Response to "Sense Partner Newsletter: It's a wrap! 2021 overview"

I don’t agree with some of the assessments made in the 2021 year review.

Solar credits were extended for another two years, giving consumers the incentive to install solar panels on their homes.

If someone had been following what is happening in California with the current money grab from the utilities, i would not have put the line mentioned above in the news letter.

California is the #1 solar state according to California Solar | SEIA

Info taken from https://www.solarrights.org


The California Public Utilities Commission (CPUC) just proposed this:

  1. $57 per month solar penalty fee for putting solar panels on the roof. The more solar panels, the larger the fee. This includes apartment buildings, new homes built with solar per the state mandate, and solar-powered batteries. The fee would be the largest in the U.S.A.

  2. 80% cut to the credit solar users get for sharing surplus solar energy with the grid. The credit would drop from an average of twenty-five cents per kilowatt hour to about five cents. This cut happens immediately; we predict it will end the solar market overnight.

  3. Rolls back protections for existing solar users. Existing solar users are currently protected from changes to net metering rules for 20 years from the date their system turned on. The CPUC is now proposing to reduce that protection to 15 years, and eliminate the protection altogether if you accept their battery rebate.


Here is the link to the proposed rulemaking:

https://docs.cpuc.ca.gov/SearchRes.aspx?docformat=ALL&docid=430903088

and the press release:

https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-proposal-aims-to-modernize-state-decarbonization-incentive-efforts

The press release title is
" CPUC Proposal Aims To Modernize State’s Decarbonization Incentive Efforts"
Yeah, right

I understand this is specific to just California and probably other states are not as bad, but still.
The words chosen in the newsletter don’t reflect the situation here where a lot of people use/want to use solar. But the marketing department probably has a different view on that.

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I have been loosely following this for a while now and know that a “NEM 3.0” has always been in the plans… In fact, from what I hear, NEM 2.0 has always been seen as a stop gap measure until they could get NEM 3.0 crafted…

That said, I have selfishly not been too concerned because NEM 1.0 and 2.0 customers are supposedly grandfathered into a 20 year agreement… I really wonder how that 20 year agreement can be altered to a 15 year agreement…

We’ve all made decisions on payback and investment in solar based on the rules at the time…and the 20 year agreement was certainly one of many factors…How can this formal agreement be changed without our permission/approval. It is a “contract” after all, is it not?

I could see them dangling a carrot in front of us to incentivize existing NEM 1.0 and 2.0 customers to alter the agreement… But can they just do it because they feel like it?

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I think we’re talking about new systems having 15 year protection. FYI - I agreed to move from NEM 1.0 to NEM 2.0 as part of my shift from tiered E1 to EV-A rate. For me, that transition was a financial plus.

That was my assumption as well…until I read the formal press release from the CPUC…

Here is a quoted bullet from the press release:

  • Transitions residential NEM 1.0 and 2.0 customers (except for low-income customers) to the Net Billing Tariff after 15 years of being interconnected to the electric grid, which will incent storage adoption and reduce costs paid by other ratepayers by billions of dollars.
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Yup - just filed my public comment against. I don’t like the changes, but do understand why something needs to change - distribution and transmission costs are a big part of the per kWh expense to utilities, but net metered users don’t currently pay for all the energy transport. I guess it’s time for the PowerWall.

And as I have learned painfully in the past, ordinances and laws are not the same as contracts. There’s no breach when a law is changed retroactively. Have discovered that local governments in even more conservative places like Texas, local governments can take away property rights that were granted a mere years ore two before.

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The thing about residential solar is that you don’t want to have it being unreasonably subsidized by the grid. Really, the ideal scenario is that there are time-of-day prices for solar power that is based on the pool price of electricity on the grid. So if there is a ton of surplus electricity, such that it pushes the price all the way down to $0/MWh, then the people who are “selling” solar on to the grid would get $0 for the electricity. On the other hand, if the pool price is really high, say $200/MWh, then they’d get that. Basically they’d get paid the same amount that any other power generator would get. Sure, that’s much more complicated than a fixed rate… but we’ve got computers now, and they’re pretty good at doing the math.

