Our electric grid is one of the most complicated systems that has ever been built. We have confidence that our electrical system is generally meeting the needs of people throughout the U.S. — unlike our electoral and election systems, which are beset by hackers, hanging chads and foreign interference. Nevertheless, new technologies such as solar, wind, battery storage, EVs, control systems and software present opportunities to improve the effectiveness and reduce costs throughout our electrical grid.
The traditional electric grid design depends on centralized power generation, sending power to customers in two stages: first over long distance high voltage transmission lines, and second over lower voltage local distribution lines. Power flowed from the generator to the customer using a top-down communication system. This centralized electrical grid, managed by public utilities, has served us well for over 100 years.
With rooftop solar, customers are generating their own power and sending the excess back to the grid (consumed by their neighbors). With batteries, customers can store their daytime-generated solar energy and use it at night, or use their batteries to meet peak power loads. And now, with the right software and communications, these local solar generators, batteries and control systems can be aggregated into a Virtual Power Plant, or VPP.
These new technologies are cheaper, more flexible, more reliable and cleaner than the traditional grid. But they function more as a network of billions of devices – similar to the way our telecommunications systems operate. Moreover, this combination of new grid technologies and a networked architecture is antithetical to the “top down” way that traditional utilities operate. Please listen to this week’s Energy Show to learn about the design of this networked electric grid of the future — and why the traditional utility business models must change as VPPs become more commonplace.
PG&E’s bankruptcy will have a dramatic effect on all electricity users in northern California — as well as utility investors, California taxpayers, and the solar industry in general. Moreover, the bankruptcy of one of the largest utilities in the country is a harbinger of the need to change the traditional utility business model. Not only are utilities experiencing competition from businesses and homeowners installing their own solar and storage systems (for less money), but utilities are also experiencing much greater than expected costs related to maintaining their transmission and distribution services. Devastating fires are more common, people are living in more fire-prone areas, our need for electricity is increasing … and this situation is likely to get worse.
Although PG&E has been my biggest competitor for almost 20 years, they have established a reputation as the best (some would say “least bad”) investor-owned solar utility in the country. Compared to almost all other utilities, PG&E has been ahead of the curve with solar, net metering, energy storage – influenced to a large degree by a far-sighted California Public Utilities Commission and state government. They are also staffed by committed and hard-working employees throughout their organization.
Nevertheless, PG&E’s financial problems raises substantial issues for solar and non-solar customers alike. Meeting the conflicting needs of taxpayers, electricity customers and investors is a daunting legal and political challenge. To help sort through these issues, my guest on this week’s show is Angela Lipanovich, President and Founder of Estriatus Law. Among the topics we will cover include:
What happens in a corporate bankruptcy, and how did PG&E fare in their 2001 bankruptcy?
How do bonds taken out by PG&E affect electricity rates?
Would these bond repayments affect net metering reimbursements?
Would a bankruptcy judge force affected homeowners and businesses to accept less money for their losses?
What would be the electricity rate impact for every $10 billion in PG&E’s liabilities?
A bankruptcy judge can renegotiate corporate debts – what affect could that have on PG&E’s Power Purchase Agreements?
How must utilities change their tree trimming and maintenance practices to prevent future fires?
What is a practical long term solution to California’s expensive electricity?
To learn more about the implications of PG&E’s bankruptcy, Listen Up to this week’s Energy Show with Angela Lipanovich.
One of my favorite Hemingway books is “The Sun Also Rises.” It’s about Spain, bull fighting and a group of lost generation friends in Paris in the 1920s. But this show is an energy podcast, not a book report. So with apologies to Ernest Hemingway — here in California — the sun also rises. But it rises at night with battery storage.
Governor Brown recently signed into law a bill called SB 700, which establishes an additional $800 million dollars of incentives for behind the meter battery storage. These incentives, part of the Self Generation Incentive Program (SGIP), are designed for both commercial and residential systems. SGIP is the biggest battery storage incentive program in the U.S. For the past year and a half, our battery storage customers have been using SGIP funding to reduce the costs of their combined solar and storage systems.
These incentive programs don’t appear automatically. The California Solar and Storage Association (CALSSA) worked for three years to finally get this storage incentive passed. Bernadette Del Chiaro, Executive Director of CALSA, explains the key reason for these storage incentives: “What we’re trying to do is create a mainstream market for energy storage — just like we’ve done for solar photovoltaic systems.”
