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Don’t like solar PV? Ban new installations

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EEnergy Informer

To put it mildly, utilities are not generally excited about the rapid uptake of solar PV – or any other form of self-generation or investment in energy efficiency. Their livelihood in most places depends on selling more kilowatt hours, so anything that reduces volumetric sales is frowned upon – whether publicly acknowledged or not. There may be a few exceptions, of course.

A case in point – albeit not a typical one – is the recent decision by the Hawaiian Electric Company (HECO) banning all new solar PV installations on its distribution network. The company’s official reason, as reported by Bloomberg’s Mark Chediak, Christopher Martin and Ken Wells (25 Dec 2013), is that “ … so many Hawaiians are stampeding to solar that (distribution) circuits may become over-saturated, causing voltage spikes, damaging appliances, electronics and even the utility’s equipment.”

HECO has announced it “needs more time to study the matter,” but doesn’t say how long it will take to study. In the meantime, anyone who has or is installing new solar PVs cannot connect to the grid or receive any credit for what is being generated on site.

No doubt, HECO’s distribution circuits are getting overloaded – as are the circuits on Energex in Queensland, Australia – yet homeowners who have installed solar PV are impatient and suspicious of the utility’s motives. With retail tariffs averaging 40 cents/kWh in Hawaii, a typical 1,600 sq. ft. home’s monthly electric bill can easily exceed $400.Screen Shot 2014-01-30 at 10.11.06 AM

HECO’s problems, no doubt, are real. According to the Bloomberg article, 9% of the utility’s residential customers on Oahu, the most populous island, are already generating most of their power from rooftop solar PV while the number of new connections have doubled every year since 2008.

But Hawaii is not alone. The rapid uptake of solar PV is reaching epidemic proportions in California. Arizona, Colorado, Massachusetts and New Jersey, to name a few (Box below). In California, where solar already powers the equivalent of 626,000 homes, according to a Bloomberg article, utilities are pushing for fixed grid connection fees that would add about $120 a year to every consumers’ bills regardless of whether you have solar PVs or not, as reported in the Oct 2013 issue of this newsletter.

Trying to calm the angry solar customers, HECO’s CEO Richard Rosenblum explained the company is “working really hard” to find a solution to oversaturated circuits caused by the rapid solar rollout, promising that the engineering studies will be completed by March 2014. He said, unconvincingly, “We see ourselves as a trailblazer, and one of the problems of being a trailblazer is sometimes the trail is not clear.’’

ban-installation-article

In the meantime, customers who have invested in solar panels are paying monthly financing fees to the installers plus the utility’s big bills. Naturally they are skeptical of HECO’s official line. Cynthia Thielen, a Republican state legislator, is among the skeptics.

She said, “This is a company with a drenched-in-oil mentality,” adding, “They’ve fought from day one on renewables. I look at the company as ultimately becoming obsolete unless it changes its practices.” For our international readers, Republicans politicians generally tend to be business-friendly. The Bloomberg article says customers are frustrated and skeptical, “They see the company as dragging its feet in an effort to stave off a threat to its very business model,” it notes.

HECO’s worst nemesis, however, may turn out to be storage – batteries, electrical vehicles or whatever can store the excess PV generation during sunny hours for later use.

“Battery storage is the holy grail of the off-the-grid crowd,” according to the Bloomberg article.

Ironically, HECO’s moratorium on solar PV connections, expected to last as long as two years on parts of the solar-saturated network, may drive many customers to install batteries and go off-grid entirely. If storage makes sense anywhere, it would be in sunny Hawaii with its high retail tariffs.

According to a recent radio talk show, HECO’s solar moratorium might have unwittingly let the genie out of the bottle.

Perry Sioshansi is a specialist in electricity sector restructuring, and he has been actively involved in discussions in a number of developed, developing and transition economies. He is founder and president of Menlo Energy Economics is the editor and publisher of EEnergy Informer. He may be reached at [email protected].  

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  • Chris Fraser

    What now, for Oahu ? Surely they can’t ban the R&D or import of batteries ? Or tax solar people for generating their own kWh ? I think even the Tea Party agree that the sun that falls on your property is there to be harvested if that doesn’t have any negative impact.

    • patb2009

      actual members of the Tea Party dislike the utility monopolies and view
      PV as consumer choice.

      • RobS

        A few do, but watch that become a flood if bans on rooftop solar start spreading, little riles up a libertarian more than being told they can’t do something on their own property.

  • RobS

    Will people ever learn that nothing generates more interest and demand for a product than prohibition? all the people who didn’t want it before all of a sudden want to know why they aren’t allowed to have it. If they keep this up for a few years as home storage devices start to hit the mainstream I predict we will see a surge of Hawaiians going off grid.

