Grid-tied without independence … what’s the point?
Grid-tied without independence … what !?! … what’s the point …
Just read this at RMI and was shocked at the prospect that grid-tied PV systems (and probably wind, too) are not normally run by servo mechanism that locks out the network to favor independence in the event of a grid failure. That’s just dumb.
“When The Power’s Out, Solar Panels May Not Keep The Lights On”
http://www.npr.org/2014/09/17/348987688/when-the-powers-out-solar-panels-may-not-keep-the-lights-on
It goes to show that the objective behind alternative energy is the reduced net cost of living, not “green”, and not even independence or emergency backup.
“The U.S. Electric Grid has a Baby Boomer Social Security Problem: Four ways to navigate the aging, financially troubled waters ahead”
http://blog.rmi.org/blog_2014_09_24_us_electric_grid_has_a_baby_boomer_social_security_problem
And we see here that green energy advocates are ignoring the reality of fossil fuels. Fracked gas and oil, and modern methods of exploration and drilling have glutted the markets now and for the foreseeable future. The US is totally independent of imports. Hooking up a furnace to a single supply line of gas, an electrical wire, or a tank of oil is a heck of a lot cheaper and more importantly, easier to embrace (i.e. not exotic) than the fully loaded the capital costs and intimidation of a complex physical infrastructure of PV panels and controls.
This is why there will be no investment in nuclear and coal refurbishment. Will that be good for PV? I doubt it, since fossil fuels will be everywhere.
GBA Detail Library
A collection of one thousand construction details organized by climate and house part
Replies
The arguments for grid-tied solar that make sense to me...
Since most electricity is still generated by coal - which pollutes and produces green-house gas - switching to grid-tied solar would reduce pollution. The economics for grid-tied solar are becoming more compelling as PV prices come down - so the cost of lowering my environmental impact is coming down quickly.
You can also set up the system so that you can add a battery/inverter later, when battery prices come down, and achieve independence at that point. Hopefully Tesla's huge battery factories will help drive prices down.
Residential PV also provides a hedge against a future jump in electric rates - due to a carbon tax or other increases in fuel costs.
I haven't made the jump to grid-tied PV yet but its looking more compelling all the time.
The US is not totally independent of imported oil. Not even close. We produce a little more than we import.
The process involved in getting crude oil out of the ground and delivering it to my house in usable form is pretty complex, compared with producing electricity from roof-top PV panels. Once we figure out how to economically store power, the grid becomes superfluous, just like Saudi Arabia and Texas will.
Flitch,
Off-grid PV systems require expensive batteries ($4,000 to $10,000+) which require regular maintenance. The batteries last about 8 years before they need to be replaced.
Trust me -- anyone who has a PV system is better off being grid-connected than off-grid. I say that as someone who has lived off-grid for 39 years.
The state regulations control whether grid-tied systems are "islandable" or not, and those regulations vary by state, and are changing daily. The (rational) fear is that without sufficient specifications on the inverters distributed PV systems could backfeed fractions of the grid in a damaged-grid situation, posing a hazard to the repair crews. This is not a technically difficult problem to solve, but the standards and regulations need to be in place.
Having distributed PV reduces peak loads on the grid, and makes the grid more stable. Losing 10kw of power generation when a cloud flies over is easier to manage than having a nuke forced to shut down when a branch touches an overloaded powerline. Offsetting expensive peak power with PV has both a grid-stablizing and rate-stablizing effect, beyond the carbon emissions it is offsetting.
Don't drink too deeply from the frackwater tap- the happy-happy-joy-joy of the current US oil boomlet isn't everything the public-relations people say it is. The "easy oil" production in the US is declining, and the capital expenditures it takes to keep the tight-oil flowing is taking a huge bite out of the balance sheets of the oil companies. Now that WTI-Cushing is running in the $90/bbl range many of those shale-oil plays are losing money on every barrel (though others can still make money.) As a result the oil companies are having to cut back on their drilling rate until the glut dries up (which it will.) Light-tight oil wells typically pump 95% of all the oil they EVER will within the first three years, so to keep the oil flowing they have to drill-baby-drill, repeat- it's a total hamster-wheel, nothing like a Prudhoe Bay kind of deal. They can only pack so much cash down a frack hole before their creditors call it in. Since 2005 the capital expenditures of the major oil companies have tripled, but their combined output has fallen, as the traditional oil fields have declined. The state-owned and kleptocrat oil companies of OPEC and elsewhere can still make money at $50/bbl, but the oil majors have been running cash negative, even at $100/bbl world price. See: http://blogs.platts.com/2014/07/30/peak-oil-forecasts/
The shale gas situation isn't quite as dire, but it's not a cake-walk either. Dry gas wells (eg coal seam methane) can't make money at the current wellhead price for gas, but those that produce "liquids fractions" of propane/butane/etc are still profitable, as long as the price of propane stays high.
