Paradigm Shift. Forbes on solar powered corp death spiral

[madd0ct0r]

3 Utilities Most Likely To Fall In Death Spiral, According To Morningstar
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Utilities that rely on nuclear fleets and speculative coal plants are most vulnerable to the solar-powered “death spiral” roiling the electric industry, Morningstar MORN +0.3% analysts conclude in a report to institutional investors.

Utilities like Exelon and Dynegy will suffer most as centralized power generation loses value to competitive solar installed by customers at home, according to Morningstar’s “Utilities Observer” report for February. Heavily regulated utilities like Pinnacle West PNW -0.86%parent of Arizona Public Service, are also vulnerable in places where regulators have only begun to address the competitive threat from distributed generation.

The Morningstar report begins with a warning to investors:

Investors beware: Distributed generation could kill utilities as we know them today. It could take a decade or more in the United States, but some European utilities already are facing change-or-die challenges due to DG. Technologies such as rooftop solar reduce the value of utilities’ century-old centralized networks, and erode their efficient-scale competitive advantage. As more customers adopt DG, utilities’ costs to maintain and operate the grid must be spread across a smaller customer base, raising customer rates and increasing the economic incentive to cut the cord. The death spiral ends when investors—equity and credit—are left holding an empty purse of dormant power plants and copper wires.

On the bright side, the analysts point investors toward utilities that are exploring ways to build competitive advantages with distributed generation, like NRG Energy NRG +0.06% and Edison International EIX +2.3%. These utilities are changing their business to take advantage of opportunities in distributed generation, as suggested by former Energy Secretary Steven Chu.

The analysts suggest investors also look for utilities that have regulatory protection for their legacy business:

I'm not to interested in which corp will die or not, but it's a definite paradigm shift when Forbes is reporting stuff like this.

[Borgholio]

Just bought a house with built-in solar. I generate about 20kw per day, up to 30kw in high summer. Multiply that by millions of homes and I can see why the traditional power industry is having issues. Nothing like this has ever happened before in the history of grid electricity.

[Mr Bean]

It is interesting except Solar still is not to the point where you can line your roof with solar panels and power your entire house even in Arizona. Leaving aside the whole issue of nighttime and power storage, the average American home needs 30 square meters of solar panels to cut your power bill in half. That's in Arizona mind you. New England needs much more than that. Home Wind Generation is even worse on a local level. You might be able to coat the average roof in 40% solar panels and get a 30-60% power reduction in use depending on the weather but still without at least 50% efficient solar panels we are not going to see people only paying the power company from 6pm to 6apm.

Considering the way companies like Duke already run the energy market (IE exactly enough to keep the lights on in the majority of customers houses and not a dime more) it's only going to cut into their profits if everyone uses 30% less energy not threaten their way of life.

[Magis]

Just bought a house with built-in solar. I generate about 20kw per day, up to 30kw in high summer. Multiply that by millions of homes and I can see why the traditional power industry is having issues. Nothing like this has ever happened before in the history of grid electricity.

I assume you mean 20 kw-hr and 30 kw-hr per day. If so, that's an average of 830 Watts during the day, with up to an average of 1250 Watts in high summer. Given these numbers, I wonder how long your pay-back period is going to be. Assuming, say, a grid electricity rate of $0.15/kw-hr, then your system is producing the equivalent of $4.5/day of electricity in summertime, and less during other days of the year.

This article has it completely wrong, in my view. Solar photovoltaics are currently the most expensive per-unit-energy of any mainstream energy technology, and individual at-home projects won't even benefit from an economy of scale that could be achieved through large projects via the grid. The economics of it just don't make any sense. Whatever someone could do at home, the grid could do with less money, and with less reliance on energy storage devices during periods of low sunshine.

And this isn't even considering the fact that the lifecycle greenhouse gas emissions associated with solarphotovoltaics are 288% that of nuclear, and is almost as bad as coal w/ carbon capture.

edit: if you do have a rooftop-style 20kW panel array, I'd still be interested in examining the numbers/cost.

