From MasterResource
By Robert Bradley Jr. — January 5, 2022
“Since rooftop solar customers pay less on their utility bills, they end up contributing less toward maintaining the grid, which they still use. That has meant the cost burden was shifted to those without rooftop solar, and often those who can’t afford it.” (Wall Street Journal, below)
“For rooftop solar companies, generous incentives were the training wheels that had to come off at some point.” (Wall Street Journal, below)
Solar as a grid source of electricity is uneconomic, from the rooftop to the large solar arrays. So various government interventions pushed by the solar lobby must come to the rescue.
Solar’s Investment Tax Credit (ITC) offers a dollar-for-dollar federal tax credit for 26 percent of the cost of installing solar. Enacted in 2006, it has been extended several times and continue through 2023.
But then comes net metering, a local/state program that requires utilities to buy solar from the same rooftop systems–at inflated prices.
Jinjoo Lee’s recent ‘Heard on the Street’ piece, Solar Starts Year with Long Shadows, in the Wall Street Journal (January 3, 2022) reveals how this subsidy is under fire, making the solar proposition a shaky political bet for the “energy transformation.”
“Rooftop solar companies aren’t exactly starting the new year with the sun shining on their faces,” the article begins.
Shares of residential solar companies Sunrun and Sunnova have fallen 19% and 14%, respectively, since the California Public Utilities Commission put subsidies for rooftop solar—known as net metering— on the chopping block in December. The commission plans to vote on Jan. 27 after taking public comments.
Florida is considering legislation that would cut such subsidies. The shock to their share prices isn’t surprising given that the two rooftop solar companies don’t yet generate a profit; their shares trade largely on growth prospects.
California and Florida–two of the sunniest states. And just imagine if the ITC were to expire too! Then it would be ‘game over’ for rooftops on the grid except for the wealthiest persons wanting to virtue signal.
California
The Golden State has the highest electric rates in the lower-48. It is mecca of high-cost energies, including solar. Jinjoo Lee continues:
California is a leader in rooftop solar adoption and as of 2020 accounted for roughly a third of all new residential solar installations in the U.S., according to Wood Mackenzie and the Solar Energy Industries Association. The state’s customers account for roughly 40% of Sunrun’s installed base and a quarter of Sunnova’s, according to estimates by RBC Capital Markets.
Why?
Much of California’s rooftop solar growth has been fueled by the net-metering system, which allows solar customers to sell the excess electricity they don’t use back to the grid at a pretty generous value, the same retail rate they are charged for their home electricity. That has helped spur solar adoption as intended, but someone else has had to pick up the tab.
Specifically, other ratepayers foot the bill, which has put the issue into play:
Since rooftop solar customers pay less on their utility bills, they end up contributing less toward maintaining the grid, which they still use. That has meant the cost burden was shifted to those without rooftop solar, and often those who can’t afford it. Various groups peg that cost shift at between $1 billion and $3.4 billion a year.
The new rule would cut the rate solar customers get for selling their excess energy by a fair chunk. The rate will decline to 3 to 4 cents per kilowatt-hour during most sunny hours of the day, down from 17 to 44 cents per kWh previously, according to estimates from Pol Lezcano, North America solar analyst at BloombergNEF.
The economics are ruined:
It also adds a carrot in the form of a credit for installations and a stick in the form of a “grid charge” for solar users. The bottom line is that it will take new solar customers about 11 years to make back their upfront investment in their solar panels through reduced electricity bills, a substantial jump from the seven years it currently takes, according to BloombergNEF estimates.
Intermittency, creating the state’s infamous ‘duck curve,’ is a big part of the problem:
Net-metering rules have always been contentious across the country, but an overhaul seemed inevitable in California. Its solar-heavy grid has an abundance of electricity during daylight hours but a steep drop once the sun sets. That creates strains. Hawaii, which saw furious growth in rooftop solar before getting rid of net metering in 2015, had to do so largely out of necessity—parts of its grid were overwhelmed by a surge of solar electricity generated during the day.
Battery Storage?
