Don't forget, the cost of capital recovery (for distribution and transmission facilities) is done over time. Facilities installed (for the sake of discussion here) over the last couple of years, still have 28-38 years left to fully be recovered in rates. To say, "...there is no distribution cost because the distribution network is already built..." is not correct. The owners of the utility (the shareholders) put the money up to pay for the facilities when they are installed. The recovery of that capital outlay plus a return on that investment is done over the life of the facilities (30-40 yrs or so). For facilities older than this period the cost has likely already been recovered but there are a LOT of facilities not yet 30-40 years old and therefore not yet recovered. Up to now we residential customers paid for the demand charge as a function of energy use. Appropriately, it should be separate but before the advent of the smart meter it was not cost effective to give every residence a commercial TOU meter to split out the two. The demand has a value (cost of facilities) and the energy has a separate value (cost of energy) hence the appropriateness of selling both as individual products. With the advent of the smart meter this can now be easily done. Don't get me wrong, I'm all in favor of PV as it was the primary reason I went to electrical engineering school in 1980. Personally I want as free a lunch as the next guy but why should I pay for the capital recovery for facilities that my neighbor uses? With PV on my roof, if I am unhappy with paying for the "stand-by" or "demand" charges to my electricity provider I can always leave the grid and do the entire energy thing myself. We all have that option.walterbays wrote:Yes, not only generation but also transmission capacity is more likely to be exhausted during heavy air conditioning loads of hot summer days. Here is a graph of renewable production on one summer day. http://content.caiso.com/green/renewrpt ... sWatch.pdf. Notice how nicely the wind and solar power curves complement one another. I think the reason you see solar production extending into evening hours is that much of the utility scale solar is thermal solar rather than PV, and continues to produce power until it cools. That's probably one reason utilities seem to prefer large desert solar plants over rooftop PV: the thermal storage smooths out the power production.drees wrote:Well, it depends on how much more it costs to deliver electricity when the sun is shining compared to when it's not, right? Daytime electricity is generally much more expensive than off-peak electricity.
Tony is right there is no distribution cost because the distribution network is already built, and local generation reduces both distribution and transmission costs. Transmission costs aren't zero though, because we PV producers need to import power now and then, whether from desert solar plants, wind farms, nuclear reactors, or natural gas plants.As far as distribution costs - distributed generation should reduce distribution costs by lowering loads on equipment. Electricity my PV system generates in excess goes straight to my neighbor - presumably the cost of distribution should be much lower when they are able to sell my excess electricity to my neighbor.
It's debatable whether money is better spent building distant power plants and transmission lines to connect them (e.g. Sunrise Powerlink) or building more local generating capacity. The optimal solution might include some of each. I only wish that utilities were given full renewable credit for locally generated power, so that the mix they choose as optimal for their shareholders would also be optimal for society.
In The Third Industrial Revolution, Jeremy Rifkin argues that distributed power generation will transform the world economy to the same degree as previous revolutions. http://www.amazon.com/Third-Industrial- ... G7YHFGBHDZ. However I doubt that local power generation will spell the end of utilities. Rather I think they will be the power brokers, the suppliers of a still very significant portion of total power, and the power reliability insurers.