[Darth Tanner]

Very interesting article, do you have a link – I’d like to show it to me boss.

Surely customers with their own generation cannot easily 'cut the cord', even if you could generate 100% of your usage with solar or a wind turbine these are by nature intermittent technologies unable to respond to 24/7 demand - you’re always going to need the National Grid to backup when the sun doesn't shine or the wind doesn't blow or you simply want to use more electricity than your installed capacity can provide or simply because the renewables can’t keep the voltage up, also without a connection you wouldn’t be able to sell any excess.

Installing the embedded generation may be undercutting the established transmission connected generators but that simply means they have to charge more for their export - the UK gas fleet is becoming largely a backup for wind when not blowing at capacity so it has to charge more per MWh exported than if it was running 24/7 base load. Unless customers are willing to cut themselves off from the central system like the article claims they have no choice but to pay for the central system as well as their embedded generation. Obviously the more embedded is installed the more per KWh the cost of the transmission system is going to be – but the more embedded generation you have the less of a transmission system and central generation you require – you can more or less allow it to atrophy to some extent. Obviously intermittent technology like wind which can cease generation altogether at relatively random periods counters this in that you need 100% alternative sources to avoid blackout.

This is interestingly similar to something the UK is facing now where GSP (local area grids) have enough embedded generation that they are spilling out on the transmission system - which under the current arrangements they effectively do not pay to use (indeed most receive massive payments under Triad arrangement). National Grid are trying to find some means by which embedded generational have to pay for the transmission system which could be a major game changer for non-renewable embedded.

[Borgholio]

I assume you mean 20 kw-hr and 30 kw-hr per day.

Correct.

If so, that's an average of 830 Watts during the day, with up to an average of 1250 Watts in high summer. Given these numbers, I wonder how long your pay-back period is going to be. Assuming, say, a grid electricity rate of $0.15/kw-hr, then your system is producing the equivalent of $4.5/day of electricity in summertime, and less during other days of the year.

Peak wattage is ~3kw at high noon and an hour or so each way. Will probably be a bit higher in the summer and for a bit longer. Currently with Tier 1 pricing it's 13 cents per kwh so I am banking about $3 per day. Your estimate of $4.5 per day in summer is probably accurate. If in the summer we snuck into Tier 2 pricing, the value of the power will go up from 13 cents to about 15 or 16 cents per kwh.

Payback period ranges from 2.5 years to 15 years depending on how you figure it. The cost of the solar was included in the cost of the house...our home builder has included solar with all new homes for the last several years. I paid $7,500 for an upgrade from the low end (1.6kw) to the highest-end (3.2kw) system they offered. Out of that $7,500...I get $5,000 back on next year's tax return as a federal rebate. So out of pocket, I only had to pay $2,500 which would be paid back in 2.5 years or so.

The retail cost of the system I bought is $16,000. So for that it's closer to 15 years payback. Depends on how you look at it.

[Darth Tanner]

Solar in the UK is subsidised to be around the 10-12 year mark on payback. (Which amounts to a nearly 200% export tariff subsidy)

Although the cost of energy is likely to rise (not as much in the US thanks to your pervasive fracking) solar is still a terrible investment. It does however make matters worse for everyone else as its subsidy is dumped onto home energy bills which for all renewables makesup around 16% in the UK domestic bill.

[madd0ct0r]

fergot to link: http://www.forbes.com/sites/jeffmcmahon ... rningstar/

[mr friendly guy]

It is interesting except Solar still is not to the point where you can line your roof with solar panels and power your entire house even in Arizona. Leaving aside the whole issue of nighttime and power storage, the average American home needs 30 square meters of solar panels to cut your power bill in half. That's in Arizona mind you. New England needs much more than that. Home Wind Generation is even worse on a local level. You might be able to coat the average roof in 40% solar panels and get a 30-60% power reduction in use depending on the weather but still without at least 50% efficient solar panels we are not going to see people only paying the power company from 6pm to 6apm.

