California's Solarwarrior: PV Economics 101
By Josh Landess
Contributing editor Josh Landess shifted focus from Adelman's EVs to PV or photovoltaic, solar electric power system, one of the largest private consumer installations in California. Here is Part 1 of that dialog.
EVW: I was reading up a bit more about your solar efforts. Essentially it strikes me that you built a solar plant in your back yard. What kind of panels did you use?
KA: ASE 300-watt panels.
EVW: About how many years are they expected to last to be effective?
KA: They say the panels have a 30 year lifetime, after which they'll produce approximately 80% of their original output.
EVW: The reason I ask is I was thinking about your situation: you have this conflict with P G and E [Pacific Gas and Electric]. I'm thinking, under ideal conditions maybe any person with a back yard and enough chutzpah could set themselves up as a business of producing electricity. But then you have to get full cooperation from the grid operator.
KA: Well, there's two different things to recognize here. If you want to be in the business of selling power, you're federally regulated and you're selling it at the wholesale rate. Under the law, you have to pay the grid operator for whatever "special facilities charges" that may be required to upgrade the grid to support your production. As these can be substantial, they are usually negotiated prior to constructing your facility and may affect where you locate it.
Small energy producers who qualify under the net-metering laws are not selling power to others and are exempt from these charges and regulations. For a small producer to put in a solar system for their own use makes a lot of economic sense, but if you want to be in the business of producing power for others, you're going to expose yourself to a lot of costs and regulations that make it unfeasible.
KA: It may make sense with wind but it's gonna require you picking a location to where the inter-tie to PG&E is not costly. But for a backyard producer I don't see that ever making sense.
EVW: What is presently the status of your situation with PG&E? Do they still have a 10-kilowatt cap on what they're willing to take from you?
KA: They raised the cap to 20 kilowatts.
EVW: So only about eleven are going wasted under peak conditions or some of that's being stored also?
KA: No what I can't use is wasted. The solar system, on the AC side we say it's 30.5 kilowatts, that's a theoretical. That would be based on a cold day in the middle of the summer, which doesn't happen. Our simulation data says the system never puts out more than twenty-seven in the summer. And this time of year it's actually quite a bit lower than that. So the amount of wasted this time of year is very small. And then in the summer it'll be high again.
EVW: Did PG&E have to make a lot of infrastructure changes in order to accommodate your 20-kilowatt limit?
KA: They made none.
EVW: So the whole issue of having to make those hundreds of thousands of dollars of changes, in the end, turned out to be different from what they originally thought?
KA: Yeah. But we're not really at the end yet. The reason I'm allowed to feed twenty is the temporary agreement while the lawsuit takes place. It's not a settlement.
EVW: Isn't part of the lawsuit to determine who will have to pay for any improvements?
KA: That's part of it. What we're trying to do is force the Public Utilities Commission to amend the E-net Tariff, which is the regulation to comply with the state law. The state made a change in the law. It took effect in the middle of April 2001. There were some other changes that were incidental but the most important one was they changed the number in the law, 10 kilowatts became one megawatt. That's a very simple change for many people to understand.
EVW: As far as the limit of a private party to upload electricity to the grid?
KA: Actually it's the maximum size system that can qualify for the E-NET net-metering. Which means effectively you're credited the retail rate, and you don't have to pay these fees. Now what PG&E is arguing before the PUC is that language in the law that exempts qualifying users from these fees doesn't mean what it says. Now the interesting thing about that is that when number in the law said "10 kilowatts", they didn't object to what the fee language said. Now that a number in the law was changed to "1 megawatt", they have changed their position on what the other language means. PG&E is arguing for a change in the interpretation of the law in language exempting someone from the fees simply because the maximum size of the qualifying systems changed.
EVW: I tried to put myself in their shoes when I was reading your claim that accommodating somebody over 10 kilowatts, a very large number might require hundreds of thousands of dollars of expenses on their part. I thought: "If I'm a business that's gonna be a lot of money. I'm gonna fight that." But it sounds like if you guys win your lawsuit then they won't be able to fight that at all and that will be the end of that.
