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CPUC NEM 3.0 discussion

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This graph is from CPUC "White Paper" which proposes NEM 3 as a solution to a problem with NEM1,2. That problem, as described in the paper centers on the above graph: solar customers need peak period power, just like everyone else, but because they get credit for their exported solar, they pay less than everyone else. NEM3 advocates describe this as a subsidy of (rich) solar owners paid for by (poor) non-solar customers.

Back to the title of this entire thread, NEM 3 and energy products. It seems to me that the solution is widely distributed short term storage to level the demand. This will reduce peak generation load to the average, which is a fraction of the peak. By locating storage near to consumers, peak transmission loads are reduced as well.

Today, with or without solar, a customer with a battery can completely avoid using power during peak periods, thus saving the utility substantial money, according to the graph. This savings gets passed on to all customers.

I have a single Powerwall charged from my solar. I use essentially no grid power, all year long, during peak periods.

The NEM3 proposal starts with radically increasing cost for all solar customers, and then discounting that a bit for battery storage. That seems backwards to me, because battery completely eliminates the problem, solar or not.

What am I missing?
This is a really bad chart and I think it is this way to mislead. The costs are average annual cost for that hour, but the TOU rates are based on both Standard and Daylight Saving time. The demand/cost shifts because humans fall the local clock time and not a fixed UTC schedule.

I extracted the actual costs from the five worst hours to compare to the E-TOU-C rate
TimeCost $/MW
17:00-18:00 ST $259.3
18:00-19:00 ST$316.9
19:00-20:00 ST $230.5
20:00-21:00 ST $161.0
21:00-22:00 ST $96.6

So the average is $212.9/MWh or $0.2129/kWh. In comparison the E-TOU-C generation Peak rate for summer is $0.2006/kWh which is very close. The rest of the day is mostly under $50/MWh or $0.0500/kWh and the E-TOU-C Off-Peak generation rate for summer is $0.14722/kWh. Maybe there is a slight loss during Peak, but there is a big gain for the rest of the day. Winter generation is $0.15189/kWh for Peak and $0.13687/kWH for Off-Peak, so again a big win for the Off-Peak generation cost recoupment.

Even without a battery solar will be either still be exporting to the grid during early Peak or lowering the demand in the costly late summer months and at night everyone is paying more than it costs.
 
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Is it not the whole idea to save money by installing solar.
If your point is that NEM3 is a problem for solar, I agree.

That was certainly a factor for us. The battery improved that somewhat as well.

The the ROI has always been a bit sketchy, and looked OK at best, and only if one made agressive assumptions about electricity costs, interest rates, rebates and credits, and NEM reliability. (Tesla stock has had far better returns.) NEM3, as proposed, would make all that much worse.

There are other factors too, in fact two others were our primary drivers. One is reduced carbon footprint. (This is one of NEM3's worst problems, stopping solar so they can burn more gas.) For us, the economics were good enough to let us buy much less dirty power from PG&E. We would like to convert our heating, hot water and clothes dryer from gas to electric heat pumps, but poor roof orientation and size, as well as some nasty tree shading limit our solar capacity. NEM3 will put the kibosh on that too.

Another non-economic factor was that the battery added some significant grid independence, for example letting us run off grid for days on end during PG&E PSPS shutdowns. It also let us shift to a time of use plan with lower off-peak rates, so it saves us some more money as well.

I think the CPUC's arguments for NEM3 are full of holes. For example it is based on a "lookback" study, published in 2019, and based on data from many prior years. Since that time PG&E has built a 182 MW battery farm in Moss Landing, due to go online this year, and CPUC's own SGIP program bought utility customers something like 40,000 PowerWalls with their equity resiliency budget, adding over 500 MWh of storage with 200 MW of power in roughly one year. So CPUC is basically ignoring the impact of and potential for more consumer and utility owned storage to solve their "problem".
 
page1image28801664


This graph is from CPUC "White Paper" which proposes NEM 3 as a solution to a problem with NEM1,2. That problem, as described in the paper centers on the above graph: solar customers need peak period power, just like everyone else, but because they get credit for their exported solar, they pay less than everyone else. NEM3 advocates describe this as a subsidy of (rich) solar owners paid for by (poor) non-solar customers.

