s Law continues to drive solar costs down and installations up, with increasingly more each like compound interest. Utilties need to adapt or get […]","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[14,19,23,24,36],"tags":[824,6129,1037,8704,6128,318,8701,397,8709,1712,8702,12,7,8713,8714,2640,62,6,8716],"class_list":["post-2927","post","type-post","status-publish","format-standard","hentry","category-economy","category-history","category-renewable-energy","category-solar","category-wind","tag-baseload","tag-disruptive","tag-distributed","tag-economy","tag-eei","tag-electric","tag-georgia","tag-grid","tag-history","tag-innovation","tag-lake","tag-lowndes-area-knowledge-exchange","tag-lowndes-county","tag-renewable-energy","tag-solar","tag-technology","tag-utilities","tag-valdosta","tag-wind"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p585fK-Ld","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/2927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/comments?post=2927"}],"version-history":[{"count":7,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/2927\/revisions"}],"predecessor-version":[{"id":19985,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/2927\/revisions\/19985"}],"wp:attachment":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/media?parent=2927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/categories?post=2927"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/tags?post=2927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}