State Headliners: Solar power nice to ratepayers during hot weeks, but a burden otherwise

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.”

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Guy Page is affiliated with the Vermont Energy Partnership, the Vermont Alliance for Ethical Healthcare, and Physicians, Families & Friends for a Better Vermont.

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.

Images courtesy of Wikimedia Commons/Public domain and Page Communications
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4 thoughts on “State Headliners: Solar power nice to ratepayers during hot weeks, but a burden otherwise

  1. Guy,
    Harvey has it wrong.
    When people come home and turn things on in late afternoon, solar is minimal and thus does practically nothing to reduce peak demand.
    Thé Synapse study is strictly about local market wholesale prices, LMPs, which are low when demand is low, and high when demand is high.
    Without solar, they would be higher, with solar they would be lower
    But that is only when solar is active
    In late afternoon it is nearly inactive, hence no change in LMPs due to solar can be claimed.
    Also LMPs apply only to wholesale trading by brokers.
    Almost all electricity bought by utilities is under long term power purchase agreements, PPAs. Those prices are not affected by changes in LMPs.
    I think the Synapse study overstated the savings, because it appears to assume all electric is traded on the wholesale, whereas only a small fraction is so traded.
    Please read the article I sent you today.
    After you read it, you may want to change some parts of your commentary.

    • Guy,

      NET METERED IS NOT NICE TO RATE PAYERS

      Please read article
      http://www.windtaskforce.org/profiles/blogs/synapse-energy-study-of-solar-savings-commissioned-by-suncommon

      GMP’s cost of net metering is 21.793 c/kWh, of which about 18 c/kWh x (owner generation, less owner consumption) is paid to solar system owners. GMP has about 150 MW of BTM solar on its system at present.

      Almost all midday times, except on hot summer days, GMP could have bought that midday electricity at wholesale prices (LMPs plus markup) of about 6 – 7 c/kWh.

      Because net-metered is generated close to the user, there are other savings which amount to about 3 c/kWh, as evaluated to GMP.

      So the real value of solar to GMP is about 9 to 10 c/kWh, say 9.5 c/kWh.

      That leaves about an 11.793 to 12.793 c/kWh difference, which is rolled into rate schedules and which every ratepayer gets to pay one way or another.

      The more net-metered solar (to the happiness of SunCommon), the more other ratepayers pay.

      The additional cost PAID BY RATEPAYERS, due to additional net-metered solar, would far exceed any S-E calculated savings, which primarily occur only on sunny summer days.

      S-E ignored the extra cost to ratepayers of about $11.3 million/y, which far exceeds the $1.3 million of the S-E report.

      GMP BTM solar production = 150 x 8766 x 0.140 = 184,086 MWh
      Owner self-use;184086 x 0.5 = 92,043
      Bought by GMP = 184086 x 0.5 = 92,043 x 18.000 c/kWh = $16,567,740
      GMP program costs = 184,086 x 0.5 x 3.793 c/kWh = 92043 x 3.793 = $3,491,191
      GMP real value = 92,043 x 9.500 = $8,744,085
      Extra cost to ratepayers = $11,314,846

  2. Solar panels and solar panel farms, just another Liberal boondoggle …..

    Give these things ten years in Vermont’s Winters and then watch your saving you
    thought you earned when repair/replacement is needed.

    It’s just another Sky is falling, Sky is falling liberal talking point !!

    • so in your opinion…it makes more sense to continue to pollute the atmosphere because it’s “Cheaper”…… Now I understand why the President loves the poorly educated..

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