Scott Sklar is one of the most expert of US experts on decentralized power. Here is a very informative article he posted recently on Renewable Energy World. Mr. Sklar takes apart power company claims that by using modern decentralized power technologies, small scale electricity producers are getting a free ride from consumers stuck in the clutches of obsolete generation and distribution.
Or, as he puts it:
In 2012, the Virginia Governor proposed a tax for the sales of energy efficient cars because they use less gasoline, which means less money goes into the highway trust fund to repair roads. Hybrid and electric car owners, like myself, went nuts — why should those saving gasoline and significantly reducing pollution be penalized? By the end of 2013, a bipartisan coalition abolished the law.
Now the same movement is underway regarding energy efficiency, renewable energy and the electric grid — and it’s as misguided as the reasoning above.
The State of Ohio abolished its energy efficiency programs and delayed its Renewable Portfolio Standard (RPS) for two years on the guise it will raise electric rates. According to Electric Choice, in 2013 Ohio’s average electric rate for all sectors was 9.49 cents per kWh with the energy efficiency and RPS in effect. Ohio’s electric rates are slightly higher than Illinois, which has the lowest electric rates in the region and also has an aggressive energy efficiency program and an RPS. But somehow the electric utilities continue to bang their drums of fear and make headway without any independent analysis.
A purported consumer group has just published “The Unintended Consequences of Net Metering,” which claims:
On the surface, the concept of promoting rooftop solar energy seems like a good idea: homeowners are incentivized to buy or lease solar panels; they benefit from reduced reliance on the local utility for electricity; they benefit directly from clean solar energy; and they sell any excess power to the electric utility for credit or payment. The subsidies, in theory, make solar energy an affordable alternative for consumers. But, that is not the whole story…net metering can produce many unintended consequences that lead to higher costs for consumers.
Of course it has the same theme of the VA electric and hybrid vehicle tax — net metering causes higher rates for all other consumers who are not net metering.
Mr. Sklar then goes on to cite two actual studies about what happens to the cost of electricity when advanced generation and load reduction are instituted:
Alden Hathaway, PECEM, of Sterling planet In Georgia explains it most succinctly in his Februrary 2013 article in NAClean Energy.
Over the course of almost a quarter of a century of focusing on load management strategies in Vermont to meet load growth, the Central Vermont Public Service Company successfully increased the average (electric) system load factor from 55 percent to 70 percent…and a reduction in costs to the electric system of 4 percent…and they met additional load growth with energy efficiency and renewable energy…Unfortunately regulators tend to place little emphasis on improving grid efficiency by requiring increases in system load factor. Instead, regulated utilities are rewarded by additional power plant capacity to meet electric system peak increases. Since they are allowed to recover their costs, plus get a return on their facilities built for (generating) electricity, incentives are tilted toward adding new facilities — which is, in fact, where utilities are currently investing.
This conventional practice, or “old” set of incentives, does not add up to more electric grid efficiency, and electric rates actually go up for all ratepayers.
In National Geographic’s December 2013 article on this issue, solar leaders in California “scoff” at the notion that on site renewable energy production increases electric rates.
Adam Browning, executive director of the nonprofit Vote Solar Initiative, scoffs at the higher figure, which includes not only energy the solar households send to the grid, but the power they keep for their own use — energy that never touches the grid and has no impact on other ratepayers. ‘It’s the functional equivalent of you turning off your lights and getting accused of raising everyone else’s rates,’ Browning said. CALSEIA’s Del Chiaro agreed. ‘If you were to put an energy-efficient refrigerator in your home, and you cut down your refrigerators’ electricity usage in half, would that be a cost to your neighbor? Of course not,’ she said.
Mr. Sklar points to the real reason why power companies are screaming. It’s because of the distorted rate payer subsidies to old technologies in generation, transmission and distribution. As readers of The Power Line know, there are significant rate payer subsidies built into all regulatory schemes in the US that reward the construction of large, centralized power plants and huge transmission projects.
Frankly, on-site battery storage with on-site renewable energy will be the trend if electric utilities and regulators put up net metering barriers. While the consumer will not be “credited” for any excess electric power they produce, they will have back-up electric power (much more reliable than the electric grid) and electric power quality (no surges, sags and transients) that are becoming more severe in this country’s aging distribution grid — saving customer losses of digital equipment including appliances, office machines, computers, web routers, and microprocessors.
Actual substantive studies basically confirm what Hathaway and Browning stated. Crossborder Energy’s CA Energy Net Metering Study published in January 2013 states:
The economic impacts of net metering on non-participating ratepayers are highly dependent on underlying electric rate design. We show that modification to existing residential rates — including 1) the gradual narrowing of rate differences between tiers of today’s block rate structure under which most of the residential customers of the IOU (independently owned utilities) take service, 2)a move to greater adoption of current time of use rates among net-metered customers, and 3) increased use in an increase of simpler non-tiered time-of-use rate structures available today — will result in an increase of net benefits to non-participating ratepayers from residential net-metering.
There have been eleven substantive studies on the benefits of net metering for both net-metering customers and electric ratepayers. And virtually all show cost reductions for both electric customers and electric utilities on frequency control and electric power quality (less surges, sages and transients), lower distribution grid bottlenecks and transformer blow-outs that are precursors for outages, and less need to build electric power peaking plants that sit idle most of the time.
Through their public service commissions, state governments control electric rates and the rules. These rules favor and reward more electric generation and less conservation and on-site energy generation. This practice drives huge amounts of investments into less efficient electric systems rather than focusing on the customers’ requirements of less outages, improved electric power quality, less swings in electric rates due to increases in global energy commodities (uranium, oil, coal, and soon, natural gas), and more precise matching of electric generation to electric load by improving electric system efficiencies.
Scott Sklar does not depend on wild rhetoric and unsupported claims. The studies he cites are some of the most up-to-date on the issues of the costs of our new technology transition. They are also based on real experience on the US electrical grid.
If you are confused by the power companies’ “free rider” BS, Mr. Sklar has the facts.