[Ok-sus] Promoting rooftop solar

Kelley C Smith smithkc at riskiii.com
Fri Sep 11 01:34:18 UTC 2015


One more thought that occurred to me, and then, I’ve surely said all I will say.

I would think the best angle for promoting rooftop solar is that of a “peak-shaving” mechanism. Here’s what I mean.

Surely the rooftop panels would be generating their little silicon hearts out during the sunniest days, and hence during the “system peak” —the point of maximum annual demand (in the engineer’s sense of the word ) or “load” as it is often called. Not just annual peak load, but most daily peaks as well. 

Bob has eluded to this also.Reducing peak demand on the system can offset the need for additional generation. That does not mean giant base-load power plants, but it does mean less expensive “peaker” units. These are generally combustion turbines. They are less expensive than base-load plants, but typically their variable (fuel) cost is higher. They would generally be under-utilized assets—used when needed but not often. Not a great investment from the stockholders’ perspective, but necessary for a utility that is obligated to serve the load.

At one time (70s, 80s, early 90s) OG&E, and probably other utilities, had some peak-shaving programs. One was called (surprise) PEAKS. Residential customers got a better rate if they had a PEAKS device installed. This device limited the time the air conditioner ran. I think it shut down the AC for ten minutes out of every hour. This decreased the probability that any given AC would be running at the time of system peak. A conservation measure, and a way to “shave” the peak. There was also a load-curtailment rate for industrial customers. They got a good rate if they agreed to “shed” load (shut down or reduce power demand some way or other) if they got a phone call telling them to do so. Phone calls only came on really hot sunny weekdays when the system was heading for a BIG peak load. 

Industrial customers gamed the system. They were happy to get the good rate, but if they got a phone call saying to shut down, they said, “Oh, we meant to tell you, we want to change back to the old rate.” Or so the story was sometimes told; I was not in Customer Service, and never actually heard any conversation with an industrial customer. 

Further, sometimes they did shut down. If it was a labor-intensive industry, they sent a lot of workers home who turned on their AC, opened the fridge door for cold drinks, and turned on the TV. Not as much peak-shaving as one might hope. 

Residential customers sometimes found ways to trick their PEAKS device also.

Not sure if customer non-compliance was the only reason peak-shaving has gone away. Peak-shaving has been replaced by time-of-use rates; aka load management aka Smart Hours. These programs do not aim to sell any less energy; the point is to shift energy use, by way of a pricing policy, to different times of day.

Anyway, there are plenty of reasons that a successful peak-shaving program is good for everyone (less CO2, less SO2, etc., less need for peaker units….) I think this would be the strongest selling point for rooftop solar. That said, “load management” (think Smart Hours) seems to have captured everyone’s imagination.

