Skip to main content

Pricing PV Energy; The Tomato Wins!

By July 27, 2015November 7th, 2021Energy Efficiency, Energy Rant, Renewable Energy

This post is brought to you by Midwest Energy News; in particular, the opinion piece, Time For Monopoly Reform in Minnesota.  It is written by Tea Partier Debbie Dooley from Atlanta.  You may have heard or read that the Tea Party and solar advocacy groups (a strange alliance) have been singing photovoltaic folk songs around southern campfires.

I am not anti-renewable, but I am very much anti-misinform and mislead.  That is what The Energy Rant is all about.  To prove my love of renewables, as I was driving back from my mother’s over the Fourth of July weekend on a beautiful day with the top open and the windows down, I thought to myself, “These spinning wind turbines are cool.  People who complain about their unsightliness are cranks.  The turbines detract no more from the landscape than any other manmade anything – roads, farms, buildings, and even crops.”

Renewable energy advocates want net metering at full retail pricing.  For the long version of why this pricing scheme is unrealistic, see Renewable Energy Pricing – A Tomato Tale.  To shoot this down more expeditiously, I start with this quote from Ms. Dooley: “The old telephone company didn’t say mobile phone buyers weren’t paying their fare [sic] share for the grid — they drove innovation and sold millions of iPhones. I’m no millennial, but I dropped my landline more than a year ago.”

I could not have produced a statement that so clearly exemplifies why comparing solar power generation to cell phones and Facebook is bogus.  To wit, consider what photovoltaic electrons are worth in the “free marketplace” when the electrical landline is dropped.


Hang with me on this.  The electric utility system we have compares infinitely closer to thousands/millions of toilets connected to sewage and wastewater treatment plants than it compares to cellular versus landline telecommunications.  I could go ahead and drop all my water and sewer fixed fees and usage charges by drilling my own well and installing a septic tank; but I’m not because the simple payback would be 10,000 years, and I don’t want to deal with the hassle.

Water, sewer, telecom, natural gas, and electricity are all infrastructural systems built for modern life in the big city, or small town.  It just so happens that one of these, and only one of these, can be beamed through the air somewhat competitively for certain services.  I.e., are there any businesses with substantial data needs that operate wirelessly with the internet?  No.  They physically connect with data pipes of one form or another.  Not even telecom is disconnected from its grid.

What should be done in the case of consumers selling electricity to the grid?  We need to inject a pricing model that is much closer to merchant power providers and the regulated electric utilities we have.  Even in the Midwest, where we still have vertically integrated utilities, substantial generation assets have been sold to other for-profit companies, many times utilities from other areas of the country.  They sell the asset and then buy electricity from the plant they just sold.

There are long-term power purchase agreements in place with generators all over the country – regulated or unregulated.  I don’t know the commodity side of the utility business, but I’m sure it is easier and more cost effective (per unit) to contract with suppliers for 500 megawatt baseload and 100 megawatt peak plants, compared to contracting with tinier assets, like a backup generator or PV.  However, demand response, such as direct load control for home air conditioning, provides no 30-year resource or any guarantee of savings/impact whatsoever.  Therefore, I would assume solar PV can be aggregated like direct load control to some average net supply to the grid, and priced accordingly.

The trend for incorporating cost to distribute customer PV electricity into rates is to increase fixed charges and decrease energy rates.  This is as crude as chopping down a burr oak with a hickory baseball bat.  It is slightly better than using a rock and your bare hands.

Where this needs to go is real time pricing with smart meters on every home.  This is fair for all stakeholders – PV owners and non-PV owners.

Utility Dive recently featured an article describing how inserting a supply/demand pricing mechanism into the solar PV equation levels the playing field.  The basis of the article was a study completed by Lawrence Berkeley National Lab.  Pertinent results are shown in the plot.

The fixed cost recovery curve would represent the ballyhooed “utility death spiral”, which has been discussed in hundreds of articles and opinion pieces.  I described it a year ago in Utility Death Spiral – The Duck Has Your Back.  I describe the time-varying rate feedback curve, or rather, the mechanism behind it in the Tomato article described above.  The bottom line is, according to LBNL, when implemented, the tomato model – buying/selling at market rates rather than phony full retail rates – will fully take care of the problem.  Now that is grid parity if you ask me.

Jeff Ihnen

Author Jeff Ihnen

More posts by Jeff Ihnen

Join the discussion 2 Comments

Leave a Reply