Carbon Footprint Reduction: History of Residential Solar and the Duck Curve
In the 1970’s, solar PV was so expensive it could only be used on satellites. By the 1990s, costs had dropped considerably and in the late 90’s, I began to look into residential solar for our house, but it was still too expensive. Most people who had solar were off-grid, and they had it installed because they had no other choice. Starting around 2000, the states began discussing Renewable Portfolio Standards (RPSs) for utilities, in the absence of any leadership from the Bush administration. In 2002, California established its RPS, with the goal of increasing the percentage of renewable energy in the state’s electricity mix to 20 percent by 2017. In 2011, Governor Brown signed a law requiring 33% renewable generation by 2020. RPSs specify that a growing percentage of the utilities’ power needs to come from solar, wind, small hydro, geothermal, or biomass. Large hydro and nuclear (which is also zero carbon, though not without its own pollution problems) were not counted toward fulfillment of the RPS. In addition, the states began to revise their utility regulations to accommodate residential solar. Residential solar is also not counted towards the utilities’ RPS, because it is installed “behind the meter”, so its impact only shows up as a net decrease in the customer’s power utilization, not as an increase the renewable power sold by the utility.
In Europe, Germany had introduced a feed-in-tariff (FIT) in the early 2000’s to promote the introduction of renewable energy. The idea behind a FIT was to compensate individuals and companies that installed solar or wind at a rate considerably in excess of what they had to pay for electricity, in order to incentivize renewable energy generation and to ensure a profitable return on the, at that time, high capital cost of the equipment. The FIT was wildly successful, but the utilities in the US balked at introducing a FIT. Instead, they proposed Net Energy Metering (NEM). NEM has a long history in the US, the first law having initially been introduced by the state of Minnesota in 1980. NEM was first offered in California in 1998 by two utilities, and in 2005 all utilities in the US were required to offer NEM “on request”, although as of 2017 four states still had no legal or regulatory framework for offering it.
The idea behind NEM is that a utility customer which installed solar would only pay the difference between what their solar PV system generated and what they used from the grid, the “net” energy used, plus a monthly “connect charge” like what you pay for Internet service. Since solar PV systems only generate power during the day, this enabled homeowners to install PV and receive credit which they could then spend at night when the PV system wasn’t generating power. Or if they generated more power in summer and used more power from the grid in winter, they could accumulate credit during the summer and spend it in the winter. Such is the case for our house, since our neighbor to the south has a “hedge” of large, over 100 ft. redwoods along the property line that block sun during the afternoons in winter.
NEM has also been wildly successful and as the cost of solar has dropped, more and more homeowners began installing it. In addition, utilities have been buying increasing amounts of solar power on the wholesale market to fulfill their RPS requirements as more and more utility scale solar projects have come on line, in response to dropping equipment costs. The result is the infamous “duck” curve, which you can see above. As more solar comes on line, the net load in spring, when folks in the Central Valley aren’t yet using their air conditioners and people with residential solar are generating more power than their houses are consuming, starts dropping year over year in the afternoon. This year in late March, the California independent grid operator, CAISO, reported that on one day solar made up 50% of the total power mix. CAISO this year is looking at potential curtailment, where solar farm operators are requested to stop feeding power into the grid, in order to accommodate other sources like large hydro which is plentiful this year due to the winter rains and which is hard to ramp up and down.
NEM has become so successful that the utilities have begun worrying about what it will do to their business models, and have started a marketing campaign against NEM, with a message that solar customers aren’t paying their “fair share” of the grid costs. Most studies have shown that residential solar in fact contributes to a smoother operation of the grid. The California Public Utilities Commission last year doubled the “connect charge”, from around $5/month to around $10/month in response to this campaign, but has so far resisted the extreme measures of other states, like Nevada, which revoked NEM for existing solar owners in 2015 (but which has partially reinstated it).
The problem of the duck curve remains however. The response of the CPUC has been to require all customers to start on Time of Use (TOU) tariffs as of 2019, where they will pay more for electricity at times when there is high demand (kind of like Uber’s surge pricing). Other reforms in the rate structure are planned to disincentive feeding power into the grid in the afternoon when nobody is at home and, instead, to feed it in at night when people come home from work and turn on the TV. In 2004 when we installed our original solar PV system, the highest TOU rate was around $0.30/kwh from 11 AM to 5 PM in the summer, and the lowest was around $0.08/kwh in the winter. Today, the highest TOU rate period has shifted to 12 PM to 6 PM in summer, and by 2022 it will shift to from 4 PM to 9 PM in the summer because there will be so much solar on the grid that the Central Valley air conditioners won’t have any problem getting power during the summer afternoon.
The obvious response is to buy a battery storage system, store power in the afternoon then use it when you get home at night. Right now, a battery about doubles the cost of a solar PV system and isn’t cost effective, but with dropping battery costs and the movement of the peak period TOU to evenings, likely we will need to get a battery by 2022 if we are to preserve enough credit for the winter months when we only get around 4 hours of sun on our solar PV. So keep this in mind if you decide to get a solar PV system. Even if you live in a solar friendly state like California, the tariff structure will be changing to make using the grid as a battery less attractive.
Image source: vox.com