Why did it take so long? There was intense opposition from electric utility business interests who do not want customers storing their own energy, just as they do not want their customers generating their own solar power. Utilities benefit financially when they install their own “grid-sized” batteries on their side of the meter, just as they benefit from large utility scale solar farms. From an overall perspective we still need utilities, not necessarily for electricity generation, but primarily for long distance transmission and local distribution of electricity.
Utilities have provided a terrific service to the world for over 100 years. Now, with inexpensive solar and batteries, utility customers can install their own generation and storage systems. To learn more about why the Sun also Rises At Night with Batteries, Listen to this week’s Energy Show.
We have all seen those big power plants outside cities that provide power — historically from coal, oil and nuclear and now more recently, natural gas. These utility power plants have served us well for over a century. But technology is passing them by. These old central generation power plants are obsolete. They are more expensive than power generated by wind, solar and energy storage. Even some of the newest gas peaker plants under construction are destined to be obsolete within a decade. New power generating technologies – solar, wind, battery storage, distributed energy resources, virtual power plants, etc. — are steadily improving in terms of cost, duration and reliability.
Unfortunately, commercial and residential electricity customers are saddled with the costs of existing power plants, even ones that have been installed recently. Utilities pass their costs of power generation, transmission and distribution directly to ratepayers. Moreover, utilities are guaranteed a 10% profit based on their net assets. Although they do indeed care about reliability and safety, utilities actually make more money when they own a lot of assets (higher profits) and charge high prices for power (higher revenues).
These new clean, inexpensive power generation and storage technologies are turning the utility industry upside down. Commercial and residential customers can essentially purchase their own power plants for less money than utility-provided power. Listen up to this week’s Energy Show as we review the deteriorating economics of utility-based power plants, as well as the implications these new technologies are having on consumers throughout the United States.
The electric utility industry is undergoing rapid change. There used to be two types of utilities: investor owned utilities (IOUs, such as Pacific Gas and Electric and ConEd) and municipally owned utilities (MOUs, such as LADWP and Silicon Valley Power). Now there is a third hybrid type, called a Community Choice Aggregation (CCA) utility.
IOUs work for their stockholders — striving to maximize their profits by charging the most they can for electricity, maximizing their net assets and minimizing their expenses (often maintenance). MOUs work for their local cities — and try to provide affordable and reliable power in their territory. Not surprisingly, electric rates at IOUs are almost always higher than rates at nearby MOUs. Because IOUs profit by installing their own solar and storage systems and maximizing their own sales of electricity, they do not look favorably on homeowners and businesses installing their own systems. My biggest competitors for almost 20 years have been local IOUs.
CCAs offer the potential for lower electric rates for customers in their territory, without changing completely to a municipally-owned business structure. CCAs buy power from large solar and wind farms, as well as hydroelectric facilities. They then distribute this power over the existing utility lines. The existing utility bills customers and maintains the power lines, while the CCA essentially just charges customers for the energy they use. CCAs offer customers cheaper electricity, and they offer better economics to solar customers.
Silicon Valley Clean Energy (SVCE) is the new CCA serving most of the Silicon Valley area. My guest this week is John Supp, Manager of Accounts Services at SVCE. Please listen up to this week’s Energy Show as we talk about the operations, economics and effects that CCAs will have on both customers and the utility industry in general.
Electric utilities got their start in the U.S. in the 1880s. Thomas Edison began transmitting DC power as he literally illuminated the world. Then George Westinghouse (with help from Nikolai Tesla) deployed a better way of delivering electricity with AC power. Both Edison and Westinghouse went on to build tremendously successful companies, aptly named General Electric and Westinghouse Electric respectively. Although dominant in the 20th century, both companies have struggled in the 21st century.
Without a doubt utilities strive to deliver reliable and affordable power all over the world. But new technologies — particularly wind, solar and battery storage — are making the conventional utility business model obsolete. Customers are able to purchase and maintain their own power plants for less money than it costs a utility to centrally generate power and transmit it to every building. There is no doubt in my mind that over the next 20 years we will transition to a network of microgrids supported by some type of intelligent power distribution system.
What we knew and (some of us) loved about conventional utilities is changing. And utilities are fighting back — hard — to maintain their power supply monopoly. So here are Ten Electric Utility Company Myths — some of which were based on fact, and some were simply PR spin.