Full disclosure: I have a family member in the oil & gas exploration biz, working projects from Alberta to Zimbabwe.
At $100/bbl oil and $2/watt PV (the unsubsidized current cost of utility-scale PV in the US, and the unsubsidized cost for small-scale rooftop in Germany or Australia), you get more net-energy where the rubber meets the road out of electric cars than internal combustion engine cars. This is partly is due to the (best-case) 25% well-head to wheels efficiency of the oil burner, vs. the ~65% net efficiency (after conversion losses) of PV-to wheels in an electric car. This ultimately means developing oil fields that cost even $75/bbl over the lifecycle of the oil field is at risk of asset stranding as the transportation paradigm shifts. See: http://www.qualenergia.it/sites/default/files/articolo-doc/KC-ESG_Toil%20for%20Oil-1.pdf
At $2/watt PV is by no means the cheapest green source of electricity out there- utility-scale wind is currently less than half the cost (even cheaper than combined cycle gas at the current record low price for natural gas in areas where the capacity factor of wind is 30%), and it's getting cheaper every year. But PV is getting cheaper faster than anything else, and is likely to be the cheapest source of energy of any type (green, brown, black) before 2030.
It doesn't matter too much whether you can island it or not- the value of PV is there from an environmental and cash point of view. It also doesn't much matter that PV (or wind) isn't a dispatchable source of power. Over the real estate covered by a regional grid PV & wind are PREDICABLE 24-48 hours in advance- far more predictable than the grid load(!). The means PV & wind do not add to the amount of spinning reserves or "backup" that detractors seem to think is a problem unique to non-dispatchable renewables. All grid power needs backup- you'd never be able to re-fuel a baseload nuke if there weren't sufficient capacity to cover it for those weeks of refueling and ramp up. What matters is reliabity and predictability, and distribute power has both in spades. You can potentially lose a gigawatt of nuke in 11 milliseconds (and have to plan for it), but you'd never lose that much wind or solar even over a several hour's time scale, and never in an unpredictable fashion.
In the ERCOT grid region (Texas), one of the only regions that has seen any growth in base load on their systems in the past 4-5 years, the capacity factors of even baseload fossil burners have been falling, due to the rapid development of wind resources, and the grid reliability has been improving year-on-year. As PV installation picks up in Texas it will shave a huge chunk of their growing peak loads as well.
Distributed PV is not very complex, nor does it impose a capital cost on the grid. It potentially will begin to when penetration rates reach 25% of the annual peak, but that day is years (if not decades) away in most of the US. Poor planning on the part of the utilities in Hawaii have allowed PV to hit over 100% of mid-day in some regions, but the solutions are not as expensive as the fossil-fueled generation that every one is trying to avoid by buying PV. The complexity of PV is not technical, the complexity is in the financial & regulatory aspects of regulated monopoly companies, companies that have not been exposed to competition (much) in the past 50 years. The state of New York is throwing out the rule-book and completely re-writing the regulatory framework where the grid becomes the platform for distributed power services. This is a very different business model from the guaranteed return on capital investment in return for reliable power that utilities have traditionally enjoyed, but it's the right thing to do. We don't need more central power generation, nor do we need (in general) major re-building of the grid infrastructure (despite it's age). The grid can (and will) be better managed for peak capacity, once power is bought & sold on a more transparent transactional basis. It's cheaper to build or subsidize distributed generation on the far side of a substation nearing it's capacity limits than it is to rebuild the transmission lines & substation to support more growth, and it's "fairer" to the ratepayers as well.