“There are some silver linings to this,” Lee adds. (Can’t be too critical to a pillar of the ‘energy transformation.’)
One is that California’s rooftop solar market is no longer at the peak of its growth, which has slowed in recent years … [at] roughly 15% of California households living in single-family detached structures….
That means growth, to some extent, has to come from selling battery storage to those existing solar customers. The new rules create a price incentive for households to add storage to solar systems, according to Mr. Lezcano.
BloombergNEF estimates that with the new rules, the payback period for solar-plus-storage will decline to six years by 2027, down from eight years now.
For rooftop solar companies, generous incentives were the training wheels that had to come off at some point. Expect some wobbles ahead, but not a crash.
Or a crash if batteries are not subsidized, and the ITC withers away.
a grounding lug for a single panel costs $5. that’s 2 months of the electric value it will produce.
Arizona is prime rooftop solar country. It doesn’t get any better in the US than Tucson AZ for solar where I have a decent size home (2,730 sf) and swimming pool. Plus, putting a solar array on the roof is a major hassle with my flat, built up roof that needs a fresh reflective coating applied every 5 years. You basically have pay an electrican $2,000 to remove and then re-install the array panels every time (5 years or so) the roof needs to get recoated. That extra charge in itself destroys the cost of solar electricity economics of a rooftop solar for my home. I do have plenty of open ground cover on my half acre lot to put the rooftop array not on the roof but on a separate elevated ground mount, but that elevated mount would be a major cost I’d have to front. All in all, totally not worth it.
Tucson Electric (TEP) installed smart meters some dozen years ago on all homes and rolled out several customer select-able programs of ‘Demand Time of Use‘ that varies how much each Kwh costs depending on the time of day and, which varies across the heating and cooling year, i.e. summer (May-Sept) and winter (October-April). TEP tried mightily to encourage customers take that varying price plans so they would not have to keep building out fossil fuel generating capacity to cover the peak demands of early evenings in the summer when the demand is high and solar power is zero. On-peak and off-peak usage for customers enrolled in Demand Time of Use rates also vary depending on the season.
From the TEP description:
So the on-peak times are changing by season and if you are on this varying plan and inadvertently forget and use a lot of electricity (like have the audacity to run your home’s A/C from 3pm to 7pm in June, July and August) during your on-peak period of 3pm to 7pm, you get hammered on the monthly bill. The Power supply on-peak charge is currently $0.0594 per kWh, and the off-peak charge is $0.0235 per kWh in the Demand Time of Use program, more than double. While in the basic plan (the I’m on) there is only one Power supply charge rate of $0.0320 per kWh in the summer period. TEP is in the business to sell electricty at a profit for its share holders, and losing money is clearly not in this plan structure.
I rejected them all after I did a hard cost analysis of my own on how much I’d save versus the hassle of constantly changing when I use electricity on heat and A/C thermostats and pool pump motor. It was paltry savings at best, may be $5/month because they apply and would only happen if I carefully managed when I used electricity throughout the day, and would necessitate changing the pool pump schedule several times during the year. Any oversight on my opart of forgetting to change the pool pump schedule or deciding to keep my house cooler during higher rate periods would cost me dearly. I decided the the few dollars it might save each month wasn’t worth the hassle and constantly worrying about when I was using electricity and adjust the thermostats program times accordingly.
Hi Joel,
Thanks for sharing your experience and reasoning. My late mom had a house in Sierra Vista (Sulpher Springs Coop territory). About 8 years ago, based on what seems a good experience in our California residence, we paid to install solar on her house. I think it was a good deal economically, but only over a long period of time. Our panels (Sunpower) do not seem to have noticeably degraded in the last 10 years, so I am optimistic about the overall benefit.
But I do have a question about your roofing. Our Sierra Vista house has a composition roof (not shingles) that got ripped up by a really big wind a few years ago. I suspect it may be the same type of roof you have. The current repaired roof is now protected by the panels themselves, and also shaded by them. It seems to me that there would be no reason to put fresh reflective coatings under the panels. So how would your figures come out if it didn’t include that $2K maintenance cost every 5 years?
