
A battle over solar power in Nevada - elorant
http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/
======
jedberg
The problem here stems from two things:

1) Net metering means that the power company is required to buy electricity at
retail rates from their customers instead of wholesale rates, which puts quite
a burden on them. Why should they have to buy at a higher rate?

2) Electric companies for decades have been rolling the cost of transmission
into the variable rate portion of people's bills. This means that larger
consumers (who tend to be richer) have been subsidizing the poorer customers.
This is generally considered a good thing by most, since it allows poorer
people to have electricity (because you don't want to live in a society where
some people have electricity and some don't). The solution here is to raise
the fixed portion of the bill to cover the true cost of transmission, and then
place a tax on those who go "off grid" to straight out subsidize the poor, so
it's more obvious that is what is happening (And presumably most people would
still support).

~~~
dpierce9
One reason net-metering is close to fair is that we are talking about
delivered electricity. Every unit I send back to the grid is a unit that
doesn't need to be delivered by the power company but the power company can
sell it to my neighbor for retail price.

A second reason net-metering is close to fair is because mid-day units of
electricity are more valuable. Solar production peaks midday while household
usage is U-shaped, so most production flows out to the grid during the high-
price periods. Rates average peak and off-peak pricing so rate customers
typically don't see that.

In other words, solar production produces high-value kWhs the utility can sell
to my neighbor for retail, even though they don't have to generate or deliver
it themselves.

~~~
tomp
I don't understand your logic for "more valuable" \- there's more electricity
at midday (because sun) and less usage (because sun and people are at work),
so more supply & less demand => price drops, not rises!

~~~
dpierce9
Well in general demand peaks midday while household usage is u-shaped (morning
and evening peaks). This makes sense, since when people go to work they are
not at home and their work energy use tends to be higher than home energy use.
But if you don't like that explanation, simply look at any price curve for any
of the organized electricity markets (they are public) and you will see demand
and price peaks mid-day.

~~~
tomp
Aha... so do you have a typo in your answer?

> Solar production peaks midday

should have been

> Solar _consumption_ peaks midday

?

~~~
dpierce9
No. Solar consumption does peak midday but that is trivial because electricity
is nearly always used when it is produced. Electricity demand, which is
basically the same thing as consumption, peaks midday (as do prices). And
solar production peaks midday. The fact that solar production matches demand
is a nice feature of solar that I think militates in favor of net-metering
policies.

~~~
tomp
Ok, I get it... I misread and misunderstood your comment in a few different
ways :)

------
paulsutter
In Germany, wholesale power prices can actually go negative on sunny
afternoons. Conditions in the US are trending towards that.

Why should actual generators get paid low (or negative) wholesale prices at
the exact same moment that some consumer gets paid full retail rates? It
doesn't make sense.

Very practically, this is illustrated by California's duck curve. Also from
Bloomberg:

[http://www.bloomberg.com/news/articles/2015-10-21/california...](http://www.bloomberg.com/news/articles/2015-10-21/california-
s-duck-curve-is-about-to-jolt-the-electricity-grid)

It has nothing to do with Musk and Buffet. How do you price power, both
wholesale and retail, in a way that recognizes that there's a need to provide
power even when it has been overcast for three weeks? It's crazy to unfairly
penalize power companies just because the public loves solar power.

It's a complicated question.

~~~
cbr
Specifically:
[http://assets.bwbx.io/images/ilVXr6BF7iAU/v4/-1x-1.png](http://assets.bwbx.io/images/ilVXr6BF7iAU/v4/-1x-1.png)

~~~
ZeroGravitas
It's a little weird that the article claims that the problem is worst in
winter, when there is least sun.