Actually the US has established domestic reserves and capacity to produces more oil and gas than it uses, but it maintains imports for other (geopolitical and business) reasons. It is in fact a net producer, not net importer. In 2012 the US became the 3rd largest producer of crude in the world.
Production exceeds consumption:
http://tinyurl.com/nxwgxvk
The US can afford to exit the world energy markets and lower prices for advantages to US citizens and businesses (fat chance of that). This would significantly increase competitiveness and slow down the current and accelerating decline of the US economy and geopolitical might on a work scale.
http://www.eia.gov/countries/index.cfm?view=production
Fitch: Why would you think exiting the world energy market would lead to lower prices? You think Exxon Mobil will give you and me a discount? Oil is fungible.
Our production of oil and liquids from gas has increased a lot in recent years, but we still consume at least a third more than we produce.
Fungibility is a business and accounting model not a fact of the physical properties of crude oil (or money, etc). I hardly expect any company to reduce prices just because they have a glut of supply. Instead, they will throttle the supply. Why did we go to Iraq in 1991? To stop the dumping of cheap, high quality crude into the world market (not to protect oil supplies as so many uneducated believe). There never was an “energy crisis” (1971 - 74); that was a propaganda intervention to stimulate the capitalization of nuclear power, which is not affordable otherwise.
When a country allows its citizens and enterprises to be treated as markets instead of as partners, beneficiaries and drivers of the economy, particularly regarding the supply and exploitation of strategic and fundamentals commodities and critical infrastructure (i.e. oil, gas, water, electricity, highways, rail lines, ports, fresh water, waste disposal, flow of capital, e tc) , greed eventually eats the heart out of the society.
Far be it from me to suggest that a smart, self-interested national policy of using the nations vast supplies of oil and gas in a strategic way to make the country more competitive internationally is to be expected, let alone hoped for.
The decline of US competitiveness: http://hbswk.hbs.edu/item/7094.html
It is foolish idea that US competitiveness is a function of the education system. Look at which countries the US is slipping behind. It ain’t their schoolin’ that puts them there; it’s the flow of capital and the cost of business. Here we are being killed because of the input costs (i.e energy, lumber, water, taxes, etc).
Any nation that has oil and gas and keeps the cost low for its own people and business, will ensure a healthy economy and affordable cost of living.
On my fist trip to Iraq, it was after Shock and Awe , they were complaining about the inflation of the price of gasoline: having recently raised from 3 to 5 cents per imperial gallon.
Dana … the economic model is missing a key element. These potentialities, who’s praises you sing, cannot be realized using the current business model. Gas and oil or PV and wind, it doesn’t matter, the model remains the same. The business viability of today's big commercial energy producers is a function of number of customers X’s the average monthly sales per customer. They just can’t think any other way.
Distributed production is a sophisticated model beyond the insiders’ ability to appreciate and execute. To work it requires a vast number of “customers” to join the program. It’s simply too expensive and exotic for home-based power generation to become a significant fraction of the energy supply side. The problem being that energy retailers don’t see this vast potential hoard or producers/co-suppliers as “partners”, they see them as “consumers”. The fact that the design of the basic and average system omits production site energy independence is proof of my point. There is no ability to recognize the incentive of independent production and use. The model in use requires the retailer to take ownership and control of the product and the interests of the producers is not only secondary to the retailer’s interests, it is treated with contempt and distrust – it’s adversarial.
Make the distributed producers partners, reduce capitalization entry costs dramatically (i.e finance the systems), and provide long term amortized turn -key low- maintenance systems that fit easily into a house, and there might be a chance. Instead, the distributed producers are just plain exploited by ridiculous entry costs, energy prices, retail industry-serving policies and short sighted regulatory thinking.
Flitch: It's the current economic model that makes tapping and using all of the known US oil reserves impossible, since the costs of extraction are too high to be profitable at $100/bbl. I'm a bit more sanguine about the mid-range financial prospects for the natural gas biz, but not so much about what it looks like 3-4 decades out. Yes, the US production rate is up, but the oil majors have been running cash negative to get there, and those shale oil plays are good for less than 5 years per well.