Have you ever done a roof recoating? or watched workers applying it? I wouldn’t even consider allowing the roof to be recoated without first removing the $20,000 solar array (if I had one, I don’t).
The coating will always start incurring shrinkage cracking at some point due to temperatures and the rain water standing under the panels are issues, along with the multiple support penetrations through the roof to support the panel structure, all of which have to be sealed- resealed. A leak you do not want.
These lightly sloped, flat-top, composite roofs are basic designs from the 1950’s thru mid-1970’s, long before anyone considered the engineering and maintenance issues of putting a solar array on them. They work quite well if used as they were intended.
We live on a boat and we have two electrical systems, 110V and 12, so we pay for power from the grid through the marina shore power. I have converted the boat to an inverter system. The shore power is 30a, 110v. Normally this would be connected directly to the 110 system through a panel. Now the shore power is connected directly to a small panel for heavy draw usage, shop vac etc, and to the battery charger. The battery bank runs through an inverter which supplies 110 to all the plugs in the boat and also supplies 12v for lighting, instrumentation and such. Were I to add wind or solar to this system it would go directly to the batteries reducing the draw on shore power by the battery charger, no power would be fed back into the grid. Even without installing solar etc our electricity bills have gone down.
Solar PV in a salt water marine environment is quite harsh on the service life of the panels and their supporting structure, a structure that has to be storm/wind capable. You might be better to put a small wind turbine up on a mast. At least it could operate a night too.
My boat atually has the system you describe. Two 120w solar panels, one 150w windmill, a solar controller connected to 4 golf cart batteries which are the main source of ship service 12v loads.
Also, a 6.5kw diesel genset, using diesel from the main engine tank, with a starting battery, a high output alternator on the main engine with a smart voltage retulator to charge the main engine starting battery, the house loads battery, and the bow thruster/anchor windlass battery up forward. Total of 7 batteries on one 43 ft boat. An inverter to make 110v AC from the house batteries, a battery charger to charge everything if plugged into shore power, and a bunch of separate switches, relays, automatic battery combiners, an exhaust fan for the battery compartment, and an ENORMOUS amount of wiring.
On a cruising boat, it makes sense, if you are sailing offshore or to far away places. But my wife has no idea how to make it work properly, so when I die I don’t know what she is going to do with it.
Oh, and I have an extra connection to feedback from the boat back into my house (the boat is parked behind the house, in Florida), so that if we lose power to the house, I can run the genset and power some equipment inside the house.
“..dollar-for-dollar federal tax credit for 26 percent of the cost…”
That would a 100% tax credit.
You spend one dollar, you get one dollar. Dollar for dollar. I hand someone a dollar. I get a dollar.
Virginia will now be exiting RGGI, which is the scam of buying and selling carbon credits, which various states along the east coast into the northeast have idiotically signed onto. It in part helps pay for things like solar and wind projects, and the cost gets passed onto ratepayers. With any luck, they will start a trend. Ratepayers are getting taken to the cleaners all for the sake of Big Green, and for uber virtue signaling.
EXCERPT from:
COST SHIFTING IS THE NAME OF THE GAME REGARDING WIND AND SOLAR
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar
Regarding wind and solar, cost shifting is rarely mentioned, identified or quantified. Those costs, as c/kWh, could be quantified, but it is politically expedient, using various, often far-fetched reasons, to charge them to:
– Directly to ratepayers, via electric rate schedules, and/or added taxes, fees and surcharges on electric bills
– Directly to taxpayers, such as carbon taxes, user fees and surcharges.
– Directly to federal and state budgets and debts
Per Economics 101, no cost ever disappears.
Eventually, the various shifted wind and solar costs, plus direct and indirect wind and solar subsidies, would increase the prices of energy and of other goods and services.
Efficiency and productivity improvements elsewhere in the energy sector, and other sectors of the economy, may partially, or completely, offset such increases.
