"First they ignore you, then they ridicule you,
then they fight you, then you win."
-- Mohandas Gandhi
Power companies whine a lot about the “problems” that solar power causes for grid management. That is one of the reasons power companies want to impose penalties on solar generators.
One of the “problems” that power companies whine about is the fact that solar generation on the grid peaks (in the middle of the day) just before major demand peaks between 5 and 8 in the evening. Here is a chart of California’s system presented in this article in Renewable Energy World about the whiners:
This graph is known as the duck chart, for obvious reasons. Note that the only actual data is shown for the lines labelled 2012 and 2013, although the 2014 projection is probably pretty close.
Here’s the whine:
The duck is the perfect vehicle for utility complaints because it casts the growth of distributed solar as a major technical problem (an area where most policy makers defer to utilities) rather than an economic one, where utility complaints can be contrasted with their customer’s desires for more local control over their energy use and costs.
The utility companies crying “fowl” highlight a particular part of the duck chart: the dramatic ramp up in power generation on the light-green 2020 curve that happens in the late afternoon, as energy produced from solar wanes but energy demand rises. In the traditional grid operating model, accommodating this ramp-up in energy use requires a lot of standby power from expensive to operate, rapid-response power plants.
Whiners whine, but are they right? No.
Evidence suggests utilities are crying “wolf,” with several experts poking large holes in the utility argument. The Clean Coalition and Regulatory Assistance Project have both offered numerous strategies utilities can use to “flatten the duck” or “teach it to fly:”
- Target energy efficiency measures for the “ramp up” period
- Orient solar panels to the west to catch more late evening sun
- Substitute some solar thermal with storage for solar PV [I'd suggest adding storage to PV also works]
- Allow the grid operator more demand management via electric water heating [already done extensively by rural cooperatives in Minnesota]
- Require large new air conditioners to have two hours of thermal storage accessible to the utility
- Retire inflexible generating plants (read: coal and nuclear) that need to run constantly in off-peak periods
- Concentrate utility demand charges on the ramp up period.
- Deploy electricity storage into targeted areas, including electric vehicle-to-grid
- Implement aggressive demand response programs (subscribing more businesses and homes into programs to shed their energy demand at key periods)
- Use inter-regional power transactions
- Selectively curtail a small portion of solar power generation
In other words, the technical challenges of the duck are manageable, largely with existing technology.
The economic problems for utilities — stemming from an outdated business model — may not be so manageable.
So the problem isn’t with solar power generation. The problem is that big base load generators are clinging to their obsolete investments and want the rest of us to pay for it.
Most people in the US pay a relatively small flat fee as part of their electric bills. In WV it’s called a “customer service fee.” No one can really explain what this fee pays for, and why it couldn’t be included as part of the company’s base rate, which in WV covers normal overhead plus capital investment costs. I demonstrated here how this flat fee raises your effective electric rate as you purchase less and less electricity from your power company. If you improve the efficiency of your electricity use, just use less or produce your own electricity with a photovoltaic system, your rates go up.
In the past, I have also written about how power companies, faced with the threat of decentralized power to their obsolete business model, (along with some dark money and influence from the Koch brothers) have been pressuring public utilities commissions across the US to add extra fees to the bills of residential customers who produce their own electricity. This effort succeeded in Arizona, ironically, the state with the most solar power potential in the US.
My friends up in Wisconsin sent me a link to this story about a Madison, WI power company that is jacking up its customer service fee from an already pretty high $10.50 per month to $19 per month (!). Here in WV, FirstEnergy included an increase of its $5 monthly service fee to $6 in its pending base rate case. AEP followed suit a month later in its own base rate case.
So it seems that electric companies aren’t interested in jacking up special fees just for solar power producers. They want to make everyone to pay higher effective rates because they want to penalize anyone who it trying to reduce his/her electricity use. I don’t know if anyone tracks trends in these customer service fees across the US, but it would be interesting to know if raising fees on everyone is increasing in frequency.
I came across this interesting piece on RTO Insider today about the pending FERC decision about whether to allow Dominion Energy to reconstruct its Cove Point, MD natural gas import facility to convert it into an export platform. The situation with natural gas exports is exactly the same as the “export” of “surplus” electricity from WV’s monster coal plants through the failed PATH power line.