Considering the way companies like Duke already run the energy market (IE exactly enough to keep the lights on in the majority of customers houses and not a dime more) it's only going to cut into their profits if everyone uses 30% less energy not threaten their way of life.

How much does the average consumer use?

I have 1.5Kw panels, and generate around 9 kilo watt hours tops on a good day. Yet looking at my power bill pretty much almost all periods (except for some colder winters) I have produced more than I use. Now I am single and mostly just wear warmer clothes as opposed to turning the heater on. Borgholio seems to has 3 kw worth of panels and I would have thought that would be sufficient for a couple, maybe even a small family.

[Mr Bean]

How much does the average consumer use?

I have 1.5Kw panels, and generate around 9 kilo watt hours tops on a good day. Yet looking at my power bill pretty much almost all periods (except for some colder winters) I have produced more than I use. Now I am single and mostly just wear warmer clothes as opposed to turning the heater on. Borgholio seems to has 3 kw worth of panels and I would have thought that would be sufficient for a couple, maybe even a small family.

903 Kw a month working out to 30.1 Kw per day. However the majority of use (As in 70%) of use is during nighttime hours. Unless your a shift worker going to sleep at 7am and sleeping to 2 you spent the majority of your power use between 6pm to 6am with it going an hour or three either way depending on season. That's for a household not a single person mind you.

[Irbis]

Point 1: industry. Unless we want to roll back standard of living, there will always be buildings requiring vastly larger amounts of energy than photovoltaics can supply in general area. Want a car? Fridge? Computer? Hell, bike, even? Someone will still have to supply all the energy for this.

Point 2: the peak energy usage for home consumer is in the evening, after work. Television prime time, peak computer games usage, peak energy for cooking, all happens in the evening. Which, unless you happen to live on the poles, happens after sunset. Anyone sees little problem here? Yes, you can build energy storage network, but seeing what English had to do just for peak tea time, consisting just of increased kettle usage, it would need to be so vast it would dwarf existing electricity generation. Also, this means huge energy losses due to low efficiency.

Point 3: you can't cheat laws of physics. My favourite image on applicability of solar energy in Europe:



When Germans energy leaders compared solar energy in central Europe to growing pineapples in Alaska, they weren't lying.

[madd0ct0r]

Irbis, you can't seriously be using the Eastender's effect to argue solar won't work?
Talk about straw instead

[Sky Captain]

There is no question that large scale usage of solar and wind energy will require massive storage capability. Without storage there is little point in adding more solar capacity than required to meet average daytime demand. IIRC in European countries with large solar and wind installations they already have to shut down some wind or solar power stations when supply exceeds demand.

[Darth Tanner]

I don't think anyone has even approached having enough solar to meet daytime demand, solar is just too small in terms of capacity and is actually reasonably predictable to work around - other power stations can plan their activity around it, unlike wind where it comes on and off at more or less random.

The main cause of having to shut down wind turbines in the UK is transmission limitation - most of the wind generation assets are in Scotland which have to send their generation down through the entire country to the demand centers in the SE and Midlands - when the cables cant handle the load there is no choice but to turn off the wind turbines. This is another hidden subsidy of wind as massive amounts are being spent to wire in generation from wind turbines in unpopulated areas that they largely do not pay for.

Energy storage is a fools dream pumped storage facilities are essential to all modern grids but they cost major £ and are only really any use for real time balancing - in the UK they can frequently charge £200-400/MWh for their export and would be rapidly exhausted if used for baseload. When people talk about storing large scale energy to make up for the variances of solar/wind they are talking about a pipe dream. The technology simply isnt there yet... or even in the medium to long term.

[LaCroix]

When Germans energy leaders compared solar energy in central Europe to growing pineapples in Alaska, they weren't lying.