However, wind and solar subsidies would divert capital from other sectors of the economy, which likely would result in fewer improvements in efficiency and productivity in these sectors.
http://www.windtaskforce.org/profiles/blogs/high-demand-and-low-wind-and-solar-during-summer-in-new-england
LIFECYCLE COST ANALYSIS OF EXISTING AND NE ELECTRICITY SOURCES
This report uses publicly available data to estimate the average levelized cost of electricity from existing generation resources (LCOE-Existing), as compared to the levelized cost of electricity from new generation resources (LCOE-New) that might replace them.
The additional information provided by LCOE-Existing presents a more complete picture of the generation choices available to the electric utility industry, policymakers, regulators and consumers.
https://www.instituteforenergyresearch.org/wp-content/uploads/2019/06/IER_LCOE2019Final-.pdf
Existing coal-fired power plants can generate electricity at an average LCOE of $41 per megawatt-hour, whereas the LCOE of a new coal plant, operating at a similar duty cycle, would be $71 per MWh.
Similarly, existing combined-cycle gas power plants (CCGTs) can generate electricity at an average LCOE of $36 per MWh, whereas the LCOE of a new CCGT gas plant would be $50 per MWh.
Non-dispatchable wind and solar impose a cost on the dispatchable generators which are required to remain in service for peaking, filling in and balancing, 24/7/365, to ensure reliable electricity service.
Non-dispatchable means the output of wind and solar depends on factors beyond our control (the wind blowing and the sun shining) and cannot be relied upon for peaking, filling in and balancing.
Wind and solar increase the LCOE of dispatchable resources by reducing their utilization rates without reducing their fixed costs, resulting in a levelized fixed cost increase, i.e., higher c/kWh.
This report estimates the “imposed cost” of wind generation at about $24 per MWh, or 2.4 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.
The CCGT plants compensate for the erratic outputs of wind and solar by inefficiently ramping up and down their outputs at part load, and inefficiently making more frequent starts and stops.
All that decreases annual production of CCGT plants, adversely affects their economic viability, increases Btu/kWh and CO2/kWh, and increases wear and tear, all at no cost to the wind and solar multi-millionaires.
This report estimates the “imposed cost” of wind generation at about $24 per MWh, or 2.4 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.
This report estimates the “imposed cost” of solar generation at about $21 per MWh, or 2.1 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.
As a result, existing coal ($41), CCGT gas ($36), nuclear ($33) and hydro ($38) are less than half the cost of new wind ($90) or new PV solar ($88.7), if imposed costs were included.
NOTE: The imposed cost on ratepayers and taxpayers of various direct and indirect wind and solar subsidies are an entirely separate issue.
EXCERPT from:
HIGH COSTS OF WIND, SOLAR, AND BATTERY SYSTEMS IN US NORTHEAST
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
Any transition from fossil fuels to low-CO2 sources, such as wind, solar, nuclear, hydro and biomass, could occur only when the low-CO2 sources are: 1) abundantly available everywhere, and 2) at low-cost, say 5 to 6 c/kWh, wholesale, and 3) as reliable as fossil fuels, 24/7/365, year after year.
This article presents the all-in cost of wind, solar and battery systems in the US Northeast.
Table 1 shows the all-in cost of wind and solar are much greater than reported by the Media, etc.
Much of the cost is shifted from Owners of these systems to taxpayers and ratepayers, and added to government debts
MINIMUM ANNUAL CARRYING COST OF ANY ENERGY SYSTEM
Simplified Mortgage Method
This method can be applied to Electric Vehicles, Heat Pumps, Electric Buses, Wind Systems, Solar Systems, Battery Systems, etc.
The minimum annual carrying cost of a house, or an energy system, is “paying the mortgage”.
With regard to a house, all other costs, such as real estate taxes, heating, cooling, maintenance, etc., are in addition.
An energy system must have annual revenues = “Paying the mortgage” + “All other costs”
Any shortage of revenues must be made up by subsidies.
The less an energy system is able to “pay for itself”, the more the subsidies.