Back to the title of this entire thread, NEM 3 and energy products. It seems to me that the solution is widely distributed short term storage to level the demand. This will reduce peak generation load to the average, which is a fraction of the peak. By locating storage near to consumers, peak transmission loads are reduced as well.

Today, with or without solar, a customer with a battery can completely avoid using power during peak periods, thus saving the utility substantial money, according to the graph. This savings gets passed on to all customers.

I have a single Powerwall charged from my solar. I use essentially no grid power, all year long, during peak periods.

The NEM3 proposal starts with radically increasing cost for all solar customers, and then discounting that a bit for battery storage. That seems backwards to me, because battery completely eliminates the problem, solar or not.

What am I missing?
I think that you are right that the answer for the short term, in both senses of the phrase, for reducing peak power costs is more distributed storage.

However, there is a very similar chart for demand and cost that compares it throughout the year, which is a different level of storage. But average demand obscures the issue. Peak demand on a given day is what takes out the grid, be it a cold day in Texas, or a hot one in New York City. Very expensive plants cover fringe cases like that. With renewables, the worst cases are calm, and heavily overcast conditions for a week (and very hot/very cold). Now you are talking seriously large storage capacity, and large generation capacity, which will remain mostly unused.

No way around it, there are some extremely large investments to be made.

I agree with @Redhill_qik that the chart is very confusing and designed obfuscate.

All the best,

BG
 
This is a really bad chart and I think it is this way to mislead. The costs are average annual cost for that hour, but the TOU rates are based on both Standard and Daylight Saving time. The demand/cost shifts because humans fall the local clock time and not a fixed UTC schedule.

I extracted the actual costs from the five worst hours to compare to the E-TOU-C rate
TimeCost $/MW
17:00-18:00 ST$259.3
18:00-19:00 ST$316.9
19:00-20:00 ST$230.5
20:00-21:00 ST$161.0
21:00-22:00 ST$96.6

So the average is $212.9/MWh or $0.2129/kWh. In comparison the E-TOU-C generation Peak rate for summer is $0.2006/kWh which is very close. The rest of the day is mostly under $50/MWh or $0.0500/kWh and the E-TOU-C Off-Peak generation rate for summer is $0.14722/kWh. Maybe there is a slight loss during Peak, but there is a big gain for the rest of the day. Winter generation is $0.15189/kWh for Peak and $0.13687/kWH for Off-Peak, so again a big win for the Off-Peak generation cost recoupment.

Even without a battery solar will be either still be exporting to the grid during early Peak or lowering the demand in the costly late summer months and at night everyone is paying more than it costs.

OK, someone might know this. Why is "generation capacity" listed as a cost item only in peak hours? I looked at the CAISO site and natural gas and imports are the main sources which ramp up in peak hours but those same sources cover the entire demand all day, and are only curtailed by 50% when solar is at its peak.

Its accounting BS. Moreover, assuming "imports" means imported from somewhere else than CA, I mean look at the CAISO entire western chart, imports aren't 31 cents per kwh, its 6 cents, you can see it every day.

Its BS designed to obfuscate volumetric pricing. If you allocate the entire cost of a natural gas plant to only four hours of the day of course the energy of that plant is going to seem "more expensive" but that is not how the market actually works.

Its only how the IOUs charge. That's why LADWP does not have to charge over 24 cents a kwh at any peak time.
 
OK, someone might know this. Why is "generation capacity" listed as a cost item only in peak hours? I looked at the CAISO site and natural gas and imports are the main sources which ramp up in peak hours but those same sources cover the entire demand all day, and are only curtailed by 50% when solar is at its peak.
Like a lot of things the terminology isn't defined and the reader is assumed to know what each term means. The closest that I could find in the white paper is the following "Generation capacity value is derived from New York Independent System Operator (NYISO) capacity market auctions." This definition is for a New York study and not this specific chart, but the same likely holds with this number representing purchases through auction of additional generation capacity for those hours which is only needed when demand exceeds contracted supply.

