Jeff,
I have enjoyed Jeff Yago’s articles. His most recent, “Solar Wind and Energy Credits” got me to wondering about the state of deregulation in the power industry.
In the 90′s I had a friend that worked for one of the local power producers in Indiana. Deregulation was supposed to open up the market for buyers and sellers.
Now I live in Tennessee, serviced by a power cooperative that buys from TVA. They have a green power program that charges the customer a higher rate so they can sleep at night, knowing their power came from a renewable source, such as wind, hydro, solar, etc. I have had no trouble sleeping without this comfort.
For the homeowner producing power, the cooperative credits the customer’s account for any surplus produced by the customer at the higher “green power” rate. When the customer draws power, they are billed at the higher green power rate. There are no cash payments for an account that produces more power than it consumes. This is the electric company’s equivalent of cell phone plans, where you carry a bazillion anywhere minutes that never get used.
My question for Mr. Yago, is it possible to sell power to another company or cooperative, allowing me (if needed) to buy power from my local cooperative at the normal rate?
Regards,
Pat Barden
Pat:
Many of the problems you have identified are well known to the solar industry and as they say, the times, they are a changing. What many want more than tax credits is a national feed-in tariff. All electric utilities have multiple sources of power, and they constantly change the mix of which generators are providing the “base” grid power based on time of day and demand. For example, most utilities will run their coal fired plants full out 24/7 as this reults in their lowest cost to produce power. Unfortunately, it can take several days to re-start a coal fired plant after it has been shut down, so they cannot just turn several on and off as their demand changes. To handle these temporary system peak demands, which usually happen in the late afternoon, they will usually fire up natural gas turbines which are much higher cost to operate, but can be started and stopped fairly quickly and are used for peaks lasting only a few hours. Lastly, some utilities have pumped storage or other temporary types which may only be able to provide power for a few minutes or maybe a half-hour, but these can be started instantly.
The catch to all this is the power companies want to pay back the solar homeowners for any afternoon electricity they sell back at their “base” cost to generate power which typically is in the 4 to 8 cents per kWh, at a time when their actual cost for the temporary afternoon peak load may be over 30 cents per kWh. Since the solar sell back occurs at the exact same time as the utilities are needing to generate the extra peak power at their highest cost, what we are really fighting for is for solar to be paid at this peak rate, not the average or base rate. There are some utilities in states that cannot meet demand now and these utilities are very friendly to solar as a way to avoid building costly new power plants. There are other states where the electric utilities have plenty of capacity from coal or nuclear and they could care less about solar and do not need the sell-back power.
As electric demand continues to increase nationally each year, at some point all electric utilities will finally come to the table and be glad to buy all the solar power they can get, as this “locally produced” power goes to the local community loads and is not lost traveling along thousands of miles of power lines. There are a few a few states that do allow the type of cross-state purchasing and selling of power that you are hoping for, and there are also a few states that now allow trading solar credits. This is when an electric utility is required by their state to purchase a certain amount of their electricity from renewable energy when they do not have any. There are companies called aggregators that go out to hundreds of small solar grid-tie homeowners and “sign them up”. Nothing changes between you and your local utility, but the aggregator gets to claim that he is representing your excess power. They then “bundle” these separate accounts into one large portfolio which they sell to the utility that needs to show they are being credited for so much solar power, even though this power never actually gets wired from your home to their account several states away. These guys are paying very good rates just to “claim” your excess solar power and it will depend on your state and your local utility if you can take part in this program.
If all this still sounds confusing, it is, but give the industry a few more years and we will have all this worked out. One thing you can be sure of, if some utilities are already fighting to purchase all the solar power they can get and at much higher rates then your local utility is willing to pay, you can bet the future looks very bright for all solar homeowners even if it will take longer then they were hoping.
Good luck and be patient,
Jeff Yago
