Quote:
Originally Posted by BrianL99
Your example offers some insight into the true state of the solar industry and why Florida (& most states) don't use more Solar ... it's not financially feasible.
Only 7 states offer SREC's. SREC's are what makes the world go around, in the solar industry. Without them, the numbers just don't work in most situations.
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Financially feasible for whom specifically? I am assuming you mean the utility and the regulated customer base.
If from the utility point of view, there are additional costs to managing the solar generation which is put back into the grid to keep the grid stable and balanced.
First, solar generation is not 100% stable, meaning that due to weather effects, generation fluctuates from 0 to 100% of capacity, sometimes very quickly as clouds pass over randomly. . This instability requires different / new equipment installed into the distribution grid for monitoring and managing energy stability, because in the legacy grid, there are no storage facilities.
Second, every distribution utility must buy X amount of electrical power from traditional generation providers through transmission lines, and this process is done on a daily basis and with the solar generation uncertainties, utilities can over purchase traditionally generated electricity wasting money and energy. . .
So adding solar generation capacity directly hooked into the local grid has hidden costs to the consume, so managing both utility profitability and grid stability, utilities favor large credits versus lots of small connections.
Utilities are mostly public companies, which mean that investors want revenue growth, dividends, profits. The major determinate of profits is REVENUE, and utilities have a statutory (government law) which guarantees a customer kWh rate which through a formula generates a 6-8% return on assets. . SO, with the existing large asset base for legacy distribution, poles, transformers, wires, pipes for underground, offices for people, trucks for maintenance, computers and software for managing customer accounts, and regulatory requirements,
cheap electricity and cheaper rates means lower revenue and lower profits, so its not in the public company's best interest and its useable in federal court to maintain the statutory rate of return on assets through rates. . hence the conflict between consumers, shareholders and regulatory agencies.
So that is why Hawaii many years ago with abundant sunshine, stopped the solar program for a while due to how the local utility would remain profitable and and how the distribution grid would stay in balance, until they came up with a solution. .
Remember, as the solar independence grows, the legacy distribution system doesn't go away and the rates become higher to maintain the return on assets on fewer users. .
So the only way for residential success is 100% off the grid, which requires a large capacity and a large storage for night and cloudy days. . supplemented with generators for the long cloudy periods. .
its a condilegma
conundrum, dilemma and enigma all together in one
former finance guy