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CPUC NEM 3.0 discussion
- Thread starter jjrandorin
- Start date
Even if that is true as a legal matter (no idea), the bankruptcy judge gave PG&E the right to breach the renewables PPAs last year. They didn't, as a matter of public policy. The same logic seems to me to apply to DER.
Cheers, Wayne
So it's only utility scale solar, it doesn't include any residential NEM exports either?
Cheers, Wayne
Certainly true, CAISO can't see "behind the meter."
Not sure that's even true.
Cheers, Wayne
I believe that is correct. It would be a metering nightmare. When I left they had something like 300,000 data points that got stored every 4 seconds for trending.
If there's 12,400 MW of utility scale solar, why do you think residential solar was the side responsible that cratered future marginal solar production value?
They run a market that clears every 5 minutes based on the highest cost of production, add 6000 MW of behind the meter solar and well the price craters. Behind the meter solar is not dispatchable, utility scale solar and wind is. CAISO can have them lower their output, residential solar nope.
I don't follow your point?
If it's the analogy to the PPA treatment (the CPUC at the IOU's urging is proposing curtailing NEM 1 and 2 length rather than outright cancelling them), I'm sure that in bankruptcy PG&E could have shortened all the legacy PPAs by 5 years, since they had the ability to cancel them outright. But again, as a matter of public policy, they did not.
Cheers, Wayne
My point is that was a PG&E decision, you are correct they did not have to honor the contract. This is a CPUC decision and the CPUC believes they have the right to shorten the deal from 20 years to 15 years.
There is no way that the production from residential solar can "cause" energy prices to tank during the day. I mean, come on.
Under current NEM, frankly, residential solar ought to actually cause the price of wholesale energy to rise, not drop. The IOUs are upset because they are essentially forced to pay something like 30 cents per kwh to "buy" solar from a resident who is over producing when the actual price is 3 cents, and then, they have to credit that same customer, when, depending on the utility, they would otherwise charge that person 30 or 40 cents. The loss to the utility is simply, its the credit they end up giving minus the wholesale cost. So if they would otherwise be able to charge 30 cents for a credited kwh but they don't and all they "got" was a kwh worth 3 cents, its a 27 cent "loss" to them.
There are a couple off ways for them to spin this. They could just flat out point out that the cost of electricity is like 10% to 15% of what they charge, but that would make people ask the obvious next question, which is like "wait a second, you mean out of my $400 bill only $45 of it was for actual electricity? What was the other $355 for? Bonuses?" They don't like that line of inquiry one bit, and you can't blame them as its a 100% downside.
Or, they could go with what they are doing, which is pointing out that by giving NEM credits a residential solar owner is not only providing their own electricity, but essentially not paying for the share of the grid itself and whatever else the 85% of the bill was going for. Since this argument is easily accepted by those who are not mathematically inclined, they are making it and people and media are buying it.
The second line of inquiry they need to avoid at all costs is for someone to ask "wait another second, if the price of electricity only varies from 3 cents per kwh to, say, 10 cents max during peak demand, how come you raise the price by 20 or 25 cents? It doesn't cost you any more to deliver a kwh at noon as opposed to 8 o'clock at night?" Man, they really, really, really don't want anyone to ask that question. And the reason is that volumetric pricing of electricity is a poor way to price it. But they are way stuck with volumetric pricing. So the fact that peak charges are really more like any business raising prices to the max they can get away with than anything to do with "peak" is another fact they'd rather avoid.
Under current NEM, frankly, residential solar ought to actually cause the price of wholesale energy to rise, not drop. The IOUs are upset because they are essentially forced to pay something like 30 cents per kwh to "buy" solar from a resident who is over producing when the actual price is 3 cents, and then, they have to credit that same customer, when, depending on the utility, they would otherwise charge that person 30 or 40 cents. The loss to the utility is simply, its the credit they end up giving minus the wholesale cost. So if they would otherwise be able to charge 30 cents for a credited kwh but they don't and all they "got" was a kwh worth 3 cents, its a 27 cent "loss" to them.