The white paper has a footnote with a link to the "current Avoided Cost Calculator" which is 404 Page Not Found. I believe that this is the location for the 2021 Avoided Cost Calculators (electric, gas, and others) which is on a box.com location and not the CPUC, but the link came from a documentation on the CPUC site.
 
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Why is "generation capacity" listed as a cost item only in peak hours?
To be clear, I posted that chart to point out how bogus it is.

You raise a good question. I could be wrong on this, but my understanding is that they are segmenting the amortization of the capital costs into hourly buckets based on peak loads during each hour. Those peaker plants are run only a few hours a day (and some only a few hours per year), and they sit idle the rest of the time. But the interest and depreciation continue all day, all year. So they include those capital costs only in the hours when they are actually used. Same thing for the transmission lines.

My point about storage is that it can level the grid load so that the generation and transmission never deviates much from the average, and all power is baseline. Those spikes of high cost go away, or at least are attenuated by incremental investment in storage.

In any case, I think you are right that this is all BS designed to stop consumer solar. As self generators, we are competitors to the utilities, a real and present threat to their monopolies. Also a threat to some of the capital they have invested it their grid. Us needing less of what they sell is a problem for them.

But NEM3 is based on an equity issue. Under the laws, the utilities can recoup all their costs in the rates they charge, and their profit percentage is essentially guaranteed. The business model of charging per kWh has always been problematic, and has required all sorts of tweaks to make it "fair", such as tiered rates, time of use, medical baseline, EV rates, etc. NEM has helped put a bunch of low carbon generation on the grid by dealing with the seasonal mismatch between our production and consumption. Clearly seasonal imbalances will become an issue as intermittent renewables increase in relation to fuel based generation. But the current NEM3 proposal addresses only the daily imbalances, and short term storage seems to me like a better fix for this than stopping consumer solar altogether, as the CPUC proposal would do.

This is why I brought this up in this forum, where Tesla energy offerings are central.
 
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With renewables, the worst cases are calm, and heavily overcast conditions for a week (and very hot/very cold). Now you are talking seriously large storage capacity, and large generation capacity, which will remain mostly unused.
Right!

In addition to storage, long distance transmission can help too. Overcast sometimes comes with wind, and seldom cover entire continents. And don't forget hydro, which is combined renewable generation and storage. Balancing these would seem to reduce the amount of long term storage needed.

While we're discussing the long term, getting off of gas for heating, and electric vehicles will both drive up demand for electricity. I don't think the electric utilities are going to see shrinking demand any time soon, no mater how much solar we put up.

Still, NEM3 is not about seasonal imbalances or renewables. To me it looks like NEM3 is designed to kill off the solar industry.

Getting back to my query about storage as it relates to NEM3, given the current NEM and rate structures, do you think that a solar plus battery customer is adding to or reducing costs for other utility customers?
 
Right!

In addition to storage, long distance transmission can help too. Overcast sometimes comes with wind, and seldom cover entire continents. And don't forget hydro, which is combined renewable generation and storage. Balancing these would seem to reduce the amount of long term storage needed.

While we're discussing the long term, getting off of gas for heating, and electric vehicles will both drive up demand for electricity. I don't think the electric utilities are going to see shrinking demand any time soon, no mater how much solar we put up.

Still, NEM3 is not about seasonal imbalances or renewables. To me it looks like NEM3 is designed to kill off the solar industry.

Getting back to my query about storage as it relates to NEM3, given the current NEM and rate structures, do you think that a solar plus battery customer is adding to or reducing costs for other utility customers?
Any reduction of consumption is "adding to the costs" of other customers. And solar and batteries are the best form of conservation out there.

That's because the grid accounts for 80% Of a kwh charge. If the electricity itself accounted for 90%, then a reduction in consumption would have little effect on the other people who are still consuming. But because solar alone or solar and batteries do not reduce the need for a grid, well there it is.