  • patb2009

    nothing prevents people from putting 5 KW on their roof, disconnecting their utility account and then stringing an extension cord to the neighbors for grid sync and voltage support. A friendly neighbor will buy off on all this.

    • Motorshack

      Well, nothing but the building code and your fire insurance companies.

      The real opportunity here is that a retail price of $0.40 per KWH might well justify both PV and storage, even at today’s cost for storage.

      Elsewhere on the site today Giles Parkinson is reporting that PV now nets out around $0.15 per KWH, so it seems plausible that you might add storage and still save money, while going completely off the grid. No need to piss of either the building inspectors or the insurance company, and the power company can quite cordially go screw itself.

    • erikkiehle

      When you start investigating PV you’ll learn about voltage drop and wire sizing. An “extension” cord is unlikely to be sized correctly to carry incoming or outgoing amperage and will likely have enough voltage drop to negate the “grid sync”. If you can afford 5 Kw of panels, spend the money the right inverter and battery and just be off-grid. There are also grid-interactive with battery backup options coming to market with more frequency. Nissan is testing a V2G (Vehicle to Grid) or V2H (Vehicle to Home) bi-directional electric vehicle (EV) charger that in normal grid-up conditions charge the EV. In the event of a grid power outage the charger could back-feed the power from the EV’s battery to the house circuits. Basically the EV would substitute for a fixed battery bank normally needed for a PV system. Such a setup needs an intelligently and properly configured grid-transfer switch but these are becoming more common and intelligent and are sometimes built into the PV central inverter anyway.

  • Michel Syna Rahme

    “Battery storage is the holy grail of the off-the-grid crowd,” haha yep, and it’s coming soon, can’t wait….. I’m saving

    • Ronald Brakels

      From the start of the new year all up I paid just under 48 cents a kilowatt-hour for grid electricity, so in some places the wait might be over.

  • erikkiehle

    From the article:
    The company’s official reason, as reported by Bloomberg’s Mark Chediak,
    Christopher Martin and Ken Wells (25 Dec 2013), is that “ … so many
    Hawaiians are stampeding to solar that (distribution) circuits may
    become over-saturated, causing voltage spikes, damaging appliances,
    electronics and even the utility’s equipment.”

    Really?! “causing voltage spikes”

    What complete and utter BS. Any certified inverter will automatically disconnect from the grid if the grid voltage or frequency doesn’t stay within strict parameters. If there are voltage spikes on HECO’s grid they aren’t coming from properly installed solar customer!

    In reality, when you skip past the company PR moves, this is a revenue issue. The article says 9% of the residential customers have installed solar and are offsetting a significant chunk of their former consumption of electrons from the utility. For sake of example, suppose all 9% actually are generating 100% of their electrical usage with PV. That means HECO lost 9% of sales. Losing 9% of your business revenue is going to hurt any business. THIS is why HECO is freaking out.

    Fighting it will just result in people disconnecting from the utility entirely. It’s getting easier and more cost-effective every year as PV equipment improves and auto-gen-start inverter controls allow automation of the home system without the grid.

    Look at HE’s stock, the parent company of HECO over the last 5 years. It turned flat about 2 years ago, right when PV adoption started increasing rapidly.
    http://finance.yahoo.com/echarts?s=HE+Interactive#symbol=he;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

    Compare that to this ETF of utility-sector stocks as a group. It’s shown consistent growth for years.
    http://finance.yahoo.com/echarts?s=xlu#symbol=xlu;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

    Basically PV became cost effective vs the utility power in Hawaii and HECO stopped “growing” revenues. Wall St. likes growth, and rewards stocks/companies that continue to grow. HECO is rightfully terrified that if they don’t stop PV they’ll see declining future electricity sales. My feeling is they should figure out what it costs to operate and maintain the grid around and in-between the islands. Once they determine what the grid itself costs to operate they should go to the Hawaiian gov’t and ask to be regulated such that they split grid operations and maintenance out as a separate line item from the sale of electrons. Passing on a grid connection fee that’s fair and equal to every customer is completely reasonable to maintain the grid. Then the question of whether someone produces their own electrons or buys electrons from the utility becomes another matter.

    This may be Hawaii today, but is already a topic in California and elsewhere. In Texas it’s wind power instead of PV. The wind resource in West and NW Texas is huge. Just this year 2013-14 new high-voltage long distance transmission lines are going online to move the power from the wind farms to Austin, Dallas, etc where the demand is. Slightly different model than PV which is distributed, but HECO should get out ahead of PV and make PV part of its business model. If HECO sold/leased/financed rooftop solar they could be gaining that revenue stream to offset the sales loss of electrons. Instead HECO is going to drive customers to disconnect from the grid entirely. Right now the economics are mixed to balanced depending on personal situation (roof exposure angle, declination, shading etc). As PV continues to mature and drop in costs the utility is placing themselves on the losing side of time.

