WOTD: Electric Utility Death Spiral

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by: ParkHill

Partial Grid Defection: Produce 80-90% of your own electricity using your solar panel and backup batteries. Stay connected to the grid only for 24/7 reliability. This becomes cost effective by 2020.

Full Grid Defection: Produce 80-90% of your own electricity, and add diesel generator for emergency use. This becomes cost effective by 2030.

From Vox.com: Batteries are going to make rooftop solar invulnerable.

Utilities don’t make money selling electricity, they make money on their infrastructure. Customers pay a flat rate to cover both electricity and infrastructure.

WHEN A CUSTOMER INSTALLS SOLAR PANELS, IT HURTS THE UTILITY IN TWO WAYS.

One, it reduces demand for utility power. Utilities generally don’t want lower demand. To justify building stuff, they need to be able to project higher demand.

Two, the more solar customers reduce their utility bills by generating their own power, the more utilities have to charge other, non-solar customers more, to cover their costs-plus-returns. This pisses the other customers off. And it incentivizes them to install solar themselves!

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Cheap batteries neuter utility attacks on rooftop solar

Rooftop solar can be staved off temporarily with fees and rate tweaks, but as batteries get cheaper, those strategies will stop working. More and customers are going to generate, store, and manage more and more of their own power.

“In a low-cost storage environment,” McKinsey writes, the rate structures utilities are monkeying around with “are unlikely to be effective at mitigating load losses.” In other words, customers are still going to keep generating more of their own power.

That’s because batteries allow customers to circumvent utilities’ two primary tools for slowing the spread of solar.

If I look at my own situation, rooftop solar may be socially conscious but it isn’t really economical unless my electrical needs were to increase (electric car?)

For one, the City of Fort Collins runs the electric utility and our prices are 20% or so less than the average in Colorado.

For two, For about $10/month added to my bill, I can purchase solar electricity directly from the City Utility

For three, my electric use is already a quarter of average. I don’t have a TV or microwave, nor electric heaters or air conditioner. My whole-house fan runs on low & I have a new, energy-star refrigerator. Those are probably my biggest consumers of electricity.

3 thoughts on “WOTD: Electric Utility Death Spiral”

marc sobel says:

July 10, 2017 at 7:01 pm

Of course utilities could make a lot of money by providing telecom services because they already have a connection, that expensive last mile. But that would require investment instead of just sucking the customers' blood.

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MichaelBowman says:

July 11, 2017 at 8:13 am

This falls under the 'adapt or die' rule and there are utilities firmly ensconced in both camps. They can only hide under the skirt of their regulatory protections for so long. Rural electrics and their G&T's generally fall in the latter category as they cling to the good old days of coal.

The death spiral ends when investors—equity and credit—are left holding an empty purse of dormant power plants and copper wires.

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mamajama55 says:

July 11, 2017 at 10:33 am

Driving north from Limon on 71 a few days ago, I was awestruck by the gigantic Limon Wind 1, II, and III farms. Nothing but turning turbines on the horizon for 25 miles. Nestled next to grain elevators and working farms, grazing cattle. No dead eagles in evidence.

I took a couple of pictures on my phone, (1 is below) but it needs someone with a good camera, a good eye, and an hour to spare to set up shots to do the spectacle justice.

Here's a Denver Post file photo from 6/3/17 to give you a better idea.

200,000 Kilowatt hours, baby!

So parkhill, for renters like myself, buying blocks of wind power from my local utility is the best way to go green. My local utility has been 100% coal powered, and that is finally about to change, as it has left a legacy of asthmatic kids and polluted water from the holding ponds.

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