Whenever there is a surplus of a resource in one market area, assuming that demand remains the same, the price of that resource will fall. That is why WV has lower electric rates (but they are rising steadily) than most other states in the US. That is also why natural gas prices have fallen dramatically over the past five years in the US. The shale gas bubble, which may be at or approaching peak production, has created a big surplus in the US which has affected all businesses that use natural gas: the plastics industry, the electric industry and gas utilities.
And what will happen if the US begins to export natural gas to other countries where prices are much higher? That’s right, your gas and electric bills will go up, because you and your family are now competing with families in Europe and Japan for that gas.
In all the discussions of Cove Point and other export projects, I haven’t heard much talk about this rate impact. Make no mistake, if exports happen, your costs for heating and electricity will rise along with them.
The WV coal industry continues to churn out mythology about renewable power. I was recently at an event where WV Coal Association president Bill Raney claimed that “Germany was turning back to coal for its electricity.” WV Division of Energy director Jeff Herholdt and Appalachian Power’s CEO Charles Patton were quoted in this State Journal article claiming that renewable power is just too expensive for WV. The State Journal’s reporter, although she interviewed both Mr. Herholdt and Mr. Patton for the article, cited only a nearly two year old paper by WVU law professor James Van Nostrand as a response the distorted claims of her coal industry advocates. So it seems the State Journal wanted to further the mythology about renewable power. So the question remains: are these claims true?
Well, let’s look at the reality of Germany’s electricity system, and how renewable power works there. I have posted about Germany’s energiewende in the past. Here’s a look at what is happening now, in the real world, not in the fevered minds of coal industry apologists:
Germany’s renewable sector (RE) is flexing its muscles, with solar production up 28% and wind up 19% during the first half of 2014. As a result, the renewable sector accounted for 31% of the nation’s electricity. If this trend continues, this may be the third year in a row that Germany sets a record for energy exports. The increase in renewables has also been accompanied by a decrease in fossil fuel usage. Gas-fired power plant production is down 25%, compared to last year, and hard coal production fell 11%.
Germany has expanded its own lignite production temporarily as it phases out big nuclear plants and adjusts its electricity infrastructure to replace that base load power until the country can transform its power economy further away from the base load/peak load system. Renewable power has gained such market power that in periods of high solar or wind production wholesale electricity prices actually turn negative. Big base load coal and nuke generators actually have to pay to keep selling their power into the grid, so they won’t shut down. As base load plants are phased out, this negative price problem will disappear and the whole system will be built on filling in between peak renewable production.
Max Hildebrandt, renewables expert at Germany Trade & Invest, points out that it is important to distinguish between the wholesale spot market price and the consumer market price, and to note that utilities in the EU have seen gradual unbundling into grid-side and generation and supply operations.
“Negative prices on the EPEX spot exchange are a relatively rare but not unusual phenomenon,” he said. “They occur only during short peak periods – usually around noon when solar radiation is highest – and not for entire days. They are merely a signal for the large-scale spot market participants and do not have an immediate effect on the more rigid prices in the consumer market.”
When spot prices are negative, power generators can choose whether to cut production or briefly accept negative prices for their electricity. Although there is a general tendency for greater fluctuations in demand and supply with an increased share of renewables, Hildebrandt notes that this can be countered “by expanding the grid so that it is more flexible geographically, by increasing energy storage capacity to increase flexibility in terms of time, and by employing demand response approaches. Germany does all of the above and there are large business opportunities in these areas.”
There are more than 1.4 million PV systems in Germany, according to figures from Germany Trade and Invest. The transformation of the German energy market, now known as the Energiewende, began with the first EEG legislation and has seen PV prices drop from over EUR 0.50/kWh in 2006 to around EUR 0.15/kWh in 2014. PV systems have nearly no operational costs meaning that once the initial capital investment has been paid back they produce power extremely cheaply. German legislators and regulators are currently revising their approaches toward the energy market as new business models evolve. [emphasis mine]
Those last words, “as new business models evolve,” is the crux of the matter for Messrs. Raney, Herholdt and Patton. Real movement toward renewable power means a complete transformation (that is what “energiewende” means in German – energy transformation) of the electrical system in WV away from centralized fossil fuel production to decentralized, democratized production of renewable power.
In WV, politicians and the coal industry (Unfortunately, these are often the same thing in WV.) talk about “all of the above” and “balance.” Mr. Herholdt’s Division of Energy holds little showcase events that give lip service to the idea of renewable power but takes no initiative to put real renewable generation in the hands of West Virginians. To justify their continued support for obsolete fossil fuel electricity, they all have to blow smoke about keeping electricity “cheap.” Tell that to WV rate payers who are facing 17% to 20% rate increases from both of their Ohio-based power companies.