KA: If it had turned out that such infrastructure changes had been necessary, then that's a charge they would pass on to the ratepayers. They don't pay any of those costs. But what they're arguing is that they would need to do this work and bill the ratepayer for it. They don't actually have to pay for anything. They don't even pay for their lawyers.
EVW: I guess I was just trying to make their case for them because I wanted to try and see their point of view on this.
KA: I actually had a very interesting conversation with them last night. One of the interesting things about it is they, at their option, can control their grid voltage to make it impossible for anyone to feed power into them. When you draw power from the grid, there is some voltage drop in the wires that feed your house. And they set their grid voltage so that when you take into account the voltage drop, your voltage stays between 126 and 114 volts. They're required to keep the voltage at the meter within that range. When you feed power into the grid the voltage drop goes the other way. So it effectively becomes a rise. If they keep their voltage rate at 126, it's impossible for you to feed power to them because when you do, the voltage at your meter exceeds 126.
EVW: And some people feeding them electricity might not see that if they weren't monitoring things very closely?
KA: Actually we suspect from our conversation last night that there's plenty of customers who are going over the 126 and just haven't noticed it. In my case with the big system we've gone substantially over it and that's why we were talking with them about solutions to that. But it did come to light that they can simply operate their grid in order to preclude renewable energy generation. Now my argument back is that the Public Utilities Commission would probably not allow them to do that. The law requires them to permit renewable energy generation.
EVW: I'm thinking in the future, I can rely on that principle more. Right now it seems like early pioneers in net metering, like yourself, are having to hammer these things out.
KA: Yeah....I think the power-company needs to have a change of attitude that residential solar systems that produce no more than the customer uses on an annual basis, net metering solar systems, are normal residential activity. And it's something that the grid should be designed to take into account.
The Economics of the Solar Installation
EVW: I guess you said you're getting retail rates with what you're sending them does this work out to be at all an economically advisable activity for you with the... I guess it was $360,000 you spent?
KA: It's difficult to remember the exact amount we spent because there were many changes to the system design and the subsidies that occurred during construction, but that figure is about right. We calculated an 18 year payback when the subsidy was $2.50/watt. We ultimately received the new $4.50/watt subsidy. I haven't calculated it, but this should shorten the payback by a few years. We also calculated that if electric rates double the payback went down to nine years. Looking at what was happening in California a year ago with electrical rates, it certainly wasn't inconceivable that they were going to double. The California electrical crisis has certainly cooled down and the price of fossil fuels has dropped substantially, but I think these are temporary things in the course of lifetime of this system.
EVW: So, on the whole, even though it's a huge outlay, there is some middle ground here. It's not a financially completely inadvisable thing you've undertaken?
KA: Oh not at all. I've seen people make different arguments as to what the real payback is. I think it's eighteen years. I think at worst it's break-even.
EVW: I was a little surprised at the cost of the system. I guess it comes out to about eleven or twelve dollars a watt that you spent by the end of the construction of the system. But I guess when one includes everything it's not just the cost of the panels and such.
KA: We also made a bunch of changes to the house that added to the system cost. We live in a really isolated area and wanted to design the system so we could operate off-grid for extended periods of time. For example, we normally don't want our electric vehicle chargers connected to the output of the solar system. If the power fails in the middle of the night, I don't want to run down my solar batteries charging the cars; I want the power to the charger to fail. But if, during an extended outage, say a couple days, I need to charge a car, then I want to be able to hook that charger directly to the output of the solar system and charge it during the day. This involved a lot of extra wiring and switching.
Fossil Fuel Involvement
EVW: Could a critic then say that in part your cars are being powered by some fossil fuels because of this charging from the grid? I'm assuming you run into a lot of questions along those lines.