    What if AT&T and Verizon hadn’t started operating cell phones and stayed as fixed copper wire suppliers to residential phone lines? They’d be obsolete and nearly dead. Instead AT&T, Verizon, Sprint, etc saw where the market was moving and made sure they were set up to gain share of that new mobile market.

    HECO should take note and follow that example of innovation and adaption, rather than consign themselves to the losing side of history. If they don’t adapt, they’ll become the new version of horse-drawn buggy manufactures and consigned to history.

    • Thank you for your commentary I enjoyed your perspective of intelligent direction. Instead of putting in the work, being adaptive in an accelerating market, and hedging themselves against an undesirable outcome it seems they would rather legislate.

      • erikkiehle

        As I’ve lately contemplated switching utilities to a local co-op where I live I’ve also come upon another option for utilities. My local co-op apparently will allow two meters per account without additional fees, etc. Basically in this rural setting many people have one meter for their house and another for their barn, shop, on-site business, etc.

        When I draw up my plans for an RE system I am thinking of proposing that my house meter be set up and billed normally. All incoming electrons are counted, charged, and the % add-on for “distribution” will be paid on the electrons I consume in my house. For my RE system (maybe a mix of wind and/or PV) I’d ask for a separate meter for that and a PPA (Production Purchase Agreement). Basically have them pay me a fair rate for the electrons I produce and put on the grid, just like they pay for electrons from a coal plant, etc. We don’t have TOU (time of use) systems out here yet but since mid-day electricity usage is higher and thus more expensive the electrons produced from a PV system are thus “more valuable” to a utility. If they don’t purchase from me they’ll need to purchase from another big generating plant.

        Now a full commercial PPA might involve a whole lot of red tape and licenses and working with the state PUC. I’m not interested in generating Megawatts and partaking in the hourly “spot price” of power production. I’d just want a set PPA rate that works for my utility and myself, perhaps on a sliding scale compared with my home’s use. If I create kWh equivalent up to 75% of my homes use, I want the full 100% electricity charge rebated against my bill (but I’d still pay for the “distribution” for the full 100% of kWh my home “consumed”). My PPA generation on the second meter wouldn’t pay for or get credited for “distribution” charges, those are paid for by whomever on the grid ultimately “consumes” the electrons, whether my house next door, neighbor down the street, etc. From 75% – 100% of my homes “use”, then I’d get credited at a reduced rate, maybe 75% of the utility’s kWh cost from other major plants. The point is the utility knows how much they’re paying for kWh from the “grid”, and should buy my local kWh for a similar price. If the utility is paying for higher priced kWh during the mid-day higher electrical demand I’d like to be paid accordingly for my PV array making power at that time.

        There are places up in the midwest where nighttime wind production getting onto the grid in excess of night-time usage has resulted in a NEGATIVE price for electricity. Basically saying the grid supply is exceeding demand because everyone is asleep, the grid doesn’t want to buy any more, even at 0.00c/kWh, and then even might CHARGE generation plants for putting electricity onto the grid that has nowhere to go. This can and does happen because of the federal 2.9c/kWh tax credit wind farms can get. Every kWh they put onto the grid ‘earns’ them nearly 3c in tax breaks so the price of electricity on the night-time grid, even at 0.00c/kWh still ‘earns’ them nearly 3c. It’s a weird system, and why utilities should be strongly encouraging electric vehicle adoption. Having thousands and thousands of electric cars sucking kWh at night when rates are really, really low would keep the meters spinning forward for the utilities.

        Sorry, long rant, but my ultimate point is utilities are stupid. They should be encouraging smart pricing policies that encourage PV generation especially since PV production coincides with the time of day higher electricity demand. For instance look at the California grid’s Independent System Operator, the coordinator for the entire statewide grid. They have a great real-time graph of use and supply available. Scroll down to the next graph and you can see statewide PV generation ramp up in the morning, at the same time so many people wake up and start using electricity.
        http://www.caiso.com/Pages/TodaysOutlook.aspx#SupplyandDemand

        By the same reasoning, electric cars on timed chargers should be encouraged by utilities to suck up cheap generation at night. In California they do have a state incentive, but you’d think utilities would want to sell more kWh and promote EVs or plug-in hybrids.

        From beginning to end, utilities are trying to operate in the last century, holding on to their old business model instead of taking advantage of new developments.

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