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Sunday Train: Is There A Beam of Hope for Texas Rooftop Solar?

BruceMcF's picture

A few weeks back, I teased that I wanted to take a bit of a look at Texas Rooftop Solar in the Sunday Train (which is, recall, focused on Sustainable Transport & Energy, and so both not just about trains, and also not in favor of trains when the trains are advancing climate suicide) ... and then the California budget passed and I went on a two week binge on California HSR.

But now its time to take that glance over at Texas Rooftop Solar. After all, you'd think that Texas would be an ideal state for rooftop solar, and for years we've been seeing articles about how Lone Star State Rooftop Solar would hit big "real soon now". For instance, this, from 13 Jan, 2013: Solar Power Could See Explosive Growth in Texas over Coming Decades:

Still, solar is just a tiny sliver—less than 1 percent—of Texas’ electricity mix, which is dominated by coal (34 percent) and natural gas (45 percent). Wind, with a 9 percent share, is a giant compared to solar.

Yet, the economics are becoming increasingly favorable for solar to take off in a big way. The question is probably when, not if. And a recent analysis by ERCOT—the industry-funded, technocratic grid operator—has some very rosy projections for the future of the solar industry in Texas. (And some very sour news for nuclear, coal and maybe even natural gas.)

The analysis, first flagged by Colin Meehan of Environmental Defense Fund of Texas, looks at potential transmission needs in the next two decades. But, as Meehan wrote, ERCOT "found that if you use updated wind and solar power characteristics like cost and actual output to reflect real world conditions… wind and solar are more competitive than natural gas over the next 20 years."

But if the future doesn't start arriving, it might never get here, brought crashing down by the catastrophic impact of runaway climate crisis. So, what are the prospects that rooftop solar might really start hitting its stride really soon now?

So, what's the hold up?

Back when Larry Hagman was advertising for Solarworld, he had his sprawling estate powered by the sun. And that sprawling estate was, of course, in California, rather than Dallas. As James Osborne reported just over a year ago, 27 May 2013, Despite growth, Texas lags far behind on solar energy:

Solar is booming in the United States, with total capacity increasing 75 percent last year as equipment prices fell to a fraction of what they were just a few years ago. In places like California and Arizona, rooftop solar installations are becoming as common as chimneys and weather vanes. But not so in Texas, where despite recent growth in hot beds like Austin and San Antonio, the technology remains largely remains on the fringe.

According to the Solar Energy Industries Association, Texas’ 107.5 megawatts of solar capacity is one of the lowest in the nation when sorted by population — Arizona’s per capita rate is estimated to be more than 30 times higher. ...

Environmentalists are quick to blame legislators in Austin for not setting up a centralized incentive program as other states have. Instead, the utility companies are left to their own devices, and while rebate programs exist for homeowners and small businesses, they are largely underfunded and often sell out within days. “All the experience we have indicates we can spend money in other areas and get greater returns than we can with solar,” said Oncor spokesman Chris Schein.

Exceptions are cities such as Austin and San Antonio, which have own government-run utilities and maintain large budgets for solar incentive programs. There, solar panels are increasingly common sights, taking on the almost fashionable status that has pervaded other U.S. cities.

Last month, 12 May 2014, Greentech Solar asked Can the Texas Solar Market Live Up to Its Potential?:

The lack of policy supporting distributed solar means that most solar in Texas is utility-scale, sold almost entirely to municipal utilities. Such projects account for more than 70 percent of installed systems, a trend Honeyman expects to continue into the near future.

Much of the growth in solar has been led by two municipally owned utilities, Austin Energy and CPS Energy of San Antonio. San Antonio ranks sixth among U.S. cities in installed solar capacity, and Austin ranks 16th, according to a report from the advocacy group Environment Texas.

Austin recently signed a contract with SunEdison for 150 megawatts of solar at a reported price of only 5 cents per kilowatt-hour. The city council has required the utility to get 35 percent of its energy from renewable sources by 2020, including 200 megawatts from solar power. It already buys solar power from a 2011 SunEdison project, a 30-megawatt installation at Webberville.

So, not only is Texas lagging behind high solar resource states like California and Arizona, but when we focus on rooftop solar, its lagging even further behind.

Net Metering vs Allowing Utilities to Free Ride Off Your Roof

A key question for rooftop solar policy is whether a state mandates so-called "net metering". A rooftop solar systems are most commonly connected to the grid, to buy power from the grid when the solar is less than consumption, and to use the grid as an AC voltage reference in converting the solar DC to AC power at the socket. And when this first was being done, several decades back now, when more solar power was being produced than being consumed, the meters in use back then actually ran backwards.

Well, that was too good to last, and so utility companies started installing meters that only measured power being drawn in, and not power being provided back to the grid. Except it doesn't take much thinking to realize that this means the power company is taking a free ride off of your roof. After all, that power is going onto the AC distribution line and is being consumed by some other house in the neighborhood. And when they consume it, their meter is running forwards. The power you fed into the system represents power that the utility didn't have to put into the system: but they still charge your neighbor for it "as if" they produced the power.

So the idea of "net metering" laws is that if the power company is going to resell your power to your neighbors, they should be required to credit your power bill for the power that you provided to them.

And, of course, Texas is a state where big companies expect to be subsidized by households ~ that's called "the government not interfering with the free market", which in this case is the freedom of big companies in the market to rip off the power produced by solar panels that you paid for yourself ~ and so reports:

To help Texans adopt renewables, the state offers numerous incentives, like property tax rebates and performance-based incentives. While other states have adopted legislation requiring utilities to offer net metering to their residents, utilities in Texas have the option to offer net metering, but are not mandated to offer it.

Instead (when it should be, "and in addition"), Texas implemented a Renewable Energy Portfolio. According to the National Conference on State Legislatures, the Texas "Renewable Generation Requirement" (still normally called a "RPS" because its essential a Renewable Portfolio Standard), passed in 2005 and superceding the (already met) original standard from 1999, required:

  • 5,880 MW by 2015;
  • 10,000 MW by 2025 (goal);
  • Non-wind: 500 MW (goal); and
  • with a 3.1% cost cap

This is an example of why you pass a bill like this with MW targets instead of percentage targets when you are more interested in giving the impression of doing something than in actually doing it. Texas met its 2025 target in 2012, on the back of booming Windpower generation in West Texas and the Gulf Coast. And having met the target so far in advance, the penalties for failing to meet the RPS are not an issue for Texas power companies ... so they have little incentive to "voluntarily" credit people for rooftop power that they are reselling.

What is a Fair Price for Rooftop Solar?

What is a fair price for rooftop solar? Net-metering in its simplest version says that the price that a fair price is for the retail customer to receive credit at the same rate they pay. And that certainly "feels like" a fair price to many retail customers. After all, that's "the price" of the Kilowatt Hour. It say's so, right on the bill!

But from the power production side, its nowhere near as clear cut. After all, they don't buy power at the retail rate from any power suppliers. Neither wind farms nor coal powered thermal plants get the retail rate. And the same would be true if the power company was a not-for-profit organization, because its not just about "generating power". There is:

  • Generation, which includes:
    • Volume of Electricity Supply;
    • Reliability of Electricity Supply; and
    • Quality of Electricity Supply.
  • Transmission, which includes:
    • Costs of transmission infrastructure;
    • Costs of managing transmission; and
    • Costs of contingency reserve capacity.
  • Distribution, which includes:
    • Physical distribution from the substation;
    • Maintenance of the distribution infrastructure; and
    • Billing and other distribution transaction costs.

There are lots of people who get a slice of the retail price of power who still have to be paid for what they do even if the power itself came over the local distribution network from two houses down.

One way to look at the "fair price of solar" in "deregulated" utility markets is to look at what the utility regulator has decided is a fair price for the company that has a monopoly on the local distribution network to charge other companies to deliver power over their wires. After all, deregulation doesn't mean that ten different companies string up wires to your house and you decide which one to turn on ... it means that different companies are responsible for putting the power onto the common grid based on what is consumed by their customers.

So based on that, the rebate per Kilowatt Hour fed into the local grid would be a percentage of the retail price, representing the percentage of the retail price normally paid to the generator of the power. For example, this source claims that an average in the United States, 60% of the cost of electricity is for generation (NB. cited as an illustration, not as a definitive source). For moderate levels of rooftop solar power production that would be about 65%.

What is "moderate levels"? That would be production of power at rates that still leaves a neighborhood as a net consumer of power through the local substation. In that case, the local rooftop solar is not consuming transmission services. At rates of production where the local substation has to be configured as a power resource which is transmitting power to the grid, the percentage overall would have to average 60%.

On the other hand, there is an argument that being paid the retail price is actually underpaying the rooftop solar power producer. In terms of fair commercial prices, it may be that the peak in power demand lines up with peaks in solar energy production. There is also the situation when troughs in other energy supplies line up with peaks in solar power production. Either or both of those can imply that the rooftop solar prevents the system from having to expand its capacity, it is saving the system money, over top of the current price of electricity. And since the hottest, sunniest, cloud free days are both days when the AC is running, and also the days when the wind turbines tends to be spinning slower, if at all, both of those could well be true for Texas.

They would be even more certain to be true if Texas pursued offshore Gulf Coast windpower, since offshore wind tends to have a peak a little after sunset, because land and ocean cool at different rates at night.

Meanwhile the biggest discount of them all is that the price paid by the household is only a fraction of the total cost to the economy of unsustainable coal and natural gas fire electricity. It is long term suicide as an industrial economy to rely on coal and natural gas for electricity. Rooftop solar power is not imposing the cost of that inter-generational tyranny on our economy, and so its fair for solar power to be credited for that benefit.

If the carbon price that we must pay to get to carbon natural is in the range of $60-$90/ton, that means about 3-4.5 cents per pound. According to the EIA, a Kilowatt hour from coal emits from 2.08-2.18 pounds of carbon, so should be costed at an extra 6.24-9.81 cents per Kilowatt Hour. At the average 11.7 cents per kWh for residential customers, the unpaid cost of coal ranges from 53% to 83% of the commercial cost of power.

Natural gas, according to the EIA, emits 1.2 lbs of CO2 per kWh, so should be costed at an extra 3.6-5.4 cents, with an unpaid cost ranging from 31% to 46% of the commercial cost of power. And, as Scientific American recently covered, this may be a substantial underestimate, as this may not account for the full amount of methane leakages occuring in US natural gas production, which would mean that for the next several decades, at least, the greenhouse gas impact of methane may be just as bad as that of coal.

For our discussion, this range of 31% to 83% of the unpaid costs of climate suicide emissions suggests that paying full retail rates is close to being a fair price, and is more likely to be an excessively low price. When cost of capacity expansion is taken into account, then for Texas, with its pattern of peak power demands and available complementary renewable resources, its even more likely to be below a fair price.

If Net-Metering is a Fair Price, What's The Problem?

The problem from the utility company's perspective is that nobody is being charged for that free ride, and they don't want the charge to come only from their accounts and only for rooftop solar power.

After all, many power companies are commercial corporations, which means that they are essentially sociopaths that pursue their own perceived short term interest. That means that if doing good is more lucrative, they'll do good, and if doing evil is more lucrative, they'll do evil. When offering incentives to get solar power on people's rooftops helps them avoid being charged a steep penalty for failing to meet a Renewable Power mandate, that's what they'll do. When they can boost their bottom line by waging a propaganda war

What about power companies that aren't sociopathic? Those would mostly be community owned utilities. And there, it depends on where the balance of local political power lies. In Austin and in San Antonio, the balance of political power lies on the side of promoting solar power, and, thanks to local mandates, those are the two bright spots in solar power generation in the State of Texas.

But for that experience to be repeated statewide, its necessary for solar to be more lucrative to commercial corporations, which is to say, to sociopathic going concerns:

  • The Renewable Portfolio Standard should be set to meet 25% of all electricity consumed in Texas by 2025, with an annual required rate of growth sufficient to meet that standard. And in any year where the target is exceeded, that surplus should be added in to the 2025 target. This would renew the benefit to the utilities of encouraging all forms of renewable energy;
  • Those utility companies that do not offer net metering to households up to the average monthly energy use of the household should have to demonstrate to utility regulators that they are paying retail solar power producers the full avoided cost of power being made available by those producers. This would both lead to many utilities offering net-metering, to avoid having to make the rate case, and would put a floor on what utility companies would have to pay to all customers not offered net-metering; and
  • The US should adopt a policy that puts us on the path to charging those threatening the destruction of our national society and national economy for the privilege of emitting greenhouse gases. Two tenths of a cent added per year over fifteen years, starting with the largest emitters in the first five years and then expanding to all original producers of products that emit greenhouse gases when used over the next ten would be a start. It wouldn't be enough to get us where we need to go, but it might be enough to get us moving in the right direction.

Now, what are the political prospects for any of this getting passed? In the short term, its hard to see anything useful getting done and, indeed, we are more likely to see additional efforts to get the first modest policy beginnings overthrown.

But the Sunday Train is not primarily about horse race politics, its more about what we need to get done and how to go about doing it. In the short term, the brightest hope in Texas is that additional cities may learn from the experience of Austin and San Antonio and establish their own program making their city another seed of hope for the future.

Conclusions & Conversations

The Sunday Train only really begins when you hop and board and join the conversation, and so that is where I want to turn it over to you.

And while it is easy to get gloomy when comparing the magnitude of the challenge we face with the amount of progress currently being made, at both state and national levels ... what I would like to ask is what seeds of hope do you see in your own backyard ~ whether neighborhood, city/town/county, state, or region?

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