In a letter to the Las Vegas newspaper today a reader makes the argument that owners of rooftop solar panels are not selling power to NV Energy at retail rates, as the company argues, but are rather banking power for use at another time.
The letter was in reply to a Review-Journal editorial that swallowed the power company claim non-solar panel owners are subsidizing those who can afford to install solar panels.
“NV Energy is not buying my excess; rather, the relationship is more like a bank account. I deposit my excess energy with NV Energy when I have it, and withdraw it during the months I need it,” the letter writer argues.
In July, NV Energy submitted a proposal to the Nevada Public Utilities Commission that would cut the credit for power uploaded to the grid by solar panel owners from 11.6 cents per kilowatt-hour, the standard retail rate, to 5.5 cents per kWh, which is closer to what the company pays for wholesale power. The PUC staff has even suggested making the rates retroactive for existing solar panel owners.
The company argues that a customer who installs solar panels and becomes a so-called net metering customer cuts his power bill by up to $1,181 a year on average, while the utility avoids no more than $519 in purchased power costs.
What everyone seems to be overlooking is that solar panels create excess power that is available for the grid at peak-use times. Power is not publicly traded on the open market at the same price all day long. The higher the demand, the higher the price. Prices fluctuate on the half hour.
Solar panel owners should not be getting less in credits per kWh, but more. In summer months, industrial scale power customers typically pay four times as much for power delivered in the heat of day at peak-demand periods than overnight.
In fact, NV Energy has set up Time of Use (TOU) rate schedules that its customers may choose to opt into. That’s what smart meters are for. Under one payment schedule a residential customer in the summer would pay 36 cents a kWh during peak hours but only 6 cents during off-peak hours. Another schedule with different parameters would charge 50 cents a kWh during summer peak.
For those who are not home during summer peak hours and set their thermostats higher, such a schedule could save money.
Since even NV Energy concedes electricity is worth more at the very time solar panel owners are providing it, perhaps the PUC should require the company to pay more, not less. Makes perfect sense.
Could be interesting, maybe NVE should have left well enough alone.
Good argument that NVE doesn’t pay for the equipment on private homes. Only the infrastructure that supports its transmission. And that should be covered by the connection fee not the generated power.
NVE may have opened a can of worms.
So 11.6 cents per kilowatt-hour is the standard retail rate, and the wholesale rate is to 5.5 cents per kWh. Since the distribution system is paid for separately, does anyone know the extra 6.1 cents goes? Paper clips maybe?
What makes you think distribution is covered by connection fees? The wholesale to retail difference pays for profit, distribution, purchased power, generation plants, salaries, taxes, etc.
I was referring to the letter in the RJ. He wrote about connection fee’s and that could become a sticking point if the argument gets to the PUC.
Yes, that is one of NV Energy’s arguments.
Where I live, a separate distribution fee is charged for delivery and is not charged by the kwh. That way, people making their own power still have to pay for their share of the distribution system.
That’s interesting Rincon…how is the amount of the distribution fee arrived at? Is it a standard fee…and does everyone pay the same amount? Also…is your electrical company a part of a federally subsidized generation and transmission system? What is the cost per kwh from your utility company?
Distribution fee is called a connection fee in Nevada.
Actually…the distribution fee covers much more than a connection fee as noted by Mr. Mitchell above. It’s for all of the transmission and distribution line construction and maintenance, distribution transformers, construction and maintenance of substations, personnel to provide the construction and maintenance as well as all of the administrative and accounting departments and personnel, salaries, taxes, dividends, etc. That’s also why the difference in compensation for received power credit is lower than the delivered power pricing. There are very few utility companies that compensate a customer with solar panels or windmills at the same rate as retail power charges. NV power won’t be doing it any more either…Warren Buffet will see to that.
Solar panels are getting cheaper. If they follow the rest of the electronics industry the price will plummet.
If every possible roof top were covered with PV, NVE would be put out of business unless there is enough fee to cover distribution or connection. It doesn’t matter what it’s called, it costs money to maintain the systems. And if your home were to lose its power source the grid would be your back up.
Things are changing and early adopters are going to get hurt, just like they always do.
These proposals are to try and make sure a grid is in place to work with the coming changes in electricity generation.
No ordinary-sized home could ever be self-sustaining with solar power, even with battery backups. Fuel cells is another matter. But don’t overlook Time of Use pricing in any event.