If prices fall, they're screwed, if prices rise they price themselves out of a segment of the transportation sector. Read at least the executive summary of that Kepler Cheuvreux bit, then note that the projected cost of PV in 2035 the used are too conservative- those costs are already being beaten in the real world contracts for even small rooftop solar in Germany & Australia, and utility scale solar in the US. And then note that other forms of electricity are currently cheaper than PV- the danger of asset stranding for the oil majors is already here, and will be dead-obvious to even armchair-observer/investors before 2025.
Thes are capitalization problems, it's NOT as simple as "...a function of number of customers X’s the average monthly sales per customer.", since oil field development and renewables investments are time-dependent, and the markets are variable. Money goes out now, and needs to be recouped over the lifecycle of the investment, while paying the interest burden. At the VERY high capital expense of NEW oil, compared to new-wind or new-solar going forward it's advantage-renewables, which have a falling cost trajectory, and a strong DISadvantage for new-oil, which has a rising trajectory. The cost-rationality crossover between electric vehicles vs. internal combustion has already been passed, only held up by the financing & infrastructure hurdle for EVs. But in less than a decade those hurdles will be much shorter than they are currently.
Falling US demand has had as-large or larger affect on the perceived US "oil independence" as new US oil production (that has come at such a negative effect on the balance sheets of the oil companies), but that demand can fall much faster with policy shifts, and that expensive new oil can dry up very fast with either lower oil prices or higher interest rates. (Trust me on this one- my brother in-law isn't renewing the lease on the apartment in Calgary, eh? ) Oil is too cheap right now for many of these plays. The fact that the reserves are known to exist doesn't make them profitable.
When comparing lifecycle costs of energy for say, combined-cycle gas vs. wind, the cost for wind is entirely in the capital financing, whereas for natural gas it is dominated by fuel costs. But since wind has no exposure to fuel price volatility, it's cost is known the day the signature ink hits the contract. It's already cheaper than combined cycle gas at $4/mmbtu gas pricing, but is on a 7-8% "learning curve" (which means every time the installed base doubles, it's cost is 7-8% lower), and there is almost no room for natural gas prices to fall before it becomes uneconomic to go after shale gas. What gas has going for it in the near term is dispatchability, but that isn't particularly valuable until/unless the lion's share of power is coming from non-dispatchable and and variable renewables. As grid economics become more transparent & tradeable, and as the EV market penetration goes up, even the value of dispatchability will be diminished. Most casual observers are clueless as to just how dramatically the utility busieness model is changing (and sadly, some utilities are clueless too.)
The notion that " It’s simply too expensive and exotic for home-based power generation to become a significant fraction of the energy supply side." is just wrong, belied by both the Australian and Hawaiian reality, despite being bungled by both the utilities & regulators in those places. When the lifecycle cost of PV hits socket parity with some margin (which it has already in the higher priced electricity markets) it becomes bankable without subsidy. Where subsidized it's financeable even in more moderate prices markets. In Australia more than 25% of all residential customers already have rooftop PV. In Hawaii its in the 12% of all customers range, and only being held off from exponential growth by utility mis-management. In Massachusetts (where electricity costs a lot less, but PV has some policy support) I get junk mail every week offering $0 down solar on a leasing basis, now money down on a loan basis.
Keep an eye on what New York regulators come up with. The first rough draft proposal lives here:
http://energystorage.org/system/files/resources/nyrev_dpsstaffproposal_8_22_14.pdf
Wow, Dana … I thought I was long winded.
I am not sure (yet) if I’m impressed by the Auzi or Hawaii examples. Why I say that is because the PV solution is relatively more pragmatic for those jurisdictions due to the sheer amount of annual sunshine and the cost of supply of the alternatives, respectively.
Have you any numbers on households with payback potential in NA and comparatively to other spheres? What really is the potential number of NA households that are economically worthwhile.
You can tell from my posts that I am not against PV’s or wind, and I really wish I had a stream that would allow micro-hydro, but I think we agree: the financing and entry dynamics are not optimized for encouraging and building a North American distributed supplier model. The industry is still fighting the customer and the regulator is not too smart.
I would jump at a PV lease arrangement but I am concerned it would not permit independence. Maybe I am stubborn and foolish; I certainly get hosed by high electricity and propane prices in western NY. Martin though seems to be making a strong statement against including the facility for on-site storage and independent use. I am not quite sure why that is. Perhaps I am not too clued in on the elements of the costs per watt data you’re relating? Does it only refer to generation that is contractually dedicated to supply the grid?