The problem is the grid should be paid for like roads. Charging per kwh was actually never that good, and now conservation is impossible to implement at scale.
 
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Any reduction of consumption is "adding to the costs" of other customers.
I am asking about consumers with battery storage. Think of it this way: if every consumer had a battery (no solar) and used it to make their grid draw constant, 24/7, by charging when their consumption was below their average, and discharging when it is more than average. Then that chart of costs would be flat, at something like half the level it is now.

Every battery used to shift power draw out of peak periods reduces the maximum that the utility must be equipped to generate and distribute, that 80% of the cost you refer to. Even with the total consumption the same, the cost is reduced for the utility and hence all their customers.

I think NEM is not an issue for battery-only customers. But solar plus battery customers are radically different from solar only, because they can avoid grid draw during peak times. This mean that these customer's reduction in total consumption is focused on peak periods.
 
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I am asking about consumers with battery storage. Think of it this way: if every consumer had a battery (no solar) and used it to make their grid draw constant, 24/7, by charging when their consumption was below their average, and discharging when it is more than average. Then that chart of costs would be flat, at something like half the level it is now.

Every battery used to shift power draw out of peak periods reduces the maximum that the utility must be equipped to generate and distribute, that 80% of the cost you refer to. Even with the total consumption the same, the cost is reduced for the utility and hence all their customers.

I think NEM is not an issue for battery-only customers. But solar plus battery customers are radically different from solar only, because they can avoid grid draw during peak times. This mean that these customer's reduction in total consumption is focused on peak periods.
Nah, My goal with my solar, and batteries, is like now, with heaters off, and no ac yet, I set them to 10% so basically off grid 24 hours a day. :)
 
Right!

In addition to storage, long distance transmission can help too. Overcast sometimes comes with wind, and seldom cover entire continents. And don't forget hydro, which is combined renewable generation and storage. Balancing these would seem to reduce the amount of long term storage needed.

While we're discussing the long term, getting off of gas for heating, and electric vehicles will both drive up demand for electricity. I don't think the electric utilities are going to see shrinking demand any time soon, no mater how much solar we put up.

Still, NEM3 is not about seasonal imbalances or renewables. To me it looks like NEM3 is designed to kill off the solar industry.

Getting back to my query about storage as it relates to NEM3, given the current NEM and rate structures, do you think that a solar plus battery customer is adding to or reducing costs for other utility customers?
To this and your follow up post, yes it does reduce some of the costs to other customers by not running the last few peaker plants that run for a few tens or hundreds of hours. But, and it is a big but, it takes a long time to get those plants of the balance sheets, unless they are owned by someone else.
@Southpasfan has a point that as solar customer consume fewer kilowatts from the grid, they distribute the grid costs amongst the remaining customers.

Net, net, gain/loss for non-solar customers: who knows for sure, but the IOUs think that it isn't making them more money, or they wouldn't be pushing NEM3.0

All the best,

BG
 
The problem is the grid should be paid for like roads. Charging per kwh was actually never that good, and now conservation is impossible to implement at scale.
I don't know if that is a good example. There is the controversy that road maintenance is being paid by the gasoline tax (sort of like per kwh) and as electric cars become a higher percentage of vehicles then a different funding scheme will need to be found (like charging per mile driven).

Personally, I think every customer should be charged a grid maintenance fee based on their peak consumption rate.
 
Any reduction of consumption is "adding to the costs" of other customers. And solar and batteries are the best form of conservation out there.

That's because the grid accounts for 80% Of a kwh charge. If the electricity itself accounted for 90%, then a reduction in consumption would have little effect on the other people who are still consuming. But because solar alone or solar and batteries do not reduce the need for a grid, well there it is.

The problem is the grid should be paid for like roads. Charging per kwh was actually never that good, and now conservation is impossible to implement at scale.
Do you have a link for the 80% of kWh charge? I'm trying to compare our local CCA to PG&E. The CCA only saves on the generation portion. That said, wouldn't the generation cost go up during Peak after the solar curve goes down?
 
