Opinion: The war over rooftop solar


In a number of states, the incumbent utilities are challenging the “net metering” that makes rooftop solar attractive to homeowners and businesses. A photovoltaic solar system generates energy when the sun is shining, but the owner may not consume all these kilowatt-hours as they are generated. So the excess energy goes onto the local circuit and is used by other buildings that don’t have solar. Net metering allows the owner to take credit for this energy by subtracting it from their total energy consumption, even thought it occurs at different times. The owner pays only for electricity used in excess of what is generated.
Remember that vertically-integrated investor owned utilities are not like regular businesses. They make money by investing their capital in power plants, transmission lines, etc. and receiving an almost-guaranteed return (Xcel/PSCo’s is 10-plus percent.) They make additional profits on energy sales into the spot market. These two reward structures incent them to build as much generation as they can convince their PUC to approve. Rooftop solar cuts into the utilities’ sales, and so limits these utilities’ profitable investments.
This incentive structure simply doesn’t make sense with climate change and its floods, extreme temperatures, droughts, etc. Just six months ago, the Federal Interagency Working Group on the Social Costs of Carbon issued an update. From the summary, “The purpose of the ‘social cost of carbon’ (SCC) estimates presented here is to allow agencies to incorporate the social benefits of reducing carbon dioxide (CO2) emissions into cost-benefit analyses of regulatory actions that impact cumulative global emissions… It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change.”
Their numbers are scary. The SCC of one ton of CO2 emitted in 2014 is $41 (2014 dollars.) For a typical coal-fired power plant, this is over $0.04/KWH, and for gas plants somewhat less. For reference, we pay slightly over $0.10/KWH retail, including transmission, distribution, etc.; coal supplied almost 60 percent of our power in 2012. The $41 number goes up each year, as climate impacts feed back on each other, multiplying the damage. For example, by 2024, the SCC of a ton of CO2 emissions in that year will have increased by about 30 percent. So we should be doing anything we can, including rooftop solar, to reduce our energy consumption when generated by these coal plants. But utilities resist including these social costs in their resource planning, no doubt because it would make their investments in coal plants look so nutty.
Rooftop solar also has significant benefits to the grid. For example, excess power is used close to home, minimizing line losses, which can be significant (5-10 percent.) It can help avoid investments in transmission lines, and it reduces water consumption; power plants are heavy water users.
Many utilities want to end net metering by treating rooftop systems just like other generators. But if my PV system’s extra output is used by my neighbors, what business is that of the utility? All the utility sees is less demand at the substation, just as if we were being more efficient. Besides, solar right now is only around 1 percent of Xcel/PSCo’s total generation, so it’s an insignificant issue. By the time solar is significant, there will likely be cheap storage and gas generators, so individual buildings or whole neighborhoods could go off the grid to escape these for-profit monopoly utilities. That’s why they want to kill off distributed generation while it’s still a fringe activity.
According to Wednesday’s Camera, Xcel now also wants to cut incentives for solar and efficiency investments because Boulder may create a non-profit municipal utility. But Xcel’s arguments just don’t stand up. Xcel currently contracts to buy 20 years worth of Renewable Energy Credits (RECs) from solar systems, but makes the payments over the first 10 years. So why doesn’t Xcel specify that each year’s payments are for two years of RECs? Then it is irrelevant whether the customer stays with Xcel; Xcel still gets the RECs they paid for, just as they do with older systems where Xcel paid all the incentives up front. If Xcel doesn’t want them, the muni can buy them. Xcel’s efficiency investments also work even if Boulder later goes muni. They either get a small or a big reduction in their system’s demand. So what exactly is their problem?

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