The Flip Side to Solar
By: Van Dwinnells
Electric Utility companies rely on selling power to those of us on the grid. As the green movement has swept the nation, independence and interdependence have become new possibilities for many consumers especially so as the push for photovoltaic solar panels has generated consistently more affordable and highly efficiency models. This effectively allows an individual(s) the opportunity to offset their usage from the grid. By this I refer to their ability to minimize their overall consumption even to the point that the individuals could sell back energy to the utility company. In some cases, with the use of storage batteries and generators, some may even be able to survive completely off the grid.
It is important to understand this process monetarily in order to grasp how solar energy may negatively impact us in the recent future.
"Solar power peaks at midday, which means it is strongest close to the point of highest electricity use — “peak load.” Problem is, providing power to meet peak load is where utilities make a huge chunk of their money. Peak power is the most expensive power. So when solar panels provide peak power, they aren’t just reducing demand, they’re reducing demand for the utilities’ most valuable product."
This is great for those that can sell back, as they are in essence buying power on the low and selling high. Basically, as solar power becomes more prevalent, peak power rates the utility companies charge will increasingly become more volatile to the market. In the past they have had very steady business models. In essence, the more that solar power is utilized throughout the nation, the greater the peak power rates will be. For those individuals that solely rely on the grid, this will mean a dramatic increases in their rates in order for the utility companies to remain profitable. Until we can almost completely offset the rather still high costs of photovoltaic systems, many citizens with average to low annual incomes will be forced to pay much higher rates to heat and cool their homes. As David Roberts puts it,
"As ratepayers opt for solar panels (and other distributed energy resources like micro-turbines, batteries, smart appliances, etc.), it raises costs on other ratepayers and hurts the utility’s credit rating. As rates rise on other ratepayers, the attractiveness of solar increases, so more opt for it. Thus costs on remaining ratepayers are even further increased, the utility’s credit even further damaged. It’s a vicious, self-reinforcing cycle:"
This will either lead to some dramatic changes in the Utility companies methods for profit generation or manufacturers and technology must soon meet the challenge to provide low cost and available solar systems. More information can be found in the following.
The Edison Electric Institute released their Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business article bringing light to such implications. It can be found here. http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf
Quotes and more emphasis can be found here: