I saw a quote by James Avery, the Senior Vice-President of Power Supply at San Diego Gas and Electric (SDGE) suggesting that “until you couple solar with energy storage devices, it’s not going to be a benefit to the grid.” This strong statement from a senior executive at a large utility may have more importance in cool climates than it has in Southern California.
I was recently talking with a heating service technician He believed that as soon as battery prices declined as expected, that there would be no need for utilities, and we would all be self-sufficient. We see a lot of governments pushing the concept of Zero Net Energy concept without explaining that they meant “Zero Net Energy Ready…”
By chance, I have been driving an Electric Vehicle (EV) for a little over one year, so my house gas and electric utility bills reflect the costs of typical electricity use as well as auto fuel and heating (I have both a heat pump and a high efficiency natural gas furnace. I also have a good quality Heat Recovery Ventilator.
I plotted the monthly energy use, and the incident monthly solar energy in my area, aiming to make the annual supply equal to the annual demand. The result was a surprise – as we get most of our solar energy between late spring and early fall but use most of our energy during winter months. The battery size for my modest home, to store summer energy for winter use was almost 5 MWh – a huge battery. If I assumed that the cost would fall from over $200/kWh to about $50/kWh, the cost at the low end would be almost $250,000 US to provide me with year-round energy, with no reserve capacity.
The quote by James Avery reveals another side of the issue. Utilities have generally charged residential customers for energy used in kWh. This is unlike the commercial and industrial customers that pay an additional “demand” charge for the peak power drawn. Utilities appear to be incurring real problems with their regulated residential rate structure, as solar is implemented. Much of the solar energy arrives in the afternoons, when the demand is relatively low, and there is little if any energy available from these sources after sunset, when most utilities see their daily peak demand. Total energy sales are declining as a result of the domestic solar supply, but the peak demand after sunset is continuing to grow. The grid design is based on peak demand, so there is a need for new capacity to meet a growing peak, but with revenue falling, there is a lack of funds to pay for the additions. Ultimately the residential rates are rising to meet the costs, and according to Mr Avery, the people without solar are paying to subsidize the ones that have installed solar systems.
The utilities are seeing other problems as well. The “duck curve” reveals that demand falls rapidly in the morning with the rising of the sun and rises equally rapidly at sunset. The afternoon increase is followed, almost immediately, with a rapid rise to the evening peak. Most conventional generators cannot meet the required change in demand over such short periods. Some utilities are also seeing so much energy injected from solar sources into the grid in the afternoons, that they are forced to PAY other utilities to take it, only to have to buy it back, after sunset. In short, these utilities are paying three times for the same energy. They buy it from the home owner, pay a utility to take surplus, and pay again to get it back. There needs to be a better way.
Some utilities are seeking approval for a peak demand charge for residential users, and in one case that I spoke with, the company was looking at giving the energy to users at no charge but adding a large demand charge. The net utility revenue would then follow demand, but the addition of a solar system on a residence would likely deliver no savings at all. I know of another utility that has applied to withdraw a tariff that was used to purchase surplus solar from residential users.
If a demand charge is implemented for residential users, a solar user that does not have storage could find that the total cost of energy with the solar operating during the day would deliver little or no savings at all.
There are clearly two sides to this story; the utility is being put into a position that is financially unviable, while a home owner that wants to do what he believes is right is essentially caught in what could easily become a zero-sum game; one side wins, the other loses.
There needs to be a better way, and there probably is.
If one looks at most homes, the electric service is designed to deliver 30-50 kW of power, and yet, the average demand by residential users is about 1 kW. The change to electrify many fossil fuel loads is going to require much more energy to be delivered. The energy may come from central generation, or it may come from a wind turbine down the street. What is going to be important is efficiency as well as a means to utilize the full capacity of the grid to deliver energy. The existing transmission grid operates at an average of about 50% of its design capacity, providing the larger range to meet peak demand periods.
A home owner may want to install a battery with a new solar system, one that would allow them to collect energy during the daytime and use it to reduce their peak demand after sunset. Any utility demand charge would then be dramatically reduced. This could be a first step, but if the utility were allowed to control the charging of the battery, an option that they might pay for, then the benefits could be optimized for both the utility and the customer. Many utilities have demonstrated that they are very capable of high quality routine optimization of their operations. Some utilities are already controlling domestic hot water heaters, heating water when there is low demand, but ensuring that the customer has hot water when needed. The same concept could easily be applied to EV chargers, storage on solar systems and multiple other domestic applications that have inherent storage.
There needs to be a paradigm shift, where home owners and utilities see each other as partners. Both sides can win by working together to optimize the total operation. That way, everyone can save, and emissions can decline significantly.