Also, that graph is unreadable? I'm already aware of what the duck curve is,
and I can't make head nor tail of it.

~~~
rhino369
I bet it's a problem in the winter due to A/C and electric heating. When it's
sunny in summer, solar production goes up but it also makes people use A/C
more. There is significant canceling out.

In winter, solar production goes up, but people use less energy due to
electric heaters not be as needed since it's warmer. Not a lot of the country
uses electric heaters, but it's enough to add to the problem.

------
WaylonKenning
This whole article is weird to me as a New Zealander, since most of the
problems comes from weirdly, not letting the market set the buy-back rate of
electricity.

I worked for one of New Zealand's largest electricity generators and
retailers, and we investigated a solar market. Here's how it works.

Electricity is broken up into generation costs, distribution costs, retail
costs, regulatory costs, and profit.

Generation capacity goes up and down throughout the day, as does demand. In
New Zealand an automated auction happens 30 minutes where generators bid in
electricity at a price. The system operator then buys capacity required at any
particular area at the cheapest price that is available. This sets the
wholesale price of electricity.

This then gets distributed by the system operator throughout the country to a
local lines company. They maintain the power lines to your house, but also to
that person in the middle of nowhere.

The energy company figures out how much you've consumed, and bills you. Of
course, when you have a problem, you call them, so there's a call centre
always available as well.

Finally, there are taxes and levies that the government applies.

After all that, if there's anything left over between the retail price, and
the sum of those costs, well, that's the profit.

The weird bit is, where do you set the buyback rate for solar? The retail
price? But there's so much expenses there, not all of which are the retailer's
cost. The fair price of the market is the generating price, or wholesale
price. But, there maybe political incentives to set a higher rate, as well as
cap the number of people who can get that higher rate.

But if you want it sustainable for everybody, then using the wholesale rate
makes more sense.

~~~
skolos
What you just said is that the buyback rate should be somewhere between
wholesale rate and retail. There is no clear cut way to figure out what it
should be so regulators and politicians get involved in setting the rate.

"Sustainable for everybody" argument can be used on both sides - if rate is
set too low, the solar panel owners subsidize the rest of the customers if it
is set too high then other customers subsidize solar panel owners.

So the argument is not as clear as you tried to make it sound.

~~~
WaylonKenning
There is a clear cut way - the wholesale rate. In New Zealand, an auction
happens every 30 minutes where demand is tallied by the system operator
(Transpower) at a Grid Extraction Point, and generators bid in what they think
it's worth.

The system operator then purchases the cheapest electricity available (taking
into account demand is different throughout the network, and the network can't
transfer all electricity to all parts of the grid because of line
constraints).

This is the cost of the 'raw materials' of the retail electricity price. A
solar panel on your house really isn't any different that a little power
station. You still have to transport that electricity somewhere, maintain
those lines, maintain the voltage, run a power station when it gets dark, bill
you, etc.

It's not a big conspiracy, it's just that the cost of energy makes up about
half the costs of the electricity system. If you set at a rate higher than the
wholesale rate, then there must be other reasons to do so rather than pure
financials.

A good example would be if an Energy Utility wanted to attract solar
customers, sell them solar systems, and put it on the bill to make them more
sticky customers.

~~~
andor436
That's not quite what the wholesale rate means in the US; we have what you
describe but it's typically referred to as the spot market. The wholesale rate
when used by politicians and the media here usually (as far as I know) refers
to the monthly auction clearing rate, which is much more stable. There is also
a day-ahead wholesale rate, but the net metering rollback bills I've read
recently are all based on the monthly auction rate.

------
zrail
Haven't finished the article yet, but that animated gif of Warren vs Elon
is... something special.

~~~
tylersgordon
Skip the article, view the gif...
[http://www.bloomberg.com/features/2016-solar-power-
buffett-v...](http://www.bloomberg.com/features/2016-solar-power-buffett-vs-
musk/img/buffett_vs_musk.gif)

~~~
dogma1138
Or don't unless you want this image for ever burned into your retinas....

------
andrewtbham
The long term question here is will solar be distributed or centralized? I
think the answer is distributed like the model Elon and solar city are using.
It just doesn't makes sense for the old power companies like Buffet's NV
Energy to maintain all the transmission lines when the cost of batteries
falls.

~~~
Gravityloss
Couldn't one argue exactly the opposite? Since, due to physics, electricity is
very hard to store and there are already transmission lines, why not use them?

There are going to be factories that probably can't realistically be supported
by batteries. Another alternative is to run only in the summer and on sunny
days. Or to do all heavy industry/manufacturing close to hydro, nuclear or
geothermal power sources. In a sense, it would be a return towards the old
mill brook economy.

They recently opened a big subsea transmission cable between Netherlands and
Norway. Norway has mountains for hydro load balancing while Netherlands has
wind turbines for volatile production.

