Thursday, May 10, 2012

Imp Ire Strikes Back

The contract states
That on these dates
You'll pay us fair and square

But here today
We get half pay
Plus cuts to our healthcare

 Ching Ching... Chang Chang...
Ching Ching... Chang Chang..

We want what's our White Hair

Ching Ching... Chang Chang...
Ching Ching... Chang Chang.. 

Don't try us, don't you dare!

It's not as though
I chose this road
Free trade was forced upon me

We must cut costs
Or all is lost
You know I would not con thee

 Ching Ching... Chang Chang..
 Ching Ching... Chang Chang..

Make knicks and knacks cheap cheap

 Ching Ching... Chang Chang..
 Ching Ching... Chang Chang..

Hi Ho Hi Ho compete!

I woke up to a surprise in my inbox today. 


Would love to help with your wish list but am dealing with an elf rebellion at the moment. Just remember... Wishes and fishes make dishes. You can always help yourself. 


Hwhat? Isn't the plural of fish, just fish? For a second I thought Santa was punking me but then I remembered the guy has a track record of not making perfect sense. He gets a pass on ho ho ho right? I can give him a pass on some gibberish in a quick email he was kind enough to write. 

My second surprise of the day came when I opened the paper.

Hot in the Cold 

The North Pole saw another week of violent protests following the unexpected initiation of austerity measures this last April. A spokesmen for the International Brotherhood of Elven Workers stated, "King Nick is playing Kung Pow Chicken with Christmas. The magnificent son-of-a-bitch actually threatened to bid out our contract to the Chinese. Can you believe that? Saint my Elven ass! Cindy doesn't want a lead paint pony for Christmas. Ack...spit... choke.. We will bite his fucking knee-caps off before we let him kill Christmas." We were unable to reach Santa for comment prior to this story going to print.

I spent the rest of the morning thinking about angry IBEW elves and Santa's limerical advice. I finally figured out Santa was telling me to break my wish list into parts and tackle them individually. 

Wouldn't you know it, here I am thinking about my wish list and I just so happen to surf across a net-metering story. The story has Travis Bradford duking it out with Barry Cinnamon. Awesome right... Two experts discussing a hot topic. After a few volleys it becomes clear the two are sacrificing their message for entertaining antics. I actually finished the article feeling the two weren't experts at all. 

From the Beginning

Many jurisdictions around the US, Canada, Japan and elsewhere offer various versions of net-metering. The standard version of net-metering gives customers with photoelectric systems (or other on-site generation) a credit for any excess electricity they backfeed into the grid. The credit is generally one to one - i.e. If you backfeed 10 kWhs of electricity you get 10 kWhs back at some later time. It's basically a trade with no transaction fees.  

  • Getting full retail value for excess feed is a sweet deal for photoelectric system owners
  • Simplifies initial system design - you build your system to match annual load
  • The mechanics are physically easy to understand
  • The great thing about net-metering programs is that they allow photoelectric system owners to get the benefit of the grid without paying for it.

  • Full retail value for excess feed is unsustainable at large scale
  • We're building poor habits into our system designs processes
  • The scheme obscures market signals
  •  The problem with net-metering programs is that they allow photoelectric system owners to get the benefit of the grid without paying for it. 

Sweetness vs. Sustainability

In the ideal net-metering situation a photoelectric system is sized to perfectly displace the site's annual electricity usage. In this situation the production credits cancel out all the electricity costs so all that's left are some connection fees and meter charges. This is a great deal for a photoelectric system owner. Unfortunately, what's good for the goose won't work for the gander. 

Buying electricity is like buying something on ebay. You pay X for the actual product plus Y for Shipping and Handling (S&H) and Z for any applicable taxes. With electricity it's not uncommon for S&H and taxes to cost nearly as much if not more than the underlying energy. This makes sense when you consider that power grids are the largest and most expensive machines on the planet. The S&H charges have to cover the costs of power lines, underground cables, transmission towers, substations, regular maintenance and continuous management. These things add up. 

As net-metering programs grow, more and more people going solar means fewer and fewer people paying more to cover the costs of the grid. Additionally, utility territories with tiered tariffs will see a non-linear redistribution of charges. Things start out slow and innocent but the extra charges to non-solar rate payers can add up quickly. 

Situation A

An average customer uses 500 kWh per month. Electricity is sold at a flat rate of 20 cents per kWh. The 20 cents per kWh  is 10 cents in energy costs, 5 cents of S&H costs and 5 cents of taxes. The bill is $100 per month.

If we want to make solar pay its way we need to do is pull the S&H charges out of the volumetric portion of the bill and make them a fixed cost. 

Situation B

An average customer still uses 500 kWh per month. Electricity is sold at a flat rate of 15 cents per kWh. The 15 cents per kWh  is 10 cents in energy costs and 5 cents of taxes. S&H costs are covered by a fixed charge of $25. The bill is $100 per month

Situation X

There are multiple versions that fall between A and B. A practical policy would be to shoot for the middle and have a temporary transition type tariff with $12.50 in fixed costs per month and electricity that cost 17.5 cents/kWh. The feedback from the temporary tariff will inform further development. Specifics aren't terribly important here - Understanding the basic mechanics of adjusting tariffs is the idea. 

Upside Down

In the net-metering article I mentioned above, Bradford uses a strange bit of circular logic to argue that we should keep net-metering right where it is. His argument starts with pointing out that photoelectricity is "bringing down the average clearing prices of all power" on the grid. This much is true. 

Bradford is talking about Germany where daytime wholesale electricity prices are hitting lows that you'd normally expect in the middle of the night. Interestingly, this new phenomena has resulted in pumped hydro plants running two cycles per day - one in the middle of the day and another in the middle of the night. 

After correctly pointing out that solar power reduces wholesale electricity prices Bradford changes gears and suggests we should move to 
“a more fair system that uses a correct locational marginal price for what it costs and the capacity charges, and using time-of-use rates for when the stuff is generated”. He then suggest that if we moved over to LMP, utilities would
 "end up paying more than they are currently paying under net metering.” His general point is that utilities should be happy where they are - let's not change a thing. 

You need to replay Bradford's logic a few times in slow motion to see where the fouls takes place. If solar is pushing daytime wholesale prices down that's going to push down time-of-use rates as well. This is going to hurt rather than help solar's competitive position. Additionally, if Bradford really thinks utilities are getting a good deal with net metering he shouldn't be defending net metering - he should be arguing for a transition to locational marginal prices. A friend of mine once called Bradford - and I'm paraphrasing here - a dumbass. I can see it. 

Change Oriented 

The little imp that was Solar has grown up and multiplied. One gigawatt, two gigawatt, three gigawatt, four - 10 gigawatt, 20 gigawatt, 40 gigawatt, more. Europe currently has an imp army on their hands and it's actually changing the way the market behaves. The US, China, Japan and elsewhere will see a similar multiplication. It's a foregone conclusion that all these places (meh... scratch China) will see solar change wholesale market patterns and upset the status quo. Solar is honestly and truly a big fucking deal. Spiderman taught us that with great power comes great responsibility. Solar advocates don't seem to understand that solar has a responsibility to change along with the market it's changing. The solar crowd is having none of it - they are la la la singing a song about how we need stable policy for stable investment. That's not going to work. Solar is moving too damned fast for stable policy. Our focus cannot be on stable policy - our focus needs to be on smart policy. 

Smart solar policy is a moving target. We aren't going to get solar policy quite right on the first, second or third go-round. So what... Failure is part of figuring things out. 

It's time to give a damn... Let's work together...

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