The Rooftop Solar Pricing Conundrum
My electricity supplier charges me a lump sum every month for the privilege of being connected to the grid. On top of that lump sum, I pay for every kilowatt-hour of electricity that I use.
The lump sum payment typically amounts to less than 30% of my total bill. I can say that my fixed costs for electricity are about 30% of the total and my variable costs are 70%.
However, that doesn’t truly represent the cost of supplying me with electricity. The cost of the wires, poles, and transformers that move the power from the generating station to my house are almost entirely fixed costs. The energy itself is a mix of nuclear, hydro, and gas with some wind and solar when the wind decides to blow, and the sun decides to shine.
The cost of operating that power grid is closer to 90% fixed and 10% variable. To match the electricity price with the cost of providing that electricity, the lump sum payment would need to triple and the price per kilowatt-hour would have to be slashed. However, that wouldn’t be good because it would encourage waste as people would have little incentive to conserve electricity if it made hardly any impact on their bill.
But if a group of customers decide to produce their own electricity instead of buying it from the grid, the fixed cost of the grid must now be distributed over a smaller number of kilowatt-hours. To compensate for the loss of sales the price per kilowatt-hour must be increased.
The situation is worse if the privileged group of customers remain connected to the grid and are paid the full retail rate to feed their home-made power back to the grid when they can’t use it themselves.
That’s the rooftop solar pricing conundrum. Rooftop solar increases electricity prices for everyone.
I don’t have a solution to the problem, but I do wish the entitled brats who have rooftop solar would stop bombarding social media with stories of how much they are saving while the rest of us have to pick up the bill.
Good points, but you're making me feel guilty for having some rooftop solar. I bought it about 2010. At the time, the federal and state tax credits made it appear to be a good and tempting investment. At first, it was fun watching the meter turn backwards knowing that PGE would be paying me retail for it. However, because of the way tax credits and deductions are structured, after a few years, because of a large unrelated deduction and the limits on how much you could write off in any one year, my credits ran out before I was able to take full advantage of them. Meanwhile, not being very computer savvy, I wasn't paying attention or following the wireless reports on my solar electric production output, (I discontinued our land phone line and ignorantly thought the little gadget that transmitted the solar data was useless, so threw it out) and didn't notice that after a few years the output drastically declined. When I heard somehow that Enbridge was offering partial warranty credit on their early inverters that had a high failure rate, I got on board and had all the inverters replaced and now I've got good output again. But the overall picture is that I've lost money, although if the system keeps working for another 10 years, and electric rates keep going up, and PGE keeps paying for my excess output (doubtful) then I'll eventually come out ok.
But you're right, and any gain I make will be at someone else;s expense, and I do not feel good about that.