The Koch Attack on Solar Energy(nytimes.com)
nytimes.com
The Koch Attack on Solar Energy
http://www.nytimes.com/2014/04/27/opinion/sunday/the-koch-attack-on-solar-energy.html
11 comments
There is a problem in what the market will do if this is allowed to proceed. The TLDR is simple : if solar power buildouts are allowed to proceed the way they've been going, we will lose grid power entirely. Why ? Market forces. The problem ? Believe it or not, a lot of people can't install solar panels (apartments, "the poor", factories that need way more power than solar can ever provide, ...). Furthermore people with solar panels still need grid power. So grid power is a necessity in the solar era just as it was before. But look at the economics of grid power in the solar space.
First, let's look at a solar power plant. Before it's built it will sign long-term power delivery contracts for, let's say 50-80% of it's capacity. That's what finances the construction. This means 50-80% of the power generation capacity never enters the market at all, and powers, say, an apple datacenter, and never anything else. Not good for electricity producers, but impact is limited. Then there's the rest. They may sign a few more contracts, but really the majority overflow capacity is going to the spot market. What happens on the spot market ?
Well : marginal cost of producing available electricity for a solar power plant = nil, zero, nada. Now wait, why not maintenance ? Well, solar panels need maintenance whether or not they're in use, since weather is responsible for most of the damage. There's going to be some amount, but ... it's more or less zero (and has been calculated into those construction contracts anyway). This means when solar panels are working (ie. the day, when industrial customers use electricity), grid power's price is going towards zero. Great, right ? Well ...
Now of course during the night you can't buy solar power at any price. So you have to buy them from traditional power plants. At what price ? Well since these plants can't quickly shut down (meaning they have a few hours where they have to compete with solar power's 0 price) it's going to be a factor > 1, because you need to pay for the fact that they have to destroy electricity during the day. For coal and nuclear it's going to be at least 3-4 (since they can't shut down or even throttle back at all, that was never designed into most of the existing plants, they were designed baseload generators). 3-4 ? Yes, given lots of solar, you can expect power to be available in most places for ~16 hours.
So calculate. If you buy power during the night, it costs the utility 3x the price it does now to provide that power (once for the power you actually use, twice for the power they need to destroy during the daytime when they can't compete with solar).
So if solar power is allowed to work the market without interference, then here's the result : during the day (ie. when people don't generally need it if they have a job), electricity is effectively free. During the night it will cost 5x the current day price or more (in some locales 20x has been observed due to a few factors), and due to an inverse Jevon's paradox, this will lead to existing plants closing, meaning after sufficient time passes, no power will be available at all during the night.
There is the additional problem that utilities' contracts generally do not allow for unlimited price difference between day and night. So, on those contracts, electricity prices would have to double or triple due to the presence of solar elsewhere on the market ... Do we want that ? I'd say no. Even where you do have separate pricing for day/night, would you really want to pay 20x more during the night ? I'm thinking, again, no you don't.
And most people don't have a choice, not having the money do install solar panels (yes, most, look at average income in America, cost of solar panels + installation and you'll see it's more than 50%. If you allow the market to force people to work with batteries, it's going to be worse).
These taxes are being introduced to prevent that from happening. Is that unreasonable ? No (in my humble opinion). They have to get a whole lot bigger to have the desired effect (stable 24h power at a reasonable price). I would expect these taxes to get a whole lot bigger, and for people to start taxing solar panels whether or not they're grid connected.
I'm not necessarily putting forth a position for or against these taxes, but if you're not looking from a strictly individualist point of view (with the individual quite rich ...) there is a very good case to be made here. The extreme interpretation is that without government interference, solar power will take grid electricity away from the poor, due to a 5x or larger price increase.
First, let's look at a solar power plant. Before it's built it will sign long-term power delivery contracts for, let's say 50-80% of it's capacity. That's what finances the construction. This means 50-80% of the power generation capacity never enters the market at all, and powers, say, an apple datacenter, and never anything else. Not good for electricity producers, but impact is limited. Then there's the rest. They may sign a few more contracts, but really the majority overflow capacity is going to the spot market. What happens on the spot market ?
Well : marginal cost of producing available electricity for a solar power plant = nil, zero, nada. Now wait, why not maintenance ? Well, solar panels need maintenance whether or not they're in use, since weather is responsible for most of the damage. There's going to be some amount, but ... it's more or less zero (and has been calculated into those construction contracts anyway). This means when solar panels are working (ie. the day, when industrial customers use electricity), grid power's price is going towards zero. Great, right ? Well ...
Now of course during the night you can't buy solar power at any price. So you have to buy them from traditional power plants. At what price ? Well since these plants can't quickly shut down (meaning they have a few hours where they have to compete with solar power's 0 price) it's going to be a factor > 1, because you need to pay for the fact that they have to destroy electricity during the day. For coal and nuclear it's going to be at least 3-4 (since they can't shut down or even throttle back at all, that was never designed into most of the existing plants, they were designed baseload generators). 3-4 ? Yes, given lots of solar, you can expect power to be available in most places for ~16 hours.
So calculate. If you buy power during the night, it costs the utility 3x the price it does now to provide that power (once for the power you actually use, twice for the power they need to destroy during the daytime when they can't compete with solar).
So if solar power is allowed to work the market without interference, then here's the result : during the day (ie. when people don't generally need it if they have a job), electricity is effectively free. During the night it will cost 5x the current day price or more (in some locales 20x has been observed due to a few factors), and due to an inverse Jevon's paradox, this will lead to existing plants closing, meaning after sufficient time passes, no power will be available at all during the night.