K


> On Sep 9, 2015, at 11:47 PM, Kelley C Smith <smithkc at riskiii.com> wrote:
> 
> At the risk of making this the “Bob and Kelley Show” …. not my plan, but no one else seems to be talking…
> 
> To get to the issue of subsidization, let’s first visit an underlying idea… “cost of service.”
> 
> First let’s think about Grandma (a fictional character). Grandma lives in a city quite a few miles away from the closest power plant owned by IOU (Invester-Owned Utility, also fictional). In order to get power to Grandma’s house, IOU has to build and maintain a generation plant. Then, they have to build and maintain a high-voltage transmission line. Then, they have to build a substation; this isn’t too far away from Grandma’s house. The substation is where the power is “stepped down” to distribution voltage. Then, there are distribution lines to be built and maintained. Then very close to Grandma’s house, there’s another transformer where the power is stepped down to secondary voltage. From there, there’s a secondary line connecting to Grandma’s house along with a few other houses.  All of these lines have to be maintained; things can go wrong. Transformers blow out. Ice storms destroy things…. Grandma doesn’t use much electricity. She has gas heat and gas hot water heater. She tries not to use too much air conditioning in the summer. If it’s too hot, she often goes to a senior center for the afternoon. So her usage is not too much. On a per-kWh basis, Grandma is a high cost-of-service customer. 
> 
> Now, let’s think about our old friend Oil Refinery. Oil Refinery is much closer to the power plant than Grandma. So, it’s fairly easy to build a transmission line extension over to Oil Refinery. Oil Refinery would double up laughing at the thought of buying power at secondary voltage. Oil Refinery’s only decision is: do I build my own substation and hire my own people to maintain it? Or do I build a substation and pay IOU to maintain it? Remember that Oil Refinery needs lots of energy (and has a very good load factor). It’s fairly easy to see that on a per-kWh basis, Oil Refinery has a much lower cost-of-service than Grandma. Oil Refinery's total cost will be more, but per Kwh of energy, Oil Refinery's cost of service is low.
> 
> Costs, except for fuel, are more or less “fixed.” That is, once transmission towers and lines, substations, distribution lines are built they have to be maintained. These costs don’t go away and they don’t necessarily diminish even if the existing customers start using less energy than they did when the system was built. If everyone buys new more efficient appliances, efficient lighting, installs solar panels to reduce energy consumption…guess what? It still costs just about the same to maintain that system as when they used more energy. Line losses are pretty much proportionate to energy consumed, but damage from tornadoes, wind storms, ice storms…. that’s still the same. So, those fixed costs are spread over the same customer base and fewer kWh. 
> 
> In the 50s through 70s, industrial customers like Oil Refinery were charged rates that really did exceed their cost of service. And residential customers were (in the view of industrial customers) undercharged. Industrial customers have clout, and beginning  in the 80s they hired lobbyists to change the rules. They also intervened in utility rate cases; hiring expert witnessed to argue that costs should be allocated so that customers’ rates more directly reflected their cost of service. Industrial customers argued that they had been victims of a system that forced them to “subsidize” customers like Grandma.
> 
> In some cases, industrial customers found ways to leave or threaten to leave their utility, either by self-generation (available to some) or by signing on to service with a neighboring utility if geography made that possible.  I’ve lost track of exactly how this has all played out… but the issue of rate-class cross-subsidization has a history. And lawyers had lots of work.
> 
> And utilities' fear of losing high-load factor low-cost-of-service customers (and being left with Grandma and Rock Crusher) is at least somewhat justified. They are in a sort of similar position to the Post Office during the early years of FedX and UPS. UPS, FedX were eager  to pick off profitable customers from the Post Office, but at least when they began (and you and I are both old enough to remember this) they did not deliver to rural customers or small towns. They left that unprofitable business to the Post Office. I’m still not sure if FedX delivers to everyone…. IOU does not want to be the Post Office. Maybe IOU needs more imagination. Maybe the whole system of granting franchises to utilities and regulating prices and quality of service is old-fashioned. It’s a struggle to envision just exactly what would be better and a reasonably just way to get to that better system.
> 
> I’m not a gambler, but I would bet my bottom dollar that OG&E has reams of data relating to cost of service. I cannot imagine that it has “gone away” as a matter to haggle over in rate cases. 
> 
> That’s enough for now.
> 
> K
> 
>> On Sep 9, 2015, at 2:54 PM, Music Director <music at epiphanyokc.com> wrote:
>> 
>> 
>> 
>> On 9/8/2015 9:08 PM, Kelley C Smith wrote:
>>> Yes, and the fixed costs of serving everyone will be spread over a dwindling number of full-service customers, who in response to the increased rates will seek out ways to avoid being a full-service (term I just invented) customer, like buying solar panels. Forcing a still smaller pool of dwindling customers to bear the fixed costs of distribution. In the industry, this is known as a “death spiral.” Not sure there’s ever been a death spiral, but utilities have been defending themselves from it for quite a while.