~~~
maxerickson
The factory nearby here (a paper mill) has a larger power plant than the
~35,000 people that live in the area.

They aren't going to switch to something less reliable than the natural gas
line feeding the plant, nor are they going to switch to something more
expensive.

It typically only shuts down for several weeks a year and isn't all that
profitable (at least, the owners keep going bankrupt, 4 or 5 times in the
recent 20 years), I doubt running less would help.

~~~
Gravityloss
Paper has become a worse and worse business since electronic media has taken
over gradually.

But the "turn factories off" was a bit of a joke. Though Nordpool does have
its spikes and it indeed makes sense to sometimes turn off factories. Depends
on your process.

Nowadays they run data centers in some old paper factories here (since the
electricity is cheap). So in a sense the old industries are gone, from lack of
demand, and new industries have gone where there is cheap power available.

~~~
maxerickson
The thought was that industry doesn't necessarily care about the grid, it just
treats it as an option and calculates whether it is a good one.

(hence pointing out that it was the largest energy consumer in the area and
had already opted out of buying grid power, that it's not in a great industry
strengthens the point)

------
rifung
> All this has enraged independent, free-market, and environmentally conscious
> Nevadans.

I'm all for green energy, but how is leasing solar panels that are government
subsidized and then having companies forced to buy back electricity at a set
price considered part of a "free market"?

~~~
landryraccoon
They might be more upset about being forced to pay to not be connected to the
grid. It's not free market if a customer can't refuse to be connected to the
grid and refuse to pay for it.

------
tlrobinson
"All this has enraged independent, free-market, and environmentally conscious
Nevadans."

...

"Nevada forces utilities to buy the excess energy at rates set by regulators"

How was the government forcing utilities to buy excess energy at mandated
rates "free market"?

~~~
rwj
Plus there is the fact that utilities are state-regulated monopolies... Until
you have competing utility providers, it isn't much of a market.

------
dang
We changed the title so it wouldn't be ludicrous linkbait. If anyone can
suggest a better (more accurate and neutral) title, we're happy to change it
again.

Submitters: the HN guidelines ask you not to use the original title when it is
linkbait or misleading. Please change it in such cases, preferably using a
subtitle or representative phrase from the article. (I couldn't find one in
this case, but if anyone else does, let us know.)

------
cjensen
Here's the problem with Net Metering: suppose you have two neighbors with
exactly the same sunlight conditions:

1\. A person whose house is large, inefficient, and uses a lot of electricity

2\. A person with a small efficient house.

If both of these people buy the exact same solar panels and generate the exact
same amount of electricity, then the utility has to pay #1 a _lot_ more money
than #2. (If you really want to ramp up the rhetoric, call #1 rich and #2
poor, and ask why the rich guy gets paid more for his solar power)

How does this happen? In order to encourage conservation, we have different
price tiers. The more electricity you use the higher the price per usage is.
When the solar "rolls the meter backwards", it's rolling away the high-cost
tier from the wasteful guy, and the low-cost tier from the conservationist.

We want to encourage solar generation, so it makes sense that solar generators
should be paid more per kWh. Net Metering is the Wrong Way to accomplish this
goal.

------
Rexxar
Meta comment : it's always surprising to see how different is the destiny of a
submission based on timing and randomness. For example, my previous submission
of this link got only one vote.
([https://news.ycombinator.com/item?id=11052575](https://news.ycombinator.com/item?id=11052575))

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chinathrow
On a second thought, the utilities should have never been privatised.

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jtlien1
It reminds me of A Connecticut Yankee in King Arthurs Court after the
Interdict came down and stopped all that progress. Our Interdict is the PUC,
regulation, lobbyists and corrupt political decisions, then subsidies and more
counter subsidies. No, rooftop solar is not a no brainer anywhere. Try to
figure in the cost of energy storage which is still astronomical in price. Or
jump into 100 years of utility regulation fights when all we need is power
generation that should be just based on common law rights etc and competitive
capitalism only.

------
chinathrow
"For years the state provided rebates for homeowners who wanted to go solar
through a lottery system."

What the heck...

