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Why Destroy The Grid?

April 26, 2014

Radical environmentalists, and some well-meaning, but not well-informed people, promote distributed generation schemes, including PV Solar.

These schemes can destroy the grid and put electric utility companies out of business.

The only rationale for distributed generation schemes is to cut CO2 emissions.

Here are some reasons why distributed generation is a bad idea that can destroy the grid as we know it. One needs to look no further than Germany to see how distributed generation is undermining the grid, and destroying the utility business in Germany.

  1. High cost of distributed generation, specifically PV Solar. For example: The average installed cost of PV Solar, roof top, is over $4,000 /KW while the first cost of a Natural Gas Power Plant is $1,100 /KW.
  • The Government’s SunShot Report, Tracking the Sun VI, published by the Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, determined that, among projects installed in 2012, median installed prices were $5.3/W for systems ≤10 kW, $4.9/W for systems 10-100 kW, and $4.6/W for systems >100 kW, which were all move than $4,000 per KW.
  1. Distributed generation imposes extra costs on utilities. Net Metering forces utilities to buy electricity for 11 to 16 cents / kWh, that they could produce for 4 cents / kWh
  2. Distributed generation forces others to pay for grid infrastructure. PV Solar owners use the grid without paying for it.
  • Net Metering requires utilities to pay PV Solar roof top owners the same as the owners would pay when buying electricity from utilities. Payments received by PV Solar roof top owners ignore the cost of the infrastructure required to produce, transmit and deliver electricity. These payments don’t allow the utilities to recover the cost of needed infrastructure, i.e., difference between $0.04 and $0.011 to $0.016 (less $0.02 for profits).
  1. PV Solar receives subsidies which are required to make PV Solar economically justifiable for owners of roof top systems.
  • Subsidies encourage what is a very uneconomic way of generating electricity, and encourages a loss of revenues that deprives utilities of the money needed to build new power plants, transmission, distribution and other infrastructure.
  1. Utilities are being forced to condone and support distributed generation by Renewable Portfolio Standards (RPS), essentially forcing utilities to participate in their demise.
  • Renewable Portfolio Standards in 33 states, force utilities to ensure that renewables are an increasingly large part of their sales.
High Voltage Transmission Lines, Photo by D. Dears

High Voltage Transmission Lines, Photo by D. Dears

The grid, as currently constituted, provides remarkably low-cost electricity to people and industry.

There are few, if any, benefits from destroying the grid with distributed generation.


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4 Comments leave one →
  1. April 26, 2014 4:48 pm

    Donn, you mentioned Renewable Portfolio Standards. It seems to me that, in a State that is unable to meet its portfolio standards, they can be used by a renewable energy generator to extort extremely high prices. In these circumstances, they seem to amount to a license to steal.

    Do you have any information on the prices actually charged? I have never seen any.

    • April 27, 2014 12:43 am


      It’s been a few years since I looked into the details of how CA is accounting for the costs of the RES. The link below is for the most recent report provided to the CA legislature by the CPUC. It can give you a feel for what it is costing ca to meet the RES and some of the transmission and grid issues.

      Click to access Section_399_19_Report_FINAL.pdf

      The file below gives some details of the contracts PG&E enters into with RE generators. The price the generator will get paid has Time of Delivery (TOD) factors that are denoted on page 94.

      Click to access ELEC_4246-E.pdf

      As a just in case this is the home page:

      • April 27, 2014 9:14 am

        Thanks for your comments.
        I’ll look at the links as soon as I can.


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