There are a couple off ways for them to spin this. They could just flat out point out that the cost of electricity is like 10% to 15% of what they charge, but that would make people ask the obvious next question, which is like "wait a second, you mean out of my $400 bill only $45 of it was for actual electricity? What was the other $355 for? Bonuses?" They don't like that line of inquiry one bit, and you can't blame them as its a 100% downside.
Or, they could go with what they are doing, which is pointing out that by giving NEM credits a residential solar owner is not only providing their own electricity, but essentially not paying for the share of the grid itself and whatever else the 85% of the bill was going for. Since this argument is easily accepted by those who are not mathematically inclined, they are making it and people and media are buying it.
The second line of inquiry they need to avoid at all costs is for someone to ask "wait another second, if the price of electricity only varies from 3 cents per kwh to, say, 10 cents max during peak demand, how come you raise the price by 20 or 25 cents? It doesn't cost you any more to deliver a kwh at noon as opposed to 8 o'clock at night?" Man, they really, really, really don't want anyone to ask that question. And the reason is that volumetric pricing of electricity is a poor way to price it. But they are way stuck with volumetric pricing. So the fact that peak charges are really more like any business raising prices to the max they can get away with than anything to do with "peak" is another fact they'd rather avoid.
A process distinction that has little bearing on the public policy issues. I would say the comparison holds and that it would be bad public policy for CPUC to shorten NEM1 and NEM2 retroactively.
Cheers, Wayne
It's not like residential solar popped out of the woodwork overnight. Seems more like utility scale solar was wildly over-built (and over-incentivized) than a problem that some Californians want to put solar panels on their roof.
Todd Strauss (Senior Director of PG&E Energy Policy and Planning) has said planning MW for filling gaps in production was a "losing strategy". But then you're basically saying the free market of energy has determined having poorly planned MW craters the economics of utility scale energy production. Hmmm...
skepticcyclist
Member
- Daily delivery charge that everyone pays regardless if you use 0 kWh or 1,000 kWh.
- per kWh NBCs that everyone pays regardless if they net produce or net use. So I will still pay for that 1 kWh of use nonbypassable charge even though
- DWR Bond that everyone pays
- local and state taxes that everyone else pays.
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He's saying the day to day spot costs are cratering... basically when the energy market tries to buy energy for day to day management, they have levers to pull to figure out if they're using their own (edit: "their own" I meant as California in general; not like the energy belonged to the CAISO), importing it, blah blah.
On a given day, the marginal cost they're willing to pay to add production from solar sources is $30 per MW. It's not like all the solar energy being produced is costing $30 per MW; only the portion they're trying to monkey with.
What is missing is the fact that PG&E's PPAs are often locked into getting a baseline allowance of $ for their generation regardless of what the market spot rate might be. PG&E was still offering PPA baseload at $150 per MW of renewable generation as recently as 2020 (15 or 20 year contracts)
The arbitrage is huge; they are basically guaranteed something like $150 per MW baseline from these baseload contracts when the daily market value is $30 because there's too so much supply. But somehow NEM is the problem and PG&E couldn't possibly be more efficient. Hah.
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I agree it would look bad to solar customers under NEM 1 and 2. To non solar customers like me, well you know...
Can you draw the line from "add 6000 MW of behind the meter solar" to "the price craters"? Because I'm not seeing it.
BTW, CAISO "net demand" is demand - utility scale renewables, right? So do we have any data on how the 6000 MW of behind the meter solar is affecting the CAISO demand curve? A reasonable way to estimate what the demand curve would look like without the 6000 MW of behind the meter solar?
Cheers, Wayne
Your bill is the whole point. An argument has been submitted to the CPUC that solar customer are not even paying for their cost of service due to the structure of NEM 1 and NEM 2 contracts. That is the whole point. Your $12 bill does not pay for your cost of service. $12 that does not even pay for a happy meal.
How much is Brightsource or Siemens paying in transmission costs when they jam the utility scale solar generation kWh into the grid as they pursue profits?
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