If so many people get solar panels on their house that the value of the energy is zero on sunny days (when everyone is producing), then that would incentivize people to buy batteries, which is a good thing. That means the correct economic signals are being sent.

I don’t live in California, so I don’t understand the specifics in that market - was it just a case where solar panel owners were getting lots of subsidies; e.g. they were getting paid more for their generation than what a power plant would have gotten for generating the same energy? And that’s being corrected now?

There are really two interlinked issues - the NEM 1.0 and 2.0 net metering credit is essentially the retail rate, not the wholesale spot rate as you suggest, plus the net shields Solar users from some of the commensurate distribution/transmission price. Plus the volume of distributed solar in California is causing grid issues - the infamous Duck Back curve.

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If you look at certain markets as a comparison:
Hawai does not allow you to put energy back in the grid anymore.
You can basically compensate for what your home is using and that is it.
The generators on the local grid should always provide at least 10% of all power in order to let the rest of the system follow.

Same is in Australia: no export of your PV power to the grid.
A friend of mine has a 55kWh battery system so he can store his PV power and use it at night and assist when the sun goes down and he still wants to run his AC.

If the utility companies have such a hard time providing the energy to the customers when they need it after the sun sets and the people go home and turn their AC on, it would be nice if this could be provided by local buffer.
But instead of a huge plant like they installed recently in my neck of the woods:

It could be done at certain other ways:
End users could install local batteries to provide that power.
Tesla powerwall comes to mind, but there are other solutions as well.

I got notice this week that I am one of the first 25 customers in my county that will be able to order & receive the new F150 lightning EV pickup. It will have a 100kWh battery pack and comes with an 8kW whole house inverter that could be used to run my house in order to support the grid and then charge later at night when the peak is no longer at the grid.

What rubs me the wrong way is the $750+ per year extra costs from my utility company for simply having solar. That is plain & simple just a money grab in my book.

Unfortunately the CPUC seems to be made up by people who used to work for all the utility companies and still seem to be interested in the best results for the utility companies, not for the end users or best a win-win for both.
There is a lot to be addressed, and I think/hope the results are not what is now presented in California.

I think the following article has good references:

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Thanks @dannyterhaar for the links!

Based on what I’m reading what it sounds like is that consumer solar panels were highly subsidized, and that subsidy is getting reduced. That sounds reasonable to me.

If I were running an electrical grid / system, I’d say that individuals that are selling power back to the grid should be getting paid the same rate (and no higher) than the rate that the power plant down the road is getting for selling power to the grid. I don’t know why they’re choosing to add various connectivity fees in California like they are. Wouldn’t a simpler/better model be to just have energy rates (that don’t include transmission/distribution), and to have two market rates for energy. One rate for dispatchable power (i.e. it can be turned on/off on command, which is more valuable), and then another rate for non-dispatchable power (i.e. whenever we get some of it, we dump it on the grid, which has less value). So let’s say you’re on the grid and you have solar panels. When you buy power you pay per kWh (for example) $0.06 for the energy, $0.02 for the transmission, $0.02 for distribution for a total of $0.10/kWh. But if you were to sell your solar power back to the grid, the best rate then the best rate that I think would be reasonable to buy it back at would be $0.06/kWh. And I could make a very good argument for the grid buying non-dispatchable power at lower prices, because non-dispatchable power isn’t worth as much as dispatchable power when you’re trying to keep a power grid stable.

Now that I’m thinking about it, it totally makes sense to me that some grids (e.g. Australia) would simply tell customers that they’re not going to buy their solar power, period. But I think that if the economics are fair (i.e. no major market distortions from big subsidies) I think would be good thing for customers be able to sell power back to the grid. But the power just needs to be priced appropriately, so that the grid isn’t forced to pay more than the power is actually worth. If the grid is selling you transmitted power for $0.10/kWh, then the expectation that you can sell it back at $0.10/kWh isn’t reasonable. And I think that grids should probably set out different rates for dispatchable vs non-dispatchable power, which could be a good way for markets to discover what the real value of energy storage is.