>> This is the crux of the OGE argument, but as far as I know, there is no actual data showing that this is a risk.  With only 215 grid connected solar/wind customers, it would be very hard to argument that any significant subsidization is occuring.  And the subsidy argument goes both ways.  Grid connected customers are removing load or feeding energy into the grid at the time when it is most expensive.  They don't get paid a market premium for what they send to oge during those periods, nor are they rewarded for removing load during those expensive periods either.
>>> 
>>> 
>>> Yes, which is why it is very undesirable from an investor’s point of view, to back off generation (not needed on sunny days by rooftop solar owners) to be available for “standby power” for those customers on a cloudy or windless day.
>>> 
>>> 
>>> Ummmm, not meaning to be argumentative, but if you charge your battery with OG&E power, you have not exactly avoided the whole grid tied issue. :-)
>> I think you are not understanding the advance of home energy storage technology.  The term "grid tied" has a very specific legal meaning, and that is that the grid tied customer feeds energy into the system which runs his or her meter backwards.  With the system I just described, the customer is never sending any energy into the grid, so he or she is just another customer with a regular OGE connection.  I regularly charge my emergency battery system, a deep cycle marine battery, before storms, or top it off anyway, and OGE knows nothing about that and if they did, they wouldn't have anything legally to say about it.  So if I want to spend $10,000, I could get a very big battery, enough to run my whole house on including AC.  My solar panels would charge it, and if they don't produce enough, then I plug in my electric battery charger and charge it up, just as I do know with my little marine battery, only its a bigger storage system.  And I think the new big batteries simply charge directly from a wall socket, without need for a special wiring set up or even a battery charger such as I use for the marine battery and the occasional dead auto battery.
>> 
>>> We’re all free to leave the grid any time. But most of us do feel we need some sort of standby power even if we could afford solar panels or our own wind turbine. The cost of providing standby power is definitely not zero. The provider could be selling that power off-system or contracting power for sale somewhere, but is obligated to be provider of last resort to PV panel owners on cloudy days.
>> 
>> With the $10K big battery, you have your own standby power system, and can charge it up if need be.  So what I am saying is that the present push for this new add-on charge --
>> 
>> (1) Is not warranted  by the current facts on the ground.  With 215 customers, any actual subsidization is so small it couldn't even be calculated.
>> 
>> (2) The subsidy argument rests on a deductive logic argument. If A, then B, therefore C.  Deductive logic is a powerful tool, but in situations like this, it must be checked against real world facts. Government should never impose a harm on its citizens based on a deductive logic argument without any actual document proof of the situation that it is claimed that we are at risk of.
>> 
>> (3) If actual documented harm to the rate base shows up in the future, when OGE can wave a spreadsheet in the air and show actual losses and a need to raise general rates because of the alleged subsidization, then that should be considered when/if it happens.
>> 
>> (4) What OGE is proposing amounts to a "preventive war" against rooftop solar, and its purpose whatever they are saying publicly, is to shut down or greatly reduce the market for rooftop solar. That's what's happened elsewhere when these charges have been introduced, also in advance of any actual proof that any subsidization is occuring.
>> 
>> (5) Technology is about to make their argument moot and it is not prudent for OGE to flush the goodwill of the community that is interested in solar down the toilet of attempting to destroy the market for decentralized power generation.   If someone would give me $15,000 I could prove this, lol.
>>> 
>>> I share your interest in a municipal system. I am wary… our city government has a definite tendency to favor the rich and powerful at the expense of the less powerful. Witness our downtown Wonderland  paid for by a tax on groceries.
>> We'll get municipal power when we have a different kind of politician elected to the City Council.  As it is now, the legislature gave OGE everything it wanted on this, while actually making the absurd claim that they were doing this to prevent the oppression of poor people by higher electric rates caused by the looming spread of decentralized rooftop solar power generation.  The idea that the Oklahoma Legislature would ever do anything to directly benefit poor people is of course an utterly absurd proposition. The legislature is in business to reward its friends and punish its enemies. OGE is definitely on the friend list, and solar energy advocates are definitely on the enemies list, together with the uninsured working poor, people on food stamps, and etc.
>> 
>> The Corporation Commission is also a creature of our political system, but recent history has shown that a well organized opposition to rate increase proposals can be successful, as VOICE proved in the recent rate case.  Which just goes to show that even in the darkest times, there are interesting glimmers of light to illuminate the hope of a better day to come.
>> 
>> rmw
>> 
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