Over the course of my lifetime retail energy prices have tended to swing to the center across the options (retail energy prices of all fuels generally equalize). This may be changing or I may have limited experience. You’re making a bet on a trend that claims a structural change is underway and oil and gas are being left behind. I on the other hand am not so confident. I am assuming that big gas and oil will shift prices and technology to match and remain competitive with the steady down-market pricing of the PV/watt ratio.
Flitch,
You wrote, "Martin though seems to be making a strong statement against including the facility for on-site storage and independent use. I am not quite sure why that is."
Here's why: the cost of a large battery of storage cells makes my electricity very expensive.
The "socket parity" map of where the levelized cost of PV is at or below the residential retail map is constantly evolving, and price/insolation/contract cost dependent. But there are people tracking and mapping in in the US:
http://www.greentechmedia.com/articles/read/Mapping-Solar-Grid-Parity-in-the-U.S
http://www.ilsr.org/wp-content/uploads/2012/03/rooftop-revolution-ilsr.pdf
The cost of solar drops by 20-40% every time the installed base doubles,. and in the US the doubling rate is now something less than 2 years. This means the date at which grid-parity arrives has been moving up from projections 2-3 years ago.
BTW: "assuming that big gas and oil will shift prices and technology to match and remain competitive with the steady down-market pricing of the PV/watt ratio" would not be a very good assumption, due to the increasing capital cost per barrel of oil. The oil price is set by the world market, not by the cost of PV or oil in the US, but the floor for NEW oil is set by the capital cost of retrieving it, which has become a risky and less-profitable business. Only when such a large fraction of the transportation sector have moved over to electricity that new oil or gas fields are no longer needed to meet demand can the price of oil fall much below $75-100/bbl, but that means the oil & gas markets will have already been shrinking for some time.
Remember, the cost curve for developing new oil and gas is monotonically upward, whereas new PV and wind is monotonically downward (quite steeply, in the case of PV.) The oil market is currently sorta-viable in the transportation sector due to the massive sunk costs of the fuel supply infrastructure and the low entry cost of buying vehicles using those fuels. But most people in the developed world live on the grid, and battery costs are also on a fairly steep learning curve. Betting 100 billion dollars on oil field development in 2015 with the expectation that it can be recouped over the next 20 years with a presumed higher (or even flat) oil price is not a sure thing, given that the marginal cost of operating EVs today is a fraction of the cost of gasoline or diesel cars, even if you tack on a miles-traveled cost.
The analysts at the Sanford Bernstein investment bank came up with this pretty picture:
http://dqbasmyouzti2.cloudfront.net/content/images/articles/bernstein-solar-coal-lng.png
Note that the scales are linear, and the time scale is long, which makes it harder to see the nuances. A shorter time scale plot, with cumulative installed base bar graphs can be seen here:
http://static1.businessinsider.com/image/5346981e6da811c920f67291-704-541/screen%20shot%202014-04-10%20at%209.08.30%20am.png
This isn't going away. The D.0.E. SunShot target of $1/watt all-in costs for PV may have seemed crazy 5 years ago, but it's not looking crazy today. At a buck a watt (or even $1.50), net-metered grid tied PV is a no-brainer investment almost anywhere in the US, and combined cycle gas even at $2/MMBTU could not beat it.
Another pretty good overview of where the energy markets have been and are going came from CitiGroup about a year ago:
https://ir.citi.com/Jb89SJMmf%2BsAVK2AKa3QE5EJwb4fvI5UUplD0ICiGOOk0NV2CqNI%2FPDLJqxidz2VAXXAXFB6fOY%3D
The cost trends of both shale-gas & PV are reasonably well stated. The in-depth PV discussion begins on p.48, but is consistent with the Sanford Bernstein analysis, and points to lower price points than Kepler Cheuvreux used to make their point about the capitalization costs of shale oil and the electrification of the transportation sector.
When the financial sector is blowing this horn it can't be shrugged off as just the pipe dreams of the Green Party. Many utilities in Germany have been gored by this phenomenon, and without policy relief (not likely, in Germany) the shareholders will be taking a big hit, even if they manage to stay in busieness at all. (Some will, some won't.)