That's why most of Europe is currently being covered in Wind turbines instead of solar panels. Still, there is a lot of PV installed on roofs, just bigger - usually in the 4kW size (about 30m²).

[Irbis]

Irbis, you can't seriously be using the Eastender's effect to argue solar won't work?

With solar, you will have Eastender's effect every moment starting every twilight, or hell, every time there's some clouds on the sky. The only way to balance solar's randomness is to start burning even more fossil fuels in virtually every developed part of Europe, USA, Russia and China except maybe southernmost tips of these (and central USA, due to very low population density).

That's why most of Europe is currently being covered in Wind turbines instead of solar panels. Still, there is a lot of PV installed on roofs, just bigger - usually in the 4kW size (about 30m²).

Wind turbines have problems of their own. Even if you don't count them being even more random and environment affecting than solar, they tend to fall apart or even outright erupt in flames or disintegrate in strong winds:



Now, in northern Europe, where most of these are installed, we recently had 2 very strong storms in 2013 alone, Cyclone Christian and Cyclone Xaver. These will only get stronger and more frequent with global climate change - what we will do then? Replace every destroyed turbine twice per year, or spend even more resources trying to make them stormproof?

[LaCroix]

Wind turbines have problems of their own. Even if you don't count them being even more random and environment affecting than solar, they tend to fall apart or even outright erupt in flames or disintegrate in strong winds

Yeah, storms that rip solar installations and whole roofs off. Or smash them with debris. Or hail. Those will of course damage wind turbines if their safety systems fail. A quick search showed about 4 or five instances of a turbine failing catastrophically in storm. So what? Every technology has it's problems, so what is your point?

As I said, usually, wind energy is much more efficient in Europe than solar, because we have more wind than sun. That's why companies build them and no solar farms. Do you contest that?

[Sky Captain]

Catastrophic failures of wind turbines given how many are built are rare enough to not be much of an issue. I think they are rated to survive 60 or 70 m/s winds if safety systems work as designed. Storms with winds like that are very rare even in North Atlantic.

[Spoonist]

Not this crap again. We have been through this already.

With solar, you will have Eastender's effect every moment starting every twilight, or hell, every time there's some clouds on the sky. The only way to balance solar's randomness is to start burning even more fossil fuels in virtually every developed part of Europe, USA, Russia and China except maybe southernmost tips of these (and central USA, due to very low population density).

...except, that is not how the science or even the energy market works. The only way your RAR!!! would even remotely translate would be if everyone had solar, which isn't optimal or reality anywhere.
No you don't get the kettle effect every moment with solar. Solar is relatively predictable, hence the baseline can be adjusted.
If the system can handle massive events like turning a nuclear reactor on or off during maintenance or somesuch event then why wouldn't it be able to handle minute stuff like twilight or clouds.

Wind turbines have problems of their own. Even if you don't count them being even more random and environment affecting than solar, they tend to fall apart or even outright erupt in flames or disintegrate in strong winds:

That is stupid on a grand scale. If that was true to even a small degree we would have huge headlines everytime a hurricane passes by, do you want to guess why we don't? (For those interested there was a study done after the big one in US 2012, miniscule damage to solar and wind). Do you really think this is an industry changing issue? Do you really think that if it was an industry changing issue that the industry in question wouldn't fix it?

Now, in northern Europe, where most of these are installed, we recently had 2 very strong storms in 2013 alone, Cyclone Christian and Cyclone Xaver. These will only get stronger and more frequent with global climate change - what we will do then? Replace every destroyed turbine twice per year, or spend even more resources trying to make them stormproof?

And did you bother to check the effects those storms had on wind and solar installations? Wanna guess how many wind turbines they had to replace after those storms and which year those turbines were installed (ie how old they were)? Wanna guess after the storms passed which energy type was still available and which wasn't to the greatest degree, oh that would be distributed energy types since they are localized wouldn't. So wanna guess which farmers had electricity when the power was down in the grid?
Oh, lets just stop this silly charade.

