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Final Up to date on: twelfth Might 2025, 06:05 pm
Means again when electrical utilities have been invented, it shortly turned apparent that the standard attributes of capitalism — vigorous competitors between a number of suppliers — would result in chaos. As an alternative of 1 set of poles, wires, transformers, and substations, there could be two or extra of all the pieces, which might be ruinously costly for everybody — particularly utility prospects. So a choice was made to offer one utility firm a monopoly inside an outlined service space. That was lengthy earlier than rooftop photo voltaic turned an element.
To guard the general public from value gouging by these monopolies, they have been to be regulated by public boards and commissions that may set the utmost charges they might cost their prospects whereas guaranteeing the businesses a secure fee of return on their investments. This mannequin has labored pretty effectively for greater than 100 years, however it by no means anticipated that prospects sooner or later would be capable to generate their very own electrical energy with photo voltaic panels or small-scale wind generators.
A monopoly, by definition, opposes any affect that may undermine its energy. From the attitude of the utilities, they got here to consider they’d the unique proper to generate and distribute energy to prospects inside their assigned territory. Due to this fact, any electrical energy generated by any means inside that territory belongs to them and needs to be managed by them. The corollary to that precept is that the electrons flowing from rooftop photo voltaic techniques don’t belong to householders or photo voltaic leasing corporations, they belong totally and solely to the utility firm for that space.
California has a few of the highest costs for electrical energy within the nation. Utility charges have been going up a mean of 12.5 % a 12 months for the previous a number of years, which additionally occurs to be the quickest fee of enhance within the US. In 2024, California Governor Gavin Newsom issued an executive order that instructed state power businesses to search for methods to chop the price of electrical energy within the state.
Excessive Utility Payments? Blame Rooftop Photo voltaic!
CleanTechnica readers know what occurred subsequent. Individuals within the trade and the regulators regarded round for the causes of excessive utility payments and got here up with the plain reply. The issue was not the damages the utility corporations must pay on account of the wildfires sparked by defective transmission strains. Neither is it the price of placing transmission strains underground to forestall future wildfires. No, in actual fact, the reason for excessive electrical charges is rooftop photo voltaic! Think about that.
As quickly because the grid in Texas or Spain suffers an outage, the blame will get positioned on renewables. It’s really easy to level the finger at photo voltaic and wind, as an alternative of doing the laborious work of figuring out the precise causes and doing one thing about them. It’s all of the fault of these newfangled renewables. Case closed. Assembly adjourned.
A invoice pending within the California legislature often called AB 942 would punish rooftop photo voltaic, regardless that it isn’t the offender. It could retroactively break contracts with hundreds of thousands of photo voltaic shoppers by reducing the compensation they obtain from offering power to the grid if their house is bought or transferred. These with photo voltaic leases, who’re predominantly decrease revenue, will likely be compelled to purchase out these contracts after they promote.
In an op-ed for the San Francisco ChronicleRichard McCann, an power advisor for extra then 4 a long time and a founding companion of M.Cubed, a public coverage consulting service, dares to ask why the state would try this to householders who’ve invested in rooftop photo voltaic. The rationale, he suggests, is that too many officers have purchased a key utility firm excuse for rising power costs, a fallacy he calls “cost shift.”
To the utilities’ mind-set, “cost shift” implies that sustaining, working, and increasing {the electrical} grid is dear. Transmission strains, substations, and different services have to be constructed and repaired to ship electrical energy to properties — and that’s constructed into the utility payments prospects pay every month. McCann says “cost shift” principle argues that since residence photo voltaic customers generate their very own electrical energy, everybody else is compelled to pay extra to maintain the system operating.
The proof to assist the speculation is “based on a seriously flawed notion” that claims utilities personal 100% of the electrical energy generated by its prospects and are entitled to full income — even for power it doesn’t ship. “PG&E’s claim that it is ‘losing money’ on rooftop solar is only true when it claims ownership of the kilowatt-hours generated and used by home solar,” he says.
In different phrases, embedded within the seemingly dire calculations of the position “cost shift” performs in rising power payments is the concept PG&E deserves a revenue on the power generated by residence photo voltaic house owners” (emphasis added). However PG&E shouldn’t be entitled to these income, McCann claims, and doesn’t want them to run a sustainable enterprise.
He factors out that rooftop photo voltaic really saves ratepayers cash by decreasing the necessity to broaden producing capability. It has performed a serious position in conserving power demand flat since 2006, particularly on sizzling summer season days when demand for electrical energy to maintain air conditioners working will increase. In actual fact, the California Impartial System Operator (CAISO) credited rooftop photo voltaic in its resolution to cancel 18 transmission tasks, saving ratepayers $2.6 billion in 2018.
“By my calculations, solar users provide 12,000 megawatts of energy to the system that would have needed to be filled through utility-controlled generation and assets,” McCann asserts. “Without rooftop solar customers paying to add that capacity, those expenses would have been added to current electric rates. That is why California launched the Million Solar Rooftop program in 2006 — it was wildly successful at meeting growing loads with customers’ own resources.” The investments California householders have made in rooftop photo voltaic saved all ratepayers $1.5 billion in 2024 as a result of they decreased demand for electrical energy from the grid and different shared advantages, he argues.
Difficult The Utility Compensation Mannequin
McCann additionally has questions on your complete utility compensation mannequin. Each firm needs to extend income, however the present mannequin rewards utility corporations for investing in additional infrastructure, not decreasing the price of producing electrical energy. Photo voltaic and wind value lower than thermal technology, however that doesn’t essentially create extra income for utility corporations. He says spending on grid infrastructure has elevated greater than threefold over the previous twenty years — 4 instances sooner than the speed of inflation — whereas demand for electrical energy has remained primarily flat throughout that interval.
“If electricity demand has remained flat for so long, what is PG&E spending all that money on exactly? That’s the question state officials should be asking,” McCann says. If the system’s prices are principally ‘fixed’ as PG&E claims, then these prices shouldn’t have elevated so quickly.
“Of course, flattened demand and cancelled investment projects do mean less profit for utilities like PG&E. To keep earning higher profits, PG&E must keep finding new ways to spend ratepayer money on grid infrastructure, and the commission must keep giving it the green light. Yet utility profit motive should not be what drives energy policy in California,” he says.
Our readers will spot some similarities between the arguments the utility corporations are making and the arguments heard ceaselessly about electrical vehicles. Take into consideration that for a second. Transportation and electrical energy each are extremely depending on fossil fuels. Is it potential the fossil gasoline trade is working within the background to torpedo rooftop photo voltaic? In spite of everything, whether it is decreasing demand for electrical energy from the grid, it’s decreasing demand for fossil fuels as effectively. We go away it to our readers to attract their very own conclusions.
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