Anyway, thanks again for the links - they were a interesting read!

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@Audacity, as a current California solar owner, I don’t like what you’re saying because it’s not the economics and financial assumptions I made when I bought my solar system. But I agree that things have to change now that distributed (and utility-grade) solar is a significant non-dispatchable contributor to the CAISO daytime grid.

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@kevin1
Where in this world can one party of a mutual agreed/signed contract break open the contract and make it better for them and worse for the other party ?
This is madness imo

@dannyterhaar,
Unfortunately, the 20 year NEM grandfathering was not done under a contract, but rather under a governmental ordinance. I had the very same thing happen when I bought a rental property near the beach with the goal of renting via AirBnB. The local town offered an official license for short term rentals (STR) in exchange for fees and a license fee that was a cut the gross. They compelled people to sign up by saying only a fixed number of homes would be licensed under a specific set of conditions, plus also highlighted that the license would ensure grandfathering, even if regulations changed. A couple of years later, backlash from local residents force the city to revoke many of the licenses, despite their claims of grandfathering. We discovered that governments are allowed wide latitude to adapt to changing conditions - much more than contract law would allow.

Let me give you my number over my 2020 solar year.
My utility company is SCE and I have chosen for buying 100% green energy from CPA as the supplier of the electricity. https://www.cleanpoweralliance.org
On my second last bill of the year CPA it reads:
Screenshot from 2021-12-19 18-39-58

What they call my “true-up” was 9015 kWh over produced.
The retail value would have been $1050.44
When I average that out it is 11.6 cent/kWh (for generation only)

And the bill of the year where they do all the calculations and the real value:

The retail value of $1050.44 is adjusted with $779.81 (74%of the retail value) to $270.63
What I got as a credit was $0.03001 cent avg for my surplus.
as you can see from above month, I had no super-off peak solar production (== at night).
So all my surplus was made of the off-peak & on-peak rates. In the given (winter) month that is 1/3 of $0.14/kWh retail & 2/3 of $0.06/kWh retail.
My credit rate vs retail rate:
100% margin at $0.06, 460% margin at $0.14/kWh.

So what @Audacity suggested is already not true.
I don’t get a credit for retail for my surplus produced solar electricity.
between 100-460% margin for CPA (who buys energy from the generators)

I wouldn’t mind getting NO credit for my surplus power, in fact I could set it up to not export anything and only generate what my house /EV charging uses.
But what I find bizar is the fact they just because I have a decent sized solar at my house (installed my self, used second panels = no tax rebate possible) I would start to have to pay > $1200 per year for simply having solar, even if would export nothing to the grid and would use the solar to store energy in batteries to use at night, not putting any kind of load/constraint on the grid.
That is unfair and a pure money grab from the utility companies, just because they can.

I totally get what people are saying about the “I am altering the deal, pray I don’t alter it any further” thing that’s going on here with governments. My commentary (as someone who doesn’t live in California) was simply about what should power grids do going forward. Obviously what California did in the past wasn’t great since those kinds of subsidies were unsustainable.

I’m just thinking about what would be a fair relationship between large scale generators (utility companies), power consumers, and power consumers who buy residential solar panels and want to sell back to the grid such that nobody is getting a raw deal, and that things are setup so that markets can correctly price everything. Clearly the dispatchability of power is very valuable, and becomes increasingly valuable as more non-dispatchable power is added to a power grid. I’m wondering if people with batteries could add more value to the grid than people with solar panels. This might especially be true if there is too much solar energy on the grid that is all generating at the same time.

Ideally you’d have a situation where the prices aren’t set by some government mandate (that gets changed on a whim), and instead the prices are set by market forces so that as solar gets less valuable (due to too much solar generation going on the grid), that the prices paid for solar power would gradually decline. For that, you need a energy market where prices are dynamically set based on supply/demand.

unsustainable?

source: Annual Reports | Edison International & Southern California Edison

When you look at the price map of electricity in California at
http://www.caiso.com/TodaysOutlook/Pages/prices.html
you get an idea of how stressed the grid is and how much generating electricity is worth.