Whatever problems windpower has it isn't tech its politics.

[Darth Tanner]

If the system can handle massive events like turning a nuclear reactor on or off during maintenance or somesuch event then why wouldn't it be able to handle minute stuff like twilight or clouds.

Except if solar was built out to be a major source of energy, like wind is then you would indeed have these problems... we already face this in the UK where you can suddenly have 3-4GW of wind cutting in or out because wind speed dyed down - thus requiring gas/diesel to serve as standing reserve.

Obviously though as you say the system has to have this reserve capacity to some extent anyway to backup for failures & demand changes but the growth of intermittent is massively increasing the need for reserve capacity which is increasing the cost of providing a stable Grid.

The idea that every turbine needs replacing twice a year because of storms is a but ludicrous though... mechanical failure of wind turbines is a growing problem, especially on off short facilities where life expectancies have been massively overestimated but their not the death bell you seem to believe Irbis.

[Magis]

Not this crap again. We have been through this already.

With solar, you will have Eastender's effect every moment starting every twilight, or hell, every time there's some clouds on the sky. The only way to balance solar's randomness is to start burning even more fossil fuels in virtually every developed part of Europe, USA, Russia and China except maybe southernmost tips of these (and central USA, due to very low population density).

...except, that is not how the science or even the energy market works. The only way your RAR!!! would even remotely translate would be if everyone had solar, which isn't optimal or reality anywhere.
No you don't get the kettle effect every moment with solar. Solar is relatively predictable, hence the baseline can be adjusted.
If the system can handle massive events like turning a nuclear reactor on or off during maintenance or somesuch event then why wouldn't it be able to handle minute stuff like twilight or clouds.

Nuclear outtages are coordinated with the electrical utility months in advance, and unexpected powerplant shutdowns are a common cause of blackouts (actually, by definition, the only cause of blackouts). The electrical grid isn't as nearly accomodating to supply/load transients as you seem to think it is. Even thermal experimental facilities in the 10s of MW range need to have their experiments coordinated with the utilities to prevent disruptions in the grid.

Wind turbines have problems of their own. Even if you don't count them being even more random and environment affecting than solar, they tend to fall apart or even outright erupt in flames or disintegrate in strong winds:

That is stupid on a grand scale. If that was true to even a small degree we would have huge headlines everytime a hurricane passes by, do you want to guess why we don't? (For those interested there was a study done after the big one in US 2012, miniscule damage to solar and wind). Do you really think this is an industry changing issue? Do you really think that if it was an industry changing issue that the industry in question wouldn't fix it?

Whatever problems windpower has it isn't tech its politics.

The problems with windpower are: economics; environmental (specifically land-use); unreliability; short lifespan due to fatigue cracking in the carbon fiber turbine blades; and damage to the axial bearing that occurs during periods of low wind.

[Darth Tanner]

Nuclear outtages are coordinated with the electrical utility months in advance, and unexpected powerplant shutdowns are a common cause of blackouts (actually, by definition, the only cause of blackouts). The electrical grid isn't as nearly accomodating to supply/load transients as you seem to think it is. Even thermal experimental facilities in the 10s of MW range need to have their experiments coordinated with the utilities to prevent disruptions in the grid.

I think this must depend of the Grid, the UK is easily capable of absorbing several major power station trips by design - the idea that a 10MW facility could disrupt the Grid, even the local Grid is absurd, how on earth would such a small facility be expected to coordinate testing/running with the National Grid if it truly had any meaningful impact on stability. My company runs around 130MW of power station and we can fire up at our own discretion night or day, we barely even make the frequency dial move when turning on or off.

Obviously the UK National Grid is one of the best (and best funded) in the world and has the advantage of a very dense demand base compared to many countries but if other countries are truly as vulnerable as you say then they would be facing daily trips even worse than shit holes like India.