By Guy Page
A recently released study commissioned by solar array installer SunCommon claims solar power reduced New England wholesale power costs by $20 million during a particularly hot week this July. You may have seen the WCAX August 29 news story entitled, “Industry study finds solar saved big bucks during July heat wave.”
Due to the fixed cost of solar power vs. the spike in power prices during heat waves, the headline is no doubt true. But it also doesn’t tell what Paul Harvey would call “the rest of the story.”
By state law, Vermont utilities must pay solar power producers a fixed rate 24/7/365, generally between 12 and 18 cents per kilowatt hour. That works out to $120 to $180 per megawatt hour. At certain times on very hot days — like evenings in early July, 2018 — solar power is a real bargain. On 90-degree days, when people come home from work in the evening and turn on their air conditioners, TVs, stoves, ovens, hot water heaters, computers and washing machines, soaring demand can drive the hourly wholesale power price way past $180. In these infrequent but crucial hours, solar power delivers valuable blackout-buffering, below-market, zero-emissions electricity. At these select times, it’s a great deal and — like coal plants during a frigid cold snap — even detractors are glad it’s making power.
During the rest of the year, well, solar power still offers some value. It is a renewable, zero-emissions generator. It contributes to Vermont’s energy portfolio diversity, which is a boon for power reliability. Building solar arrays helps the Vermont economy. Even its Achilles Heel — supplying power when the sun shines but not necessarily when people want it — is driving the energy industry to develop better battery storage systems.
But darn, it’s expensive. In the wholesale electricity business, cost is king. Compared to New England market power, solar is usually very expensive — see the day-by-day spreadsheet of average peak wholesale prices for every weekday of 2018, from Jan. 1 to July 30. (The peak prices available from ISO-New England for July 1-7 were much higher than usual, including $119 on July 5.) On almost every day that isn’t hot, solar power pricing isn’t so hot for rate-paying consumers. For example, on a typical day when the market is charging just $3-4 per megawatt-hour, Vermont utilities still must buy all available solar power at $12-18. These hourly solar surcharges add up. They’re pushing power rates higher, say utility officials.
It’s OK for SunCommon and the renewable power industry to celebrate when they help keep power costs low. But ratepayers also need to know that, at present and on average, solar power has the opposite effect.
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.