In my ideal situation, I would have access to some indicator it is worthwhile/wanted to export to the grid.
If/when California has an abundance of energy, my solar system should pick up a signal not to export into the grid, limit it to self usage (0 import/export from the grid). when there is a demand my solar should export but the rates should be calculated dynamically per minute almost, just like the generators do at the moment. If a person adds batteries (also think EV’s ) to their setup, they should be able to even to discharge those and help stabilize the grid during the high demand. But one should be paid a fair price for the investment one made.
Sounds like a utopia to me for now, and most old school solar systems are not able to limit production and they are probably still in their 15-20 year write off period, no incentive there to upgrade/update.

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Sure, and that’s basically what I’m proposing. For every hour of the grid, there is a marginal price of electricity. When the marginal price is high, you sell to the grid. When the marginal price is low, you don’t.

The problem with lots of people having solar is that whenever it’s a “good solar hour”, it’s probably a good solar hour for all the other panels in the region. And when you have a significant percentage of the grid being solar, that would drive down the marginal price of electricity. So you’d always be selling your solar power for a very low rate. The best case scenario for a individual solar panel owner is if there aren’t that many other solar panel owners.

It may turn out that providing a battery to the grid might be worth more value in the current situation in California rather than providing solar power.

But one thing to consider: if you’re using a battery for grid stability and it goes through a full charge/discharge cycles in a day, that would really be harming the lifetime of your car’s Li-ion battery (or powerwall battery). Suppose you’re discharging a Model S P100D’s battery and the marginal price of energy is $100/MWh, you’d get $9.50 for the full discharge of the battery (I checked the specs, and that car battery has a capacity of 95kWh). Of course, doing that would destroy your battery quickly, so you’d want to stay within 20%-80% of the battery capacity, which would net you $5.70 or so for a charge cycle. But that still causes plenty battery wear. I wonder if the wear and tear on your battery is worth the $5.70 or not. I mean, I guess you may as well use it if you’re not doing anything else with it (i.e. a Powerwall), but you need a lot of days to pay off your Powerwall, and at that point one wonders if there is any benefit. Not to mention that there is a cost to the power that you just sold for $5.70, whether you bought it off the grid at the lowest prices, or generated it yourself with your solar panels. That said, it would be a interesting market forecasting problem to figure out when the best time/price to charge your battery and what time/price to sell to the grid. It’s especially interesting when you consider that there would be a bunch of other people doing the same thing, so it would be kind of like a little energy stock market where you’re predicting what other people will do. :slight_smile:

I dunno, after doing the math, it makes me think that the economics aren’t there. And that’s probably why large scale grid storage with Lithium Ion batteries really isn’t a thing today. But if it were to ever become a thing, I’m guessing that the numbers work out better when you’re able to scale up to really big batteries, (e.g. 1GWh+), and it may never make financial sense for individuals to do it.

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I just bought 23kWh gross/20kWh usable li-ion batteries (LiFEPo) that are guaranteed to do a full cycle discharge/charge every day for 4000 cycles. That is over 10 years!

If the grid doesn’t need my solar export, i can charge my batteries/EV and when the sun sets and solar production gets less, I could use my batteries from my solar system & EV to export to the grid.
It should make it worth while to have the wear and tear.

What they should do is make artificial lakes along the California coast and with the excessive solar power start pumping sea water into artificial lakes during the day. When sun sets and we need more power let the sea water flow back to the sea and generate hydro power.
That is the most scalable way to tag this power issue

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The conclusion I’ve come to after doing a bunch of reading on the topic is that nuclear power is the way to go for clean energy generation. The problem with much of those prospective pumped energy storage sites are:

  1. They’re very land intensive, and can be very destructive of the local ecosystems to create the new lakes and dam up the rivers.
  2. The renewable energy sites that would feed the energy storage sites are also not very dense (land wise or energy wise).
  3. You can’t just make two new lakes with elevation changes in the middle of a city, where most of the power demand is.

Unless the city in question has some particular natural disaster risk that precludes nuclear reactors, I’d say that nuclear reactors are the best tool we have today. Even without nuclear fusion, just fission. It appears to be the best option.