WV NAACP Joins the Call for Business and Job Growth from Renewable Power and Energy Efficiency Investment
Last Thursday, the WV chapter of the National Association for Advancement of Colored People held an event in Charleston to advocate for real energy transformation in WV. The NAACP highlighted a report published for the organization in February 2014 titled “Just Energy Policies: Reducing Pollution and Creating Jobs in West Virginia.”
It doesn’t take much looking in WV to see the disproportionate impact that pollution has on African Americans in WV. In the Kanawha Valley, most African American communities lie in low areas directly downwind of particulate matter and mercury plumes from AEP’s John Amos coal burner. Mountaintop removal mining in southern WV has destroyed countless rural African American communities and has left those who remain with significant health and social problems.
The Jefferson County NAACP stood up for all FirstEnergy customers in WV when it took a leading role in finding a solution to the customer billing chaos that resulted from the FirstEnergy buyout of Allegheny Energy. Now the state chapter is moving beyond billing to creating a new electrical system in our state.
The NAACP report focused on the vast potential of local renewable power and energy efficiency investment to create jobs in local communities. The report focuses on the need for significant expansion of projects in African American communities across the state, along with mandates for the training and hiring of local workers.
The report cites three main problems in WV:
- Lack of a mandatory renewable power portfolio standard in WV instead of former Gov. Manchin’s fake standard
- Lack of mandatory energy efficiency standard in WV
- The need to expand WV’s net metering program to larger renewable power systems so that businesses as well as residential customers could participate
Readers of The Power Line will note that these are exactly the issues I have highlighted here over the past eight years in my posts about solar carve out legislation, bills to create an energy efficiency standard in WV and the need to change net metering maximums and business billing to allow business participation.
One additional note about the NAACP report – Instead of moving forward, the WV Legislature has decided to move backward. The solar energy tax credit described on page 16 of the report no longer exists. The Legislature allowed the tax credit to expire last year.
The Energy Foundation has just released its annual report ranking states and metropolitan areas on their performance and policies concerning energy efficiency and renewable power. Guess where WV ranks in both areas? 48th in policy and 49th in performance. Other states, like California, Colorado and Illinois are rapidly expanding their capacity and programs. Investment and patent registration is growing right along with this commitment. Contrast that dramatic business expansion with the whining we hear from Charleston about the collapse of the coal industry.
Here’s the list of the overall ranking:
Note that there are three states in the top ten, New Mexico, Colorado and Illinois, that are also states with relatively large fossil fuel extractive industries.
I was also glad to see that WV was given no credit for having a Renewable Portfolio Standard. Many lists of states with RPS list WV among them just because the state has something it calls an Alternative and Renewable Portfolio Standard. As readers of The Power Line know, the WV ARPS is a fake and is only a way for WV power companies to continue business as usual.
The Williamson Daily News reports that Sen. Truman Chafin from Mingo County wants the WV PSC to reject AEP’s new 17% base rate increase. Mr. Chafin is trying to present himself as the champion of the little guy by complaining about the high salaries paid to AEP executives.
Unfortunately, Sen. Chafin, who was once a leader of the Democratic Party in the WV Legislature, doesn’t seem to understand WV law. WV law requires that our state’s licensed electric monopolies are entitled to recover all their costs of doing business, including capital costs and a reasonable return on equity for their investments. Sorry, Sen. Chafin, AEP will get a rate increase this year. It might not be 17%, but it will be significant.
For the last few years, legislation has been proposed at the Legislature to create real integrated resource planning (not the fake FirstEnergy bill that passed the Legislature last year), a real renewable portfolio standard and an energy efficiency standard that would have enabled electric customers in WV to reduce their electric bills. Where was Sen. Chafin when these bills were stuck in various committees in 2010 through 2013? Was he urging his colleagues to support them? Was he taking a leadership position, along with Del. Mike Manypenny, Del. Barbara Fleischauer, Del. Tim Manchin and Sen. John Unger?
And where was Sen. Chafin as both FirstEnergy and AEP dumped their obsolete coal burners on WV customers? Was he ” urging all of his Senate colleagues to voice their opposition” to these rate increases designed to bail out WV’s electric monopolies?
While I welcome Sen. Chafin’s concern for WV electric customers, I will only take him seriously when he talks about real solutions, instead of ranting and raving just to hear his own voice.