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24 May 2013

The Power of the Sun: Rooftop Solar Can Either Make or Break Utility Companies

Written by  Jonathan Thompson

For more than a century, monopoly electric utilities have nurtured the West. They fed the mines and the mills, and now deliver the juice to our thirsty digital devices and air conditioners.

Now, it appears as if the offspring is offing its mother, as rooftop solar slowly strangles utilities.

While the green media has gleefully spread word of this apparent matricide, it was first spawned by a report right out of the utility industry itself, and then bolstered by a prominent utility executive, lending it credence. The concern from the industry is fairly straightforward: If customers produce their own energy, they won’t need to buy it from the utility, and revenues will drop. And if those consumers produce more energy than they use, they become competitors, lower the price of electricity and take another bite out of the utilities’ bottom line—until we just don’t need the utilities anymore at all.

The idea of this sort of rooftop revolution is as rousing and lovely as that of wiping out our industrialized food system, with backyard and rooftop gardens. But it’s also nearly as implausible for two reasons: scale and dependency.

If any utility should be under threat from rooftop solar, it would be the Phoenix area’s Arizona Public Service. The state is one of the best places in the world to generate solar power, and it has a strong net metering program that allows homes with distributed generation to recoup their costs and then some. APS boasts that 24,000 of its customers have taken advantage of the sun and the incentives. While that’s a hefty number, it represents only about 2 percent of the utility’s more than 1 million customers. That may put a tiny dent in APS’ $600 million-plus yearly profit, but it’s a long way from being an existential threat. Even the 150,000 solar rooftops here in California, with a max capacity of less than half of what the Palo Verde Nuclear Generating Station kicks out at any given moment, is a mere drop in the total energy bucket.

With the cost of solar panels continuing to drop, it is conceivable that 2 percent could become 20 percent. But that still won’t necessarily be the death knell for utilities, because distributed generation as we know it now is still desperately dependent on the grid, and the utilities that run and operate it. David Roberts, over at Grist, recently noted that “a home creating its own power basically unplugs itself from the grid. … The electricity that’s generated onsite on a solar home is used by that home or its immediate neighbors. It barely touches the utility’s transmission and distribution system.”

While Roberts’ explainer on this issue is otherwise excellent, this passage doesn’t quite cut it. Even figuratively, one could say that a home “unplugs” only during those very rare moments when it produces exactly as much power as it uses. That might happen for a few minutes during the day. For the remaining 86,000 seconds in the day, rooftop solar is very plugged in.

Solar generation typically reaches its peak around 1 p.m., right at a time when residential power use is relatively low, because air conditioners have yet to crank up too much, and the residents are at work. Power flows from house to grid, where it adds to the current that is flowing towards the “load,” or places that need it. That might be a neighbor, unless her house’s panels are also generating surplus power, in which case it could be the Walmart down the street or the factory in a neighboring town. Residential power use then swings upward as the afternoon progresses, peaking around 5 p.m., as folks get home from work, and air conditioners rev up. By this time, solar power is on the downswing, so the typical residence will use more power than rooftop solar generates. It’s payback time, when residences that generated all that surplus power in the middle of the day get it “back” from the grid (though now the juice is most likely coming from natural gas, hydropower, coal or nuclear plants). In essence, a transaction is taking place that allows the rooftop solar home to treat the grid like a big battery, storing up excess power and then releasing it when needed.

This transaction is critical for rooftop solar to make any sense (unless one is inclined to attune one’s energy use precisely to the cycle of the sun, or to put in a big enough battery bank to back up all that solar on site, but more on that later). But the transaction can’t take place without the grid. And in most parts of the West—California being the exception—the grid is run by monopoly utilities, and they’re the ones firing up the so-called peaking generators necessary to keep the power on when the sun dims and demand is at its highest. Indeed, the cost of building and running those “peakers”—which in many cases are essentially power-generating, natural gas-guzzling jet engines—are the big threat to utilities. Yet they become more and more necessary as more solar—be it rooftop or utility-scale—is put into the grid.

There are ways around this quandary. The obvious one is for all those folks with distributed generation to battery-up and literally unplug from the grid. The other is to broaden the push for distributed generation beyond rooftop solar, to small-scale hydro-power, geothermal, wind and even small natural-gas plants, so that the collective input from distributed generation can meet demand at all times of the day so as to ease the dependence on the utilities (though not necessarily the dependence on the grid … decoupling from the grid will be a lot harder than cutting the utilities loose, for a number of reasons.)

In the meantime, the utilities might want to consider the recent warnings as a wake-up call. Rather than go to battle with distributed generation—by trying to kill incentives or cut down net metering programs—they’d do well to adapt to it, even embrace it. This won’t be easy. It's a hugely complex issue, but it may be the only way out. Rooftop solar can be the utilities’ killer, or savior, depending on how the utilities handle things.

Cross-posted from High Country News. The author is solely responsible for the content.

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