KA: I do get that question a lot. Let's look at what net metering is about. I produce a lot of power during the day when I don't want it. I have no use for it. And I'm pumping into the grid. At night is when I need it to charge my cars and I draw it back. At the very instant I'm drawing the power back it's being produced by fossil fuels in a natural gas turbine. In California that's the most likely source of it. But during the day when I fed the power into the grid I was stopping fossil fuels from being burned in the natural gas turbine to supply somebody else. And the whole public benefit of the net metering is that I'm producing power during the hours of peak usage when power is most expensive to produce for everyone else, and I'm consuming in the morning when it's least expensive.
Now as far the fossil fuel usage at night goes, during the night I'm burning them and during the day I'm stopping other people from burning them. The way I look at it is there's a tank of natural gas storage. At the end of the day, is there less natural gas in there because I charged my car at night?
EVW: On balance with all your activities there's more, it would appear.
KA: Certainly the same, if not more.
EVW: Do you run any of your house directly from your cells or is all the solar stuff transmitted to the grid?
KA: Well it's all interconnected to the grid in a sense that if I turn a light on it stops me from feeding that amount of power to the grid for an instant. But the most of the house is connected what we call "behind the inverters". So if the power fails the solar system still supplies them.
Pros and Cons of Using the Grid
EVW: I guess what I was getting at is that in trying to do some research, I was looking at Phil Karn's very good page, [http://people.qualcomm.com/karn/ev/ev_emissions.html] ... his calculations for some of the debate about fossil fuel creating electricity for EV's. I was trying to figure out what grid transmission losses were, and I wasn't able to succeed. I was seeing the grid as a kind of storage of electricity for somebody like you.
KA: Oh I see your argument.
EVW: I don't know where I'm going with it exactly. I always argue for EV's and for solar energy but it would be nice to see the numbers on energy lost to grid transmission losses incurred due to using the grid as storage.
KA: Let me make a counter-argument. Basically the argument you're making is that when I feed power into the grid I receive a credit for it. And when I draw it back I use that credit. But I'm not paying for the transmission losses.
EVW: Well I see it as more of an unrecognized positive in what you're doing. If you're going directly from solar to lighting your house and your computers, your servers, and if you were going directly from solar to running your cars, you're not only saving the gasoline that you would have otherwise used, but you're additionally saving the natural gas that would have been burned to overcome the transmission losses from the power plant. I think it's kind of a complex thing.
KA: Well let me maybe express this another way. If I have a choice as to when to charge my car, at noon or at midnight... if I charge my car at noon I'm feeding it off the solar system at the time that the power's produced. So the power's not fed into the grid and drawn back later. But if I charge it at midnight then the power as it was produced [during the day] is fed into the grid and suffered a transmission loss. And when it's drawn back out it suffers a transmission loss. Neither of which I pay for.
EVW: Yeah I guess it's just the price we pay for currently using the grid as a sort of power storage, a net power storage as it were.
KA: Let me make the counter argument. There's actually two of them. One is that when I feed power into the grid it doesn't suffer a transmission loss. That's because the power that I feed into the grid doesn't go back to the power plant. It goes to my neighbors. And when it goes to my neighbors it reduces the power that the power company needs to deliver over the long wires, which suffers the big loss. So essentially I'm offsetting the transmission loss when I'm feeding the grid.
EVW: So I need to take some distances into account when I make these calculations, not just make a simple into-the-grid-statement?
KA: If we assume basically that I am physically close to where the power goes so that the loss between me and my neighbors is negligible, all the others cancel out. That's the one you would need to take into account. And I think for the most part that is.
EVW: Very interesting.
KA: Now, there's a second argument.... Which is that the power company, when they choose which power plants to put on line, they turn their most efficient ones on first because they make the most money. They also happen to be the cleanest ones. So for example a modern full-cycle gas turbine runs twenty-four hours a day. But then they have dirty or less efficient peaker plants that only run during the peak hours.
