All electricity generation throughout the US is subsidized in various ways already - eg low interest loans for new generation capacity, programs for low income earners, not (or not effectively) charging for carbon and methane emissions, low fuel taxes on sources used for electricity generation. The "subsidies" you list help make a desirable energy source compete on a more level playing field - matching benefits that competing energy sources already receive.
My understanding is that when utilities buy energy from solar farms, they do so based on the demand and available supply, meaning that solar farms get paid more or less depending on these factors. But with net metering for residential solar installations, utilities are buying independent of supply/demand, which gives the residents a subsidy even vis-a-vis other solar producers.
I understand that all kinds of energy production methods are subsidized, but if net metering lets residential solar owners get paid more for the energy they produce than solar farms would be paid, I don't see how that's anything but a subsidy.
Most US solar farms have a power purchase agreement that’s independent of real time market prices. Solar farms agree because being paid 2c/kWh or whatever for the first X years guarantees they can repay all loans. Utilities agree because it’s guaranteed to save them money.
Those power purchase agreements then makes it really easy to get loans.
There are all kinds of complications - commercial solar isn't dispatchable so it does tend to get lower rates than most other sources. In my jurisdiction residential (net metering) customers are only allowed to install a certain numbers of panels - corresponding with household energy consumption and assumed production levels (i.e. your monthly bill will never be negative - at lowest you'll be paying distribution charges and 0 for consumption). With low levels of residential solar installation, locally installed panels can help balance the grid as it is consumed on distribution lines and doesnt need transmission lines (conversely, high levels can unbalance the grid).
> if net metering lets residential solar owners get paid more for the energy they produce than solar farms would be paid, I don't see how that's anything but a subsidy.
Paying them nothing would be even more unfair (and that's the only option available where I am at least - net metering or no household generation)
> Paying them nothing would be even more unfair (and that's the only option available where I am at least - net metering or no household generation)
I wasn't suggesting this. The phased rollback of net metering in California (the state mentioned in my original parent comment as "attacking" solar installation) means that solar owners will still get paid, just not as much as before. I'm sorry that you live somewhere that this middle option isn't available — the two extremes are indeed less fair!
Thank you for this clarification - I thought the discussion about changes to net metering was general, not California specific. Reading [1] about the changes to net metering in California, it seems reasonable, especially as it has high solar penetration. Hopefully it will (like many things) lead the way so that load shifting becomes simpler/more economical throughout North America.
I have heard of income-based billing, but that will apply regardless of whether you own solar panels. Also, some legislators are trying to repeal it before it goes into effect. [1-2]
Income-based base billing is indeed terrible, but it is not an attack on solar. You'd pay it whether you have panels or not. Also, legislators have apparently come to their senses and are looking to repeal it. [1-2] As for the pricing for power sent to the grid, I did mention the changes to net metering, which offer grandfathering for existing installations.
The high fixed monthly cost regardless of utilization means that compared to previous, my total costs for solar go up, even if my total costs for PGE supplied power don't. That will cause many fewer people to switch to solar or solar + battery.
It doesn't change the calculus for switching. It's the same fixed cost either way. The price is simply going up for customers who are not poor. I don't see how this makes someone more or less likely to switch to solar, since the dollar amount they can save stays the same.
An analogy: your kid's preschool has an option where you can volunteer once a month and save $50/month. One day, they announce that they are going to institute a new fee that ranges from $10-100, depending on your income.
How does that new fee cause fewer people to decide to volunteer?
Can you explain how the income-based fee results in lower savings? It is a fixed fee that applies whether or not you have solar.
To be clear, I think the income-based fee is a bad idea, but I just don't think it changes the calculus on installing solar. I have also had conversations about this specific question with a friend who has a PhD in urban planning, lives in CA, and is in the process of installing solar panels. It's possible she's wrong, but everything she says lines up with what I have read.
It sounds like you're referring to the net metering changes, which are separate from the income-based fee. That does change the calculus, obviously (which is why they grandfathered existing installs for 20 years).
Income based pricing encourages people to go off grid.
The upfront cost of doing that with a propane generator is about a half that of a battery + solar system (it's about a third if you go with battery + solar + generator, which is more comparable to a grid connection).
However, the maintenance and fuel costs of the generator mean that the solar will be much cheaper (and quieter!) to operate.
If the income based pricing is $100 / month, and the net energy / base connection cost is $0 / month (assuming an exactly sized solar system), then it'll take about 200 months for the generator to pay itself off. That's 16 years, which is a bit longer than the system will last, though replacing a generator costs about half what I've assumed above.
So, there's a pretty low upper limit to the amount they can screw with these fees before it's economically (though not necessarily environmentally) rational thing for individuals to just cut the cord and let the power grid death spiral.