Subsidies can be reductions in the upfront turnkey capital costs
Subsidies can be reductions of some items of “All other costs”
Subsidies can be paying for the electricity production in excess of market prices
A house, after paying the mortgage, likely is worth more than in Year 1.
However, wind, solar, and battery systems have useful service lives of about 20, 25, and 15 years, respectively.
Thereafter, they still perform at lesser outputs for some time, but their financial value is near zero.
Complicated Spreadsheet Method
A more exact analysis of the economics of an energy system would involve a spreadsheet with many rows and at least 25 columns (for solar), one for each year. It would involve Present Values, Internal Rates of Return, Levelized Costs of Energy, etc.
GMP, VT-DPS, VT-PUC, etc., have such spreadsheets, as do I. They would be much too complicated to present here.
PART 1
Cost Shifting from Owners to Ratepayers and Taxpayers
It all gets cost shifted away from the unreliables and added to the poor folks service charges-
Synchronous condensers to lift constraints on renewables in South Australia – pv magazine International (pv-magazine.com)
It’s the great lie the climate changers promulgate with solar and wind and why that correlation large penetration has with expensive power bills.
Thanks, Observa, I read your Synchronous link, but no mention of cost. Do you have data or even a personal guesstimate? Could be fun shooting holes in the 1gw plan:
copy
System strength-boosting syncons, batteries to super-soak up peak variable renewable generation, and judicious network upgrades are also being combined in Victoria as a more flexible alternative to massive investment in transmission and distribution networks. In May, Victorian distribution provider Powercor announced a plan to position 16 syncons, 20 batteries adjacent to substations in its network
This is not new ! get rid of all the “tricks” and “incentives” , do some basic math and financial projections and solar is laid bare ! It used to be ludicrous ! now It’s just extremely marginal which is useless for the future (maintenance, replacement ,disposal ,upgrading ,endless! And no matter what the price of installation will come down to , does anyone really believe that local government or federal for that matter is going to allow every Tom Dick and Harry to make significant profit on your installation without taxing it in some way ?
“BloombergNEF estimates that with the new rules, the payback period for solar-plus-storage will decline to six years by 2027, down from eight years now.” Don’t know where they go their numbers, the payback in In Arizona is 16 years. on second though when you electricity cost three times as much as Arizona the payback would be shorter. I live in Arizona and the payback figures even at sixteen years is in la la land. Even worse I had some idiot call me trying to sell me solar telling me I would only use the power I produced I ask him why he lied since the power I produced has to be use at that point and time, it not stored and since the sun does not shine 24/7 where does that other power I use come from. The idiot had no clue of was just a lair.
I have a 7.32kW system in North Phoenix – comparing the first year costs with solar to the last year without solar, and taking away the solar payment, I saved $800/year. Part of it is attributable to the solar array, the other is the PID controller that limits the current draw and cycles the power to each 4 ton air conditioner. Once the system is paid for, I will save about $3k year as compared to not having solar.
System was around $30k but that included some roofing work, $9k was subsidized. Without the incentive, it’s a non-starter.
APS has ON peak (3pm to 8pm) summer rate of $0.08615/kWh and Off peak of $0.05146.
However APS has a multiplier for max kW used during any peak time during the month that is punitive. I’ve set the controller to 5.5kW max – so as the solar panel output decreases, and it’s still not yet 8pm, the house will warm by a few degrees, but still comfortable when it’s 115F outside.
APS pays $0.09045 kWh for the excess power sold to them.
Last month I used 504kWh and sold 428kWh – bill was $40. The list of charges, fees, taxes is fairly long. For me, it’s working out, because it’s sunny 300 days a year here.
Just my $.02 – hope someone finds it useful.
An instant paid up $30K annuity at 5% yields $1500/yr ($125/mo),That’s what keeps me from putting solar panels on my brand new roof…one little leak…
The interest rate is less than that 3% and the length is only 12 years.
Start digging Califorlorny-
Renewable: Lithium promises revival for dying California inland sea (msn.com)
The price of lithium was $6,000/tonne just over a year ago. Now it’s above $43,000/tonne. What price batteries? Are they economic?