A grid is necessary to share power, backup and supplement.
The costs for maintaining and upgrading the grid are where the discussion is centered.
So, this is one area I’m completely ignorant. I don’t like taxpayers subsidizing the purchasing if these systems, but do they make sense financially to the homeowner. I suppose it would depend on the size of the home, and the amount of energy being used. In general, for an average family in an average size home, is it a good financial decision?
As long as the subsidies and tax incentives and credit from NVE continue they will ROI from 10 to 20 years depending on how fast the homeowners portion is paid off.
I have a neighbor (with the same house plan) who claims his will be paid for in 7 years but he’s into the system for 30,000 so, based on my own use on TOU I figure it will ROI in about 20 years.
Basically the tax incentives and subsidies only make it so you prepay for power. What is happening now may change it for all the people (like my neighbor) who bought into the plan already.
Iv’e said this before. The best way to make certain you can get the best ROI is to utilize solar for the large loads (Central AC, pool pumps, fridges) and grid for the rest. You can get some subsidies (Central AC if you buy a unit and install solar at the same time) but the system would have to be yours, not a “free” system you pay for the power at a set rate from SunRun or any of the others.
This necessitates the use of inverters and transfer switches (and maybe even batteries, depending on how off grid you want to take the central AC) so you can switch the units back onto the grid when desired. (night time or cloudy days) In this example it will ROI at whatever rate you can use the system in place of the grid. It’s in your control not some one else’s.
Barbara, here are a couple of links that are interesting and may be helpful…
Both good articles, one states getting a quote is the best. That is very similar to what I stated. Ask a neighbor what they paid.
All things considered, it is better to pay off the house. You will “save” a lot more money doing that over trying to go solar.
Also, if the house is paid for, you are actually taking on the equivalent of second mortgage or a new car.
You could beat this bet with a few good long term investments.
As I watched AT&T writhe through the machinations of evolving from a monopoly, I see the scenario repeating again with the energy producer monopolies. Nationwide, this has turned into a struggle against change with every energy company.
Our PUC will soon prop up NV Energy’s profits and it’s guaranteed ROI as the public clamors for “fairness” with subsidy, straw man arguments. For one, that (soon to expire) 30% federal tax rebate for roof top solar is a deduction against my tax obligation. It is akin to anyone’s mortgage deduction and not money stolen out any of my neighbor’s pockets.
And that infrastructure argument? For one, any help to support peak demand on a 110 degree summer’s afternoon would seem to me to be a benefit to NVE. The 1-to1 trade for pricing should also benefit NVE. I’m on flat rate pricing for energy I purchase. My neighbor is TOU. On that hot afternoon I give NVE my unneeded electrons at +-$.11/kwh. They in turn graciously sell them to him for up to +-$.35/kwh.
Oh, and that infrastructure support argument? On who’s planet does one not pay basic fees and taxes just because they have roof top solar? My excess electrons go past my meter and enter the river of electrons flowing past my house. They join the stream and usually end up at my next door neighbor’s. How much in transmission costs could that possibly NV Energy?
Within the next two weeks the PUC will hand us a byzantine rate structure and crushing increase in basic fees for net meter customers. NV Energy has a legal army, library sized document producing machine, and a PUC sealed chamber eliminating public opinion as granted by our feckless legislature. Look up NAC 703.481 and see why it is illegal to write to a commissioner while his honors are contemplating our future.
[…] A 113-page draft order, if approved by all three commissioners, will open the door to so-called net energy metering (NEM, in PUC jargon) to TOU (time of use) billing. This was briefly discussed in a previous post. […]
[…] According to IBD, net metering is required in 44 states but is a thorn in the side of utility companies, which can buy renewable energy cheaper from utility-scale solar plants instead of giving credit for rooftop solar at the same rate as retail. But solar panel owners say that are not “selling” power, but are banking it. […]
[…] It immediately cuts the credit for each kWh of power uploaded to the grid from 11 cents to 9 cents and slashes it to 2.6 cents in 2020, half the daily levelized rate NV Energy says it pays for wholesale power now. And never mind that the power is uploaded in the heat of the day when wholesale power costs many times more. […]
thanks for sharing
[…] NV Energy should pay more for power from rooftop solar panels, not less […]
[…] rate for uploaded power, the PUC fails to take into account the power is uploaded during peak demand time when the power company must pay three or four times more on the open market and there is no […]