Interesting, are you aware of anyone going off-grid for this reason? Where I live (Menlo), I don't think anyone would have a propane tank installed because of the size and unsightliness. The sound would also be annoying to them (and their neighbors, given how small the plots are). People generally build to the very edge of their property to maximize resale value, and this would take up a decent chunk of space. Maybe out in Woodside people would do this, since it's a bit more rural. Still, I've not heard of anyone saying the new income-based fees (which I disagree with, as noted above) are too high, and I'm going to install a propane tank and genearator. As you point out, this would go against the environmental rationale, which most folks with solar probably care a lot about. It's an interesting thought experiment though!
Depends how you see it. If you assume a neutral state of no incentives, adding benefits to stimulate growth and later removing this benefits once growth is achieved can be seen as "attacking this positive state" or simply "bringing back to neutral".
I moved to SoCal recently and didn't realize things like net metering even existed, so when people started to rant about these new measures I was very surprised to learn about them, and especially about people presuming these things to be "normal".
> when people started to rant about these new measures I was very surprised to learn about them, and especially about people presuming these things to be "normal".
I think at first people were (reasonably) scared that net metering might go away with no grandfathering for existing installations. People had a reasonable reliance interest in maintaining at least some of their existing benefits for the payoff period of their panels.
Once it was clear that existing installations would be grandfathered, I didn't hear much ranting anymore — just people who were bummed that a subsidy was going away (or people rushing to get in under the wire).
The problem with rooftop solar is that it is very, very, expensive compared to utility grade solar:
>…Rooftop solar photovoltaic installations on residential buildings and nuclear power have the highest unsubsidized levelized costs of energy generation in the United States. If not for federal and state subsidies, rooftop solar PV would come with a price tag between 117 and 282 U.S. dollars per megawatt hour.
If we want to subsidize a renewable energy source, why should we subsidize rooftop solar when we could subsidize utility grade solar or wind? Money is fungible and not unlimited - a dollar that goes to subsidize residential rooftop solar is a dollar that would go much, much further if it was used to subsidize utility grade solar or wind.
Rooftop solar subsidies are also unusual in that much of the subsidy is often paid by less well-off households to subsidize their wealthier neighbors - sort of a reverse Robinhood scheme.
OP was complaining about CA, and this appears to be an proposed law in AZ. It could affect CA utility prices because it relates to export, but it's not up to CA to decide what laws are passed in another state, governing the usage of land in that state.
In California the switch to NEM 3.0 more or less means that folks with solar will get socked with high monthly fees and much lower export rates (roughly wholesale instead of retail). NEM 3.0 came into effect in April of last year.
Right but we're talking the effect on new installs (and upgrades beyond a certain amount, and eventual maintenance on older NEM 1.0 and 2.0 installs). With NEM 1 exports were paid out at retail rates and there were no interconnect fees. With NEM 3 exports are paid at roughly wholesale rates with a $145 monthly interconnect fee. NEM 3 is absolutely an attack on solar installs.
Happy to have that conversation. I was replying to this language, which was not talking about new installs, or at least did not indicate so in any way:
> means that folks with solar will get socked with high monthly fees
"folks with solar" makes it sound like you're talking about people who have solar, not people who are considering putting in solar. Anyway, now that you've limited your comment to new installs, we are in agreement. There is a lower incentive for new solar installs, but IMO "lower incentives" do not amount to attacks. If other people think that it's an attack to give less free money to the purchasers of a product, they are welcome to do so (not saying you are, but others seem to think this).
Basically, to get subsidies, you need to install a battery storage system with a solar installation. This can be quite a bit more expensive than the solar alone. (worth it if possible, adds a backup in case of a power outage too)
If few people use net metering it's kind of fair. Your solar installation generates electricity, any excess gets delivered to your neighbors. The electricity is providing the infrastructure for that without making any money on that specific transaction (it gets deducted from your meter and added to your neighbors' meter), but that's easy enough to account for in base fees.
The issues start if too many people do net metering. Imagine everyone has a solar roof and reaches net-zero electricity. You can still maintain the infrastructure with base fees, but the electricity company still has to run power plants in the morning and evening when demand outstrips solar supply, and for baseload in the night. And during the day there's now an oversupply of electricity that they somehow have to sell.
In commercial electricity generation many countries have a kind of spot market for electricity, where prices are determined by demand (down to the minute) and available supply. Prices can go close to zero if lots of solar and wind capacity is available, or far above the price charged to consumer for capacity to cover the evening peak. If we changed consumer prices to more accurately reflected this "true" market price (plus markup for the grid operator), with prices changing by the minute, net metering would be pretty fair. But so far there's little desire to dump all that complexity on regular consumers.
> You can still maintain the infrastructure with base fees
In theory yes, but the grid has not used properly scoped base fees to pay for infrastructure. Delivery costs of power are more than half the total cost; to get to a base+generation model, you'd probably see monthly connection fees for Electricity in the $100+ range for many Americans.
