More thoughts on Net Metering and the price for exported power
While the January CPUC decision settles things for the moment, I keep asking myelf, as solar penetration gradually increases over the next few years, what is the fair price to pay us for exporting power to the grid?
Solar power varies throughout the day and season, so being able to "park" our excess instantaneous power in the grid is effectively making a deposit in the grid like making a deposit in the bank. Getting fair value for this deposit is essential for development of solar power.
The economics of the grid depend upon both the peak power the grid must handle and the volume of kWhs being transmitted. When solar penetration was low, the peak in utility power usage was usually in the daytime, so we could claim that our rooftop generation was reducing the peak usage. However, solar penetration in California, especially from grid-scale solar projects in the desert, now often follows a "Duck Curve" usage pattern, where the net natural gas generation peaks just before the sun rises, and several hours after the sun sets. For more on the Duck Curve, see the separate thread http://www.mynissanleaf.com/viewtopic.php?f=25&t=19398
This means that further solar penetration will not contribute to further reduction in the peak power that the grid must be sized to deliver.
At the same time power consumed behind the meter will continue to reduce the total kWh flowing through the grid. Commercial scale solar projects will replace a lot of power behind the meter that is consumed in malls, warehouses, etc throughout the day.
If the grid is supported primarily by usage and not demand charges, the cost of supporting the same size maximum power grid with fewer billable kWh in front of the meter will result in an increase in distribution charges per kWh. Everyone, with or without solar, will pay these higher distribution prices for the power they need from the grid. This increase will be modest, but I don't see anyway around it. In my opinion it would be unfair to burden just the solar customer with the cost of this decrease in net grid utilization
However, the more subtle and controversial question is how to price exported power, which is an especially important question for the residential customer whose usage during the day may be low while the family is at work, school, shopping, etc.
Right now in California, with penetration levels at the utility level approaching the 5% cap, most exported power is consumed close to home. At best your exported power is consumed by your immediate neighbors sharing the same neighborhood backyard transformer with negligible loss. At higher penetration the net power through your local transformer may be reversed, so your exported power has to go through that transformer onto the medium voltage distribution circuit, and back through another nearby transformer whose power is not reversed. The loss for this case is typically 2 to 4 %.
Your exported power delivered to your neighbor is billed to them at full retail price, but this power did not require the full grid hierarchy to get to its destination. In addition, the portion of the grid that is used is used in a negative fashion that reduces the day time load of both your backyard transformer and the transformer that feeds it at the substation. This seems to be the two key reasons we as distributed generators should be credited much closer to retail
than wholesale for our exported generation.
In an earlier post I discussed the idea of selling your exported power to your neighbors at a discount price from retail, as part of a "virtual micro gird." Your neighbor would be happy to get that discount, proving its value above wholesale price. They would benefit from increased solar penetration without investment of their own. However, non-solar folks living in an upscale neighborhood with lots of solar would benefit more than folks on a different circuit in a different part of town with little distributed solar to share.
Penetration would have to be very high before power would reverse at the substation level. A few circuits in Hawaii have apparently reached this status. The efficiency of such power drops because it has to go through two more levels of transformer to reach a consumer.