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jhm
Well-Known Member
Happy New Year Californians: US Largest Utility Jacks up Rates the Most since 2006 Despite Collapse of Natural Gas Prices | Wolf Street
PG&E in California is raise electricity rates 8.5% and natural gas 4% inspite of the fact that generation costs for yhe utility have fallen 8.8% and NG 36%.
I bet that 2.3% escalator on SolarCity PPAs is feeling pretty ok. Are the Nevada SolarCity employees willing to work in northern California? They may be needed there.
PG&E in California is raise electricity rates 8.5% and natural gas 4% inspite of the fact that generation costs for yhe utility have fallen 8.8% and NG 36%.
I bet that 2.3% escalator on SolarCity PPAs is feeling pretty ok. Are the Nevada SolarCity employees willing to work in northern California? They may be needed there.
I couldn't find an answer to this on their website, so I sent an email to customerservice at nvenergy asking specifically what the exit fee would be for a residential customer. Here's the reply:
Thank you for contacting us. We have confirmed there are no additional fees to exit the grid.
We look forward to serving you.
Sincerely,
Sharon
We look forward to serving you.
Sincerely,
Sharon
How many short years will it be before the monthly payments to SolarCity on a rooftop solar system, with battery backup, will be lower than the monthly bill from NV Energy?
That is great, thank you. With all the costs shifting going around protect profits I don't think it will be long at all laugh out loud
TheTalkingMule
Distributed Energy Enthusiast
With every customer(or more likely group of customers) that goes this route, the utilities will lose peak payments and jack up retail prices to maintain profits. So while I can't tell you 1, 2 or 5 years I can say with certainty that the economic forces pushing towards this inevitable end will feed back on themselves so that each month is more forceful than the last.
I'd like to see a nice transition success story from somewhere in the world to give these guys a blueprint for this new reality. All they've got as of now is striking out in desperation. Hopefully RWE or EON in Germany will make strides in 2016.
Edit to Add: Back on topic I must admit I was kind of looking for a market sized drop in SCTY this week of maybe about 3-4% to bring down options prices. Such a supposedly fragile stock seems very resilient today and techs get slaughtered.
I'm reading in Forbes today that 2GW of solar installs will likely "slip" to 2017 now that there's less ITC urgency. Any thoughts on this affecting the entire sector later this week?
jhm
Well-Known Member
I think that SolarCity will be able to install and lease/loan a 7 kWh Powerwall for under $32/month. This provides daily backup to a solar system. Add to this a cheap, low Watt generator for deep back up for about $1000 plus fuel and maintenance. So that is another $10/month for 10-year financing (for comparability). So combined $42/month plus fuel for deep back up. Basically, NV Energy can't get away with charging more than $40/month in solar access fees especially if feed-in tariffs are really low too.
Let's consider what NV Energy is really providing the solar owner, a backup energy service. How much is back up service worth. For most families probably not more than $600 per year in total cost. This is the folly of utilities trying to push more cost onto solar customers. They can only extract less than $600/year. If NV Energy really wanted keep some revenue from solar owners, they would offer a feed-in tariff high enough to discourage any installation of additional back up devices like batteries and generators.
NV Energy has a really hard time understanding the limited value they provide to their customers. If they understood what this value was, they would negotiate within that range. When the casinos are willing to spend hundreds of millions of dollars in exit fees, this is a clear indication that NV Energy was attempting to extract multiple amounts of cost out of these customers. They failed to negotiate to mutually beneficial compromise with these customers, because they substantially over priced their service relative to what these customers could obtain from other providers. This is why I believe NV Energy is horribly mismanaged. They don't know what their service is really worth and expect customers to pay quite a premium.
I suspect they have the same blindness regarding solar customers. As they start pushing more than about $500/year in cost on solar customers, they will induce them to leave the grid. As it is, they could extract about $250/year for decades, but $500/year for only about a year. So NV Energy is giving up a $5000 multidecade revenue stream for $500 in one year revenue. This is extraordinarily short-sighted, really dumb management. Moreover, this is a oneway transition. Once a home goes offgrid, it only gets more economical to remain offgrid. For example, the price of batteries fall 10% or more each year, better panels can be added to the system at lower cost, and other power management technology comes to market. So once NV Energy burns out a customer, they lose that customer for life and whoever buys their home.
A scary situation that utilities should consider is what happens to property values as solar customer leave the grid and those who can't install solar are stuck paying jacked up utility rates. Look at it from the perspective of a homebuyer. You are comparing to home one with inexpensive solar installed and the other is incompatible with installing solar. Otherwise, they two homes are equally desirable. Which one do you make the better offer on? Clearly the one with solar can fetch a higher price. As this reality works it's way into the real estate market, home buyers become increasing concerned about the resale value of a home without solar. If you can't trust the utilities not to jack up rates, then this becomes an added risk of owning a home without solar. So while this may not immediately impact the utility, it does create a system where solar adoption skyrockets if only to preserve homevalues. Utilities don't want to face that sort of stigma in the real estate market.