I don't think there's any obligation for people's financial trickery to be sustainable. Like, a new power pole costs (say) $1000 regardless of how many watts are going through the wires attached to it. Someone has to pay the person that cut down the tree and hauled it to its final location money. That they loan you money on the infrastructure and you repay through using electricity isn't the actual cost model, it's just a pricing model people are OK with. When it stops working, the model will have to change.
I always laughed about the pricing structure of the business ISP that I worked at. We charged $1000 to install your service, then $1000 per month (without a contract). This was a financial game; we would lose money if you cancelled after your first month. I always thought the pricing should be $15,000 to install, and then $5 per month. That's closer to what the actual costs are. But instead of you going to the bank to get a loan to pay the $15,000, we hid that for you. It made more people sign up, and we had a better source of funding than bank loans. But, at the end of the day, we would have been out of business if a bunch of people signed up and didn't pay. If that happened, I imagine the pricing would have changed to reflect actual costs.
Comcast quoted rates in this range for installations in areas near Palo Alto. IIRC my friend was quoted $20k for the installation. She might have gone for it if they'd charged $5/mo after that, but of course Comcast wouldn't be so kind. Last I heard, she was still on AT&T copper. Hopefully Starlink will be able to help people like this, who are just outside the reach of existing wired internet.
> Like, a new power pole costs (say) $1000 regardless of how many watts are going through the wires attached to it. Someone has to pay the person that cut down the tree and hauled it to its final location money.
That pole is carrying the power for, say, 100 people.
Half of them use a below-average amount of electricity. If you stick them with a $100/month fixed fee, they don't need a large solar/battery system to get off the grid entirely, so you've made that economical and that's what they do.
Now you have the same number of poles and half as many customers, so the fixed fee rises to $200/month, and more customers do the same thing. This is not going to a great place.
Meanwhile there is a rural road somewhere that only has two things on it. One is a large commercial operation and the other is somebody's house. Putting up poles along that road is going to cost $100,000, but the commercial operation is content to pay the entire amount because their alternative is buying land somewhere that it costs significantly more than $100,000 more. The house on the same road is not content to pay half of that and will just use their $50,000 to install a solar/battery system and have quite a bit left over, even though a model where they only pay for usage would get them to sign up, and the power company is installing the poles either way.
The problem we're looking at is that if you charge a fixed fee for a grid connection, low users opt out of the grid, and then the fixed fee goes up and creates a new set of low users. But if you charge for distribution per kWh, everybody installs local solar generation because it's cheaper than any generation method that has a significant distribution fee as part of the cost per kWh, which in turn raises the distribution component of the price per kWh even more. Under the first option, a large proportion of rural and suburban customers aren't going to want a grid connection at all. Under the second option, they'll take the grid connection but then only use it if local generation isn't available (i.e. it's cloudy) and the grid price per kWh at those times will be quite high. But that's plausibly the better of the two alternatives, because a grid connection with a high price per kWh will generally be better than losing power at those times, or having enough local storage/generation to prevent that from ever happening even in rare circumstances.
A third option is to charge everyone the fixed fee for the power grid and force them to take a grid connection even if that isn't economical, but that's even worse. You've essentially created a head tax with no way to avoid it even if you can't afford it, because you can't cancel your service and you can't pay less by reducing consumption.
Your analysis is spot on. My main question is how viable is it to get off the grid entirely? I think that the number of people who will actually go off-grid and take the risk of outage is really small. The cost of going off-grid is a lot higher than you'd think, and the size of batteries needed to get through a week-long rainy spell is significant.
There is also a pole closer to the substation which is carrying the power for 5000 people.
Meanwhile if four of the eight people near your house decide to disconnect from the grid because the fixed fee is too high, you still have to cover the cost of that pole with half as many people, some of whom might then decide that the higher fixed fee is too much and disconnect too, etc.
If a customer is permitted to buy as much electricity as they want at a fixed price while also being able to sell as much as they can at a different time at a fixed price, it seems like there's an obvious subsidy happening anytime they sell electricity at other than when the wholesale price is the highest or buy other than when the wholesale price is lowest. (In areas with an excess of solar generation capacity, these distortions become quite large.)
(I'm still all for these subsidies on the balance of factors; we just shouldn't pretend that they're not subsidies.)
I guess you didn't actually click through to the links; they refer to windmills, solar panel pricing issues in SE Asia, and various other topics (I'm sure some links involve the CA govt attacking solar, but the first several didn't). Maybe next time you can post a couple links that you've actually read, instead of just giving the impression that there are scads of attacks at your fingertips?
I've not heard of any attacks, just reductions in subsidies (tax credits, net metering). Can you share what you're referring to?