Trust me, I'm skeptical of any monopoly, particularly ones which are tied closely to government. But all I have to do is look at caiso.com to check wholesale energy prices. As I type this, the sun is shining and wholesale electricity costs about $80/MWh ($0.08/kWh) here in Orange County. NEM 2.0 solar customers on SCE's TOU-PRIME rate plan are selling juice back to the grid at for about $0.19/kWh. Who's paying for the difference?
Are you ready for a fun read? Because I'm sitting in a Zoom call learning about some new HRIS... which means I have a lot of free time.
An energy consumer (on the same rate plan but without solar) is paying that $0.19/kWh. They would pay that $0.19/kWh regardless if the energy is coming from the utility or coming from a neighbor with solar. As the IOUs are quick to say every single time they discuss rates with the public; the utility doesn't make a profit margin on the generation costs. They simply pass the generation costs through, and the IOUs make all the money on transmission/distribution. In your example, the homeowner with solar has an ROI. But what is missing in your example (and what the IOUs never disclose) is that the utility scale energy generators all have an ROI as well. If you're upset about residential solar, you should also be upset at the utility scale operators.
I've highlighted numerous times (lol the thread is 150 pages!) that a major reason ratepayers have such high retail rates for energy in California is because of the purchase price agreements (PPA) that the utilities agree to in advance. These PPAs guarantee a price for energy produced by a utility scale generator who gets the PPA contract. Since the guarantee is coming from monopolies that are "too big to fail", the IOUs are subventing energy generation plans that allow CAISO's "independent operators" access to very cheap/attractive debt to finance their projects. As long as the project can be completed, the resulting cash flow is a slam dunk. So, lenders will clamor to throw money at the project and they're almost always AAA rated.
The CAISO members argue this PPA approach
needs to exist, or else they could never get an energy project off the ground. However, this means planning energy generation capacity becomes massively important, or else the PPAs are a huge waste. If the utilities subsidize too much energy generation, then suddenly there is a ton of supply... and to your point, the wholesale price is wildly disconnected from the PPA price. But ratepayers are paying the higher price no matter what since the utility effectively is locking ratepayers into those rates when they enter in the the PPAs.
You would think, this means the CPUC or PG&E or SCE or blah blah must spend a lot of money making sure they get their demand forecasts accurate right? RIGHT????? But nope, PG&E's lead of energy policy planning has gone on the record quite often saying PG&E's planning exercises were more around executing the desires of California's Office of Planning and Research (OPR) directives. The IOUs argue it's up to the state through cap and trade and other policy setting to establish a target energy generation portfolio. For example, PG&E has never disclosed how it intended to offset Diablo Canyon closing... because to my knowledge they never had a plan; they expected California to come up with that plan. Turns out California didn't have a plan either, so now the state is throwing forgivable loans at Diablo Canyon to keep it open.
PG&E says it will replace the nuclear plant with renewable energy, but it's not as easy as it sounds.
www.kqed.org
Anyway, back on the topic you asked about. We learned during the PG&E bankruptcy, what ends up happening is that the utilities take on a massive liability to pay these locked in rates. These contracts cannot be hedged (who would be dumb enough to take the other side of the PPA rate-contract?). So when the wholesale/spot price of solar tanks, the ratepayers don't see any savings since the rates are locked in. After all, the IOUs get to pass this liability to the ratepayers (with no additional profit margin!). Had PG&E been able to shed some of these liabilities in their bankruptcy, Northern Californians would have seen lower energy bills. But then this would rock the energy market since now it meant PPAs are actually risky... and it would (as CAISO claims) kill the ability for future utility scale generation to be constructed.
So in closing, the CAISO members may be a self-described "independent" group (the I in CAISO), but they're joined at the hip to the IOUs through lucrative PPAs. And yes, folks who put in solar under NEM 1.0 and NEM 2.0 are negating their exposure to these PPAs because the homeonwer with solar suddenly doesn't care what PPA the utility entered into... since the homeowner with solar became their own generator.
If you're upset that a neighbor with solar is "selling energy at the retail rate" then you should be equally upset that the utility scale generators are "selling energy at the retail rate". But you should be doubly annoyed at the utility scale generators for creating such bogus planning/execution to result in that mega high retail rate to begin with. The proof is in the pudding... the actual spot-value for the utility scale operator is $0.08/kWh, but they're raking in $0.19 / kWh because there is too much supply.
Personally, I think you should be thanking your neighbors with solar. If they didn't have their own rooftop solar, there would be even more utility scale generators out there. And based on the fact they're private companies looking to make a buck, I would wager had they built generation themselves (instead of the distributed generation atop thousands of homes), those CAISO members would have had even more juicy PPAs. The retail rate would be higher than your $0.19 / kWh right now.