I am on EVA. Here are my current rates:
Rate A
Total Energy Rates ($ per kWh) PEAK PART-PEAK OFF-PEAK
Summer Usage $0.60355 (I) $0.35944 (I) $0.24689 (I)
Winter Usage $0.42148 (R) $0.28947 (I) $0.21774 (I)

Energy Rates by Component ($ per kWh) PEAK PART-PEAK OFF-PEAK
Generation:
Summer Usage $0.31212 (I) $0.16865 (I) $0.12227 (I)
Winter Usage $0.11819 (I) $0.09334 (I) $0.09334 (I)
Distribution**:
Summer Usage $0.21743 (R) $0.11679 (R) $0.05062 (I)
Winter Usage $0.22929 (R) $0.12213 (R) $0.05040 (I)

So from my perspective generation is over 50% of my kWh costs. (see bold numbers)

WRT to the Pioneer CCA: On a call last month they stated that the average savings for a $300 monthly bill would be $10. Not a big deal to me. And in fact I think as long as I remain on EVA I can make more money in Cost Savings Mode selling it back during peak.
 
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I am on EVA. Here are my current rates:




So from my perspective generation is over 50% of my kWh costs. (see bold numbers)

WRT to the Pioneer CCA: On a call last month they stated that the average savings for a $300 monthly bill would be $10. Not a big deal to me. And in fact I think as long as I remain on EVA I can make more money in Cost Savings Mode selling it back during peak.
thanks
I'm on EVA1 and agree with you. Staying with PG&E gives higher credits and I rarely consume during peak since I have PWs.
But I had a big surprise and so did my neighbor. Both of us called to opt out, but said we had to wait until closer to our true-up, but did not define "closer". We both have true-ups in April, but neighbors is early April, while mine is later. Neighbor kept calling and was finally told their deadline was March 22. So they opted out on 3/21. Low and behold, they got shifted anyway and Pioneer forced their PG&E trueup 2 months early. This cost them $200 since March is a big credit month for them and it was not included. Pioneer claimed they sent them 2 notices in the mail. They did not receive them. They called me to give me a heads up. I had not received any notices either. Logged into my PG&E account last night and sure enough, I'm shifted to Pioneer ahead of my true-up. Best I can tell they did this after my last PG&E billing statement which had usage thru 2/22.
I know other people like their CCAs, but this Pioneer group seems shady at best. Neighbor was told they have to pay a fee to switch back to PG&E. If that is the case, we both are going to fight it. No notice of deadline to opt out and they accelerate the true-up. How can they do that?
 
thanks
I'm on EVA1 and agree with you. Staying with PG&E gives higher credits and I rarely consume during peak since I have PWs.
But I had a big surprise and so did my neighbor. Both of us called to opt out, but said we had to wait until closer to our true-up, but did not define "closer". We both have true-ups in April, but neighbors is early April, while mine is later. Neighbor kept calling and was finally told their deadline was March 22. So they opted out on 3/21. Low and behold, they got shifted anyway and Pioneer forced their PG&E trueup 2 months early. This cost them $200 since March is a big credit month for them and it was not included. Pioneer claimed they sent them 2 notices in the mail. They did not receive them. They called me to give me a heads up. I had not received any notices either. Logged into my PG&E account last night and sure enough, I'm shifted to Pioneer ahead of my true-up. Best I can tell they did this after my last PG&E billing statement which had usage thru 2/22.
I know other people like their CCAs, but this Pioneer group seems shady at best. Neighbor was told they have to pay a fee to switch back to PG&E. If that is the case, we both are going to fight it. No notice of deadline to opt out and they accelerate the true-up. How can they do that?
Not to get too off topic but the Pioneer CCA is a disaster IMHO. You cannot opt out until 60 days prior to your true up according to their call. I am in July. Sounds like you did everything right.

How they are allowed to operate in a Op Out manner is crazy. It should be opt in IMHO.