More from: profits

Solar vs. Electric Utilities

In a September 20, 2014 posting, IEEE Spectrum comments on the eventual impact of distributed power generation, in particular solar installed on homes, upon the existing for-profit electric power generation corporations.

even a modest penetration of distributed solar bites into the earnings of utilities, the Berkeley Lab study found. If distributed solar photovoltaic adoption rose to the equivalent of 2.5 percent of utilities’ retail sales, it would cut shareholder earnings by 4 percent. Meanwhile, the impact on electricity rates for consumers was minimal—only 0.1 or 0.2 percent increase. As solar penetration goes higher, the economic impact rises along with it. In a scenario in which 10 percent of generation came from rooftop solar, the reduction in shareholder earnings ranged from five to more than 40 percent.

http://spectrum.ieee.org/energywise/energy/renewables/rooftop-solars-threat-to-utilities-by-the-numbers

IEEE observes that utility’s profits will be reduced if citizens are permitted to charge the utilities money for the electric that citizens generate and supply to the grid, even though the utilities pay only wholesale cost for this power and can re-sell it at a profit. IEEE says that the problem is that the citizens also are escaping from most of their need to purchase any electricity from the utilities, thus reducing their profits. I say the problem is we are thinking about it wrong: what we need is an electric power version of the Internet.

I say the problem is we are thinking about it wrong: what we need is an electric power version of the Internet.

The solution to this is simple, and requires 1. a return to defining a utility as a single entity, granted a legal monopoly for the convenience of the community, that acts as the sole provider of a necessary service to the community at its cost, as a public service, not for making a killing, and 2. a change in the reason for charging any fee to the citizenry such that the necessary grid and maintenance personnel are paid for and citizens only pay additionally for power that they do not generate themselves, rather than playing an accounting game with selling electricity back to the utility. In this way corporate exploitation is reduced to restore trust of the utility by the citizenry, and people have a financial incentive to do their part in transitioning civilization from a single point power generation model — feeding the power grid from one point with all other connections being end users — to a much more durable and safer distributed power generation model — feeding the power grid from thousands of points, so that harm to our civilization from power outages due to the loss of any one point due to floods, storms, or other disasters is isolated and minimized.

The best way to do this is … as we already do for highway infrastructure.

The best way to do this is for the State to assume ownership and financial operation of the utility levying taxes according to some fair standard set by the State legislature to pay all necessary costs associated with maintaining the infrastructure, as we already do for highway infrastructure, and charging citizens monthly for electric that they take from the grid. Adoption of solar electric panels on citizen’s homes and businesses could be more easily facilitated through the State obtaining a Federal grant for installation of solar, which the State could distribute to municipalities to pay contractors to assemble and install solar panels and related interface equipment on citizen’s homes and businesses.

The end result would eventually be a zero electric bill for most entities in the State with a small tax to cover grid maintenance and a much more rugged electric power distribution infrastructure. It would also permit us in Indiana to avoid the extreme price increases related to the Federal policy of punishing us for generating power by burning coal.