Let's consider what NV Energy is really providing the solar owner, a backup energy service. How much is back up service worth. For most families probably not more than $600 per year in total cost. This is the folly of utilities trying to push more cost onto solar customers. They can only extract less than $600/year. If NV Energy really wanted keep some revenue from solar owners, they would offer a feed-in tariff high enough to discourage any installation of additional back up devices like batteries and generators.
NV Energy has a really hard time understanding the limited value they provide to their customers. If they understood what this value was, they would negotiate within that range. When the casinos are willing to spend hundreds of millions of dollars in exit fees, this is a clear indication that NV Energy was attempting to extract multiple amounts of cost out of these customers. They failed to negotiate to mutually beneficial compromise with these customers, because they substantially over priced their service relative to what these customers could obtain from other providers. This is why I believe NV Energy is horribly mismanaged. They don't know what their service is really worth and expect customers to pay quite a premium.
I suspect they have the same blindness regarding solar customers. As they start pushing more than about $500/year in cost on solar customers, they will induce them to leave the grid. As it is, they could extract about $250/year for decades, but $500/year for only about a year. So NV Energy is giving up a $5000 multidecade revenue stream for $500 in one year revenue. This is extraordinarily short-sighted, really dumb management. Moreover, this is a oneway transition. Once a home goes offgrid, it only gets more economical to remain offgrid. For example, the price of batteries fall 10% or more each year, better panels can be added to the system at lower cost, and other power management technology comes to market. So once NV Energy burns out a customer, they lose that customer for life and whoever buys their home.
A scary situation that utilities should consider is what happens to property values as solar customer leave the grid and those who can't install solar are stuck paying jacked up utility rates. Look at it from the perspective of a homebuyer. You are comparing to home one with inexpensive solar installed and the other is incompatible with installing solar. Otherwise, they two homes are equally desirable. Which one do you make the better offer on? Clearly the one with solar can fetch a higher price. As this reality works it's way into the real estate market, home buyers become increasing concerned about the resale value of a home without solar. If you can't trust the utilities not to jack up rates, then this becomes an added risk of owning a home without solar. So while this may not immediately impact the utility, it does create a system where solar adoption skyrockets if only to preserve homevalues. Utilities don't want to face that sort of stigma in the real estate market.
jhm
Well-Known Member
TheTalkingMule
Distributed Energy Enthusiast
I don't believe NV Energy is blind or dumb, nor do I think they're having a hard time understanding their value. I think their eyes are wide open and they're taking the only avenue left that allows for short term profits to be maintained.
What happens if SolarCity rolls into Nevada and scales up the entire rooftop industry there? Customer acquisition soft costs go down to zero for everyone, PPAs and installs alike. Everyone and their mother gets on board because they live in the goddamn desert and solar is logical and cheap. All legacy utility production loses profitability nearly instantaneously.
Think of NV Energy's lifespan if solar is allowed to get to scale within the state. It's not 5 years or 10 years, it's immediately worthless once solar gets above 5% of total supply because every single rooftop install negates 5 customers worth of profits at midday. Given that absolute reality, wouldn't you expect them to take one last dying lunge?
This will pass. My hope is that the people of Nevada figure out they're being royally screwed and don't just allow NV Energy to transition out of production without punishment. That will never happen of course.
What happens if SolarCity rolls into Nevada and scales up the entire rooftop industry there? Customer acquisition soft costs go down to zero for everyone, PPAs and installs alike. Everyone and their mother gets on board because they live in the goddamn desert and solar is logical and cheap. All legacy utility production loses profitability nearly instantaneously.
Think of NV Energy's lifespan if solar is allowed to get to scale within the state. It's not 5 years or 10 years, it's immediately worthless once solar gets above 5% of total supply because every single rooftop install negates 5 customers worth of profits at midday. Given that absolute reality, wouldn't you expect them to take one last dying lunge?
This will pass. My hope is that the people of Nevada figure out they're being royally screwed and don't just allow NV Energy to transition out of production without punishment. That will never happen of course.
jhm
Well-Known Member
Well SolarCitycould come back in a few years once it has a pile od Powerwalls and total cost under $2.25/W. It could really clean up at that point. It would go for the jugular taking everyone off grid.
So tell me why Buffet owns this hot mess?
TheTalkingMule
Distributed Energy Enthusiast
gigglehertz
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jhm
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doggusfluffy
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