There is the additional problem that utilities' contracts generally do not allow for unlimited price difference between day and night. So, on those contracts, electricity prices would have to double or triple due to the presence of solar elsewhere on the market ... Do we want that ? I'd say no. Even where you do have separate pricing for day/night, would you really want to pay 20x more during the night ? I'm thinking, again, no you don't.
And most people don't have a choice, not having the money do install solar panels (yes, most, look at average income in America, cost of solar panels + installation and you'll see it's more than 50%. If you allow the market to force people to work with batteries, it's going to be worse).
These taxes are being introduced to prevent that from happening. Is that unreasonable ? No (in my humble opinion). They have to get a whole lot bigger to have the desired effect (stable 24h power at a reasonable price). I would expect these taxes to get a whole lot bigger, and for people to start taxing solar panels whether or not they're grid connected.
I'm not necessarily putting forth a position for or against these taxes, but if you're not looking from a strictly individualist point of view (with the individual quite rich ...) there is a very good case to be made here. The extreme interpretation is that without government interference, solar power will take grid electricity away from the poor, due to a 5x or larger price increase.
We should JUST feed the grid from solar ;)
They have found the perverse solution to the innovators dilemma. Having seen the new market developing, and having decided on its inevitability, instead of joining it, they're fighting it legislatively. I would love to hear Clay Christiansen's take on this.
I don't like the Koch brothers. And decentralized solar will surely become a large part of any future energy plan.
That said, this article is also pretty unfair to the utilities. They're totally not just pulling the implementation costs of decentralized solar production out of their asses. It's a real thing. The swing towards decentralization, without the increase in decentralized energy storage means utilities still have to keep significant amount of plants sitting around to deal with solar irregularities. Maybe the costs are exaggerated, but they're surely there.
And their arguments are largely sound. If there is a cost to decentralizing, you have a choice of how to spread that cost around. Tautologically, if you do not place that cost completely on the backs of those decentralizing, then you are increasing the burden on those not participating.
Now, it's clearly a complicated topic. There is potential for net system savings given a large scale move towards decentralization. But there's also easily a potential for net system increases. And honestly, nearly none of us are equipped to actually answer that question, unless you happen to work in the industry. And given the complex profiles of North American utilities across the continent, it's not even a given that what holds for one location will hold for another.
So, that was rather long winded, but the point is that yes, there are shenanigans going on. But decentralized solar isn't all sunshine and lollipops, and adding some sort of surcharge/fee/tax on feeding back into the network may be the right course of action.
That said, this article is also pretty unfair to the utilities. They're totally not just pulling the implementation costs of decentralized solar production out of their asses. It's a real thing. The swing towards decentralization, without the increase in decentralized energy storage means utilities still have to keep significant amount of plants sitting around to deal with solar irregularities. Maybe the costs are exaggerated, but they're surely there.
And their arguments are largely sound. If there is a cost to decentralizing, you have a choice of how to spread that cost around. Tautologically, if you do not place that cost completely on the backs of those decentralizing, then you are increasing the burden on those not participating.
Now, it's clearly a complicated topic. There is potential for net system savings given a large scale move towards decentralization. But there's also easily a potential for net system increases. And honestly, nearly none of us are equipped to actually answer that question, unless you happen to work in the industry. And given the complex profiles of North American utilities across the continent, it's not even a given that what holds for one location will hold for another.
So, that was rather long winded, but the point is that yes, there are shenanigans going on. But decentralized solar isn't all sunshine and lollipops, and adding some sort of surcharge/fee/tax on feeding back into the network may be the right course of action.
Koch Brothers are behind every liberal conspiracy theory.
How about a Kickstarter for buying coal plants and turning them off.
I'd prefer to put my money behind replacing coal plants with solar. Such as subsidies to solar suppliers for installing and running their plant, at least equivalent in scale to the subsidies offered to coal power plants through fuel rebates, special zoning to reduce land taxes, low rent for digging up the coal in the first place, and many more.
Exactly. The first step for replacement is decommissioning existing coal plants.
As there's no (or little) political will to do this, the private sector (and specifically those that recognize the problem) can act directly.
And since it's the 21st century, it seems like Kickstarter is the way the private sector can do it.
As there's no (or little) political will to do this, the private sector (and specifically those that recognize the problem) can act directly.
And since it's the 21st century, it seems like Kickstarter is the way the private sector can do it.
Coal power plants are baseload generators. So the simple answer is that this is only possible for 30-40% of the coal generation capacity. If you want the lights on at night, that is.
Nuclear, for example, can replace coal if we want it to.
Nuclear, for example, can replace coal if we want it to.
Then much of the country would go dark. It's great to be idealistic but you should try to understand the problem first.
How about a KickStarter so more people can use more solar in some small capacity, thus reducing our pull on the grid?
How about a KickStarter so more people can use more solar in some small capacity, thus reducing our pull on the grid?
Simply put, transmission networks (aka the grid) were never built with thought that local residential providers would input into said grid. While this sounds trivial, when you add a significant new input into the infrastructure especially local end points that are only one-way flows, serious investment is required to ensure this continues to work (ie no blackouts).
Similarly, solar supply is not consistent and scheduled. The system is built for coal to provide a strong baseline where peaks are met by on demand providers (typically gas). This is significantly more expensive than coal. The flip side is that a coal plant can require 6-12 hours to 'warm up'. That the cost of supplying electricity with unscheduled solar is not a fallacy.
I, for one, completely agree and demand that solar should be part of the mix (and can end up being a replacement for coal). That should be the long term goal. Legislatures should be working towards that. Unfortunately, as in most public policy issues today, this is an incredibly complex and difficult area to make progress and will require more detailed analysis and hard decisions. This is the opening that the Koch's are using and will require more commitment to push them back.