Now because I'm producing the power on peak, when I run my system in the middle of the day and feed power to the grid, I'm stopping power from being produced where? I'm stopping power from being produced in the peaker plants.... because those are the dirty ones, the more expensive ones to run that the power company will back off on. But when I draw the power at night they're producing it in the clean natural gas turbine, the most efficient plant. I would argue that for every kilowatt-hour I feed into the grid during the day I stop the consumption of a large amount of fossil fuel. And when I draw that back at night it takes less fossil fuel than saved during the day to produce it.
EVW: Since we're talking about using the grid as storage in a way, do you know if places like PG&E do a lot of running a dam in reverse so that the dam acts as storage?
KA: I heard down in LA there's some places. I've heard of it. I don't think PG&E does it. I think they do that in upstate New York.
Solar Power, Reliability
KA: One of the things about the solar panel is the sun is very reliable. Now I've been a big fan of nuclear energy. I just want it 93 million miles from here.
EVW: I agree: it's the largest nuclear reactor in the solar system.
KA: The solar energy's very reliable. One morning I woke up, took a shower, sat down in front of my terminal, read some email, looked at the status of my solar system and realized the power had been out for two hours. Occasionally I get my pager telling me my power's out. I get a little change of status from my software and it emails my pager saying my power went out. Course all my computers were still working to send the page out.
EVW: The grid power provided by PG&E you mean?
EVW: And in those circumstances your solar has been really effective in keeping you up and running in the way you need to be?
EVW: Is that combined with lead acid batteries?
KA: Yeah there's a battery bank. As a matter of fact let me tell you the story of the first power failure I had since we put the system in. This was when I was still working on the software that's used on the web site. I woke up one morning, pulled up my own website and looked at the status of the system, the most convenient way for me to check it, and I noticed a couple things were weird. Noticed that I was producing like 6 kilowatts of power, burning 6 kilowatts of energy. This was at 8:00 in the morning and the sun wasn't very far up: I said: "Boy, we don't have six kilowatts of sun at this time in the morning. Something's wrong here."
So anyway I started looking at some of the other parameters and it said my battery voltage was down to 49 volts, ...that's too low. Wait a minute: One of the inverters is selling my battery into the grid; it must be really screwed up. That was the thought running through my brain. Then I looked around some more and I said: "The grid voltage is zero." And then the next thought was, "Oh, this software's just really screwed up." Then I realized that what I was looking at was a power failure. The grid voltage was zero, and the inverter was inverting power out of the batteries to supply the loads in my house, not the grid. But you know most people wake up to flip the light switches and know the power is out. I had none of those sensations, none of the normal feedback I get that the power is out. So I was in a state of disbelief when I went to look at the parameters in the solar system with the power bank out, that that is what I was looking at.
EVW: It was so much different from your previous power outage experiences.
KA: I was sooner to believe that the software wasn't working right than I was to believe the power was out.
EVW: So you mentioned that an acquaintance of yours houses some computers as your house partly for the energy and partly for the reliability of it.
KA: It's partly for the reliability. One of the things that happened was we put in the solar system to produces as many kilowatt hours a year as we use, because we decided that was the environmental, the right thing to do. And if you get time-of-use metering, with net metering combined, you can feed power to the grid at a high rate and buy it back at night fairly cheap. And you can actually get away with, depending on your particular time of day of your load, with as little as a third of the solar panel that you need, to still zero your electric bill, which from a purely economical payback point of view is the best way to do it.
KA: So you could reduce the payback period substantially from what we previously talked about by doing that. Now it turns out that PG&E has a right to force you to get time of use metering if you have electric vehicles.
EVW: They have a right to what?
KA: To force you to get time of use metering with electric vehicles. And they did so with us.
EVW: So then you couldn't get the totally ideal deal?
KA: No, not it's a better deal than I needed. Because my bill would be zero without time of use because we put in a big enough system to reduce the power we use. So because we got the time of use, now what we have is basically a big negative credit that we throw away at the end of the year. Because from a dollar point of view the system produces more dollar credit than I use in dollars. And that has to do with the fact that I'm producing power on peak and consuming it off peak.
EVW: You know I'm assuming that some of our readers already understand exactly what you just said but could you briefly define time of use?
KA: It's where you have a special computer digital computer meter that charges you different rates for the power depending on the time of day.
EVW: Oh okay. So otherwise it would be just a standard flat rate that you would pay or receive if you weren't on time of use?
EVW: They're not running the meter backwards, you have a separate meter on your deal?
KA: We don't have a separate meter; the time-of-use meter runs backwards.
KA: If you have a flat rate meter and the meter turns backward, you're receiving credit for that power you exported. The credit is in kilowatt-hours, but since the price per kilowatt-hour is constant, you can also think of it as a credit in dollars. With time-of-use metering in California, when you run the meter backwards you receive a credit in dollars, not in kilowatt-hours. During the peak periods when the sun is out and electricity is expensive, you're hopefully producing more than you're using and you'll be credited for that excess at the high rate. And then off-peak in the middle of the night when you consume power, you're doing so at the lower rate. As a result, you can consume more than you produce and still have a zero bill.
EVW: It sounds like a win/win for you and win/win for whoever is selling electricity.
KA: Well what it comes back to is because of this quirk where they forced me to get time-of-use metering that I didn't want, I have excess dollar credits that I don't need. So by having friends move their computers from their house to here they can help me consume that dollar credit instead of gifting it to the power company.
EVW: I also noticed that you're Microsoft free. I have to say that I applaud you strongly. It isn't anything personal against Mr. Gates but ... well you could almost set up one of these renewable energy web-hosting services from your house because you are solar-powered ....and Microsoft free, which I don't know why that goes with renewable energy in my mind, but somehow it does.
KA: Well actually there is Solar Hosting.com I think does that.
EVW: Yeah there seem to be a couple of those out there.
KA: I think the dot-com boom is over. The joke is how do you get a dot-com-mer off your porch?
EVW: I don't know.
KA: Pay him for the pizza.
EVW: I saw a chart on the net metering laws of different states and for some reason it listed California as only solar qualifies, not the other renewables?
KA: That's not true. Actually I think any renewable qualifies, but wind certainly does. I'll look it up real quick here. Okay who uses a solar or wind turbine electrical generating facility or hybrid system of both, so it would have to be solar or wind. I'm looking at the law.
EVW: Okay. So I can't drill down to the earth's mantle and operate a geothermal plant.
KA: That's interesting too because I know someone who's going to put in a hydroelectric, a small turbine in a stream, and so that would mean that he wouldn't qualify. And by the way it turns out that from an economical point of view it makes sense to do a hybrid system.
EVW: Why does it make sense from an economical point of view?
KA: I was waiting for you to ask that question. It has to do with the way the subsidy works. If you take a solar system the current subsidy is 4.50 a watt and it's limited to half the cost of the system. You're typical photovoltaic system installed is going to run more than 9 bucks a watt; you're going to get the 4.50 subsidy. You're not limited to half the cost. You're typical wind mill is going to run a buck a watt. So if you're just putting in a windmill system you're just going to get 50 cents a watt in subsidy. You're gonna get half the cost.
EVW: Mm-hmm. So you could actually install a windmill system ideally for something like 50 cents a watt?
KA: Right. Now remember though that that's nameplate wattage. That has nothing to do with the power production. In the case of a windmill, just like a solar system, it doesn't put out nameplate wattage twenty four hours a day.
EVW: What is the term you're using?
KA: Nameplate. In other words if you buy a 300-watt solar panel...
EVW: It's not always producing the peak amount?
KA: Well it doesn't produce it at night. The model we use for photovoltaic is that it produces it for five hours a day. Now for wind it produces it for a lot less than that in most of the situations, but it's so much cheaper. But the subsidy doesn't take that difference into account. It's just the nameplate wattage that you get the subsidy off of.
EVW: In talking to various people around California about the best balance of wind and solar, part of it is where you live, whether or not the energy is there. I don't know if there's wind energy in Santa Cruz or not.
KA: Well it turns out that for every