1. Myth: Utility profits are decoupled from selling electricity
2. Myth: Solar shifts costs to disadvantage ratepayers
3. Myth: Utilities support energy efficiency, we offer rebates
4. Myth: Utilities like EVs. They get to sell a lot more electricity
5. Myth: Utilities like Solar and Battery Storage
6. Myth: Utilities are a public monopoly working for ratepayers
7. Myth: Solar reduces electricity costs
8. Myth: Safety is a utility’s #1 concern
9. Myth: public utilities are the only way to provide reliable and affordable electricity
10. Myth: Solar will disrupt the grid at high penetration levels
Listen up to this week’s Energy Show as we go into detail on each of these myths — and explain their implications on ratepayers and competing power industries.
There is no doubt in my mind that the “All Electric future” is inevitable. The only question is how fast…20 or 50 or 75 years? Electric generation and storage technology is getting cheaper, while at the same time the problems with fossils fuels keep getting worse. Many of our new construction customers at Cinnamon Energy Systems want to power their entire homes with electricity. They will not need natural gas for heating, hot water, laundry or cooking. And with EVs, they will not need gasoline for their cars. Naturally, a bigger solar array is required. And battery storage for when the grid goes down — also to maximize savings with time of use rates.
Mankind has been using fossil fuels since we started burning coal thousands of years ago. What does it mean when our homes, businesses, industries and transportation systems operate primarily from electricity instead of coal or oil or gas? In some states our political leaders are pushing for this 100% clean energy transition. The solar and wind industries will obviously benefit – as well as electric utilities which can transition to fueling our vehicles as well as powering our buildings. The coal industry — and eventually other fossil fuels — will steadily decline as their polluting product also becomes too expensive compared to wind and solar. Breakthroughs with clean coal or inexpensive nuclear are becoming less and less likely as renewable power prices continue to decline.
Enabling this transition is a steady stream of new devices and appliances that substitute electricity for fossil fuels. A few examples include heat pump hot water heaters, induction electric stoves and electric vehicles. Please Listen Up to this week’s Energy Show for more about this “All Electric future” — and what you can do now to best prepare your home and business.
For over a hundred years our civilization has been getting electricity from centralized generation. This utility business model relies on remote power plants fueled originally by coal, oil and gas — and now increasingly by wind and solar.
But the development of inexpensive rooftop solar power over the past 20 years is changing this central generation paradigm. It is now cheaper for homes and businesses to generate their own electricity on their rooftop, and only stay connected to the utility for night time power. These Distributed Generation (DG) solar power systems are connected on the customer’s side of the meter, or referred to as Behind the Meter (BTM) from a utility’s perspective.
Utilities generate their profits by selling power, as well as owning the power plants and utility power lines. When customers generate their own power, utilities lose revenues. Moreover, when customers pay for their own solar generating systems, utilities do not get to own additional generating assets – further reducing their profits. This loss of revenues and profits is disrupting the conventional Investor Owned Utility (IOU) business.
Utilities claim that there are costs being shifted from solar customer to non-solar customers. This cost shift argument is nonsense, since in reality the utilities are trying to regain their lost profits from solar customers by increasing rates for everyone else. Think about it: since utility customers are going elsewhere for the utility’s product (electricity), utilities are raising prices for everyone else. Nice work if you can get it.
The trend towards BTM solar (and now battery storage) is inexorable as these technologies continue to get cheaper. The aptly named Institute for Local Self Reliance (ILSR) focuses on these technology and sociological transitions. Our guest on this week’s Energy Show is John Farrell. John directs the energy program at ILSR and is best known for his research and papers on economics and benefits of local ownership of decentralized renewable energy. John is one of our best thinkers and communicators on this subject, so Listen Up to this week’s Energy Show for his commentary on the superior economics of Behind the Meter solar and storage.
Barry Cinnamon has been blogging about the Solar Industry since 2007.
Barry hosts The Energy Show, a weekly 30 minute talk show that runs every Saturday at 1:30 PM on KDOW Radio AM in San Jose California.
Every week Barry provides practical money-saving tips on ways to reduce your home and business energy consumption.
Barry Cinnamon heads up Cinnamon Solar (a San Jose residential and commercial solar and energy storage contractor) and Spice Solar (suppliers of built-in solar racking technology). After 10,000+ installations at Akeena Solar and Westinghouse Solar, he’s developed a pretty good perspective on the real-world economics of rooftop solar — as well as the best products and services for homeowners, manufacturers and installers. His rooftop tinkering led to the development of integrated racking (released in 2007), AC solar modules (released in 2009), and Spice Solar (the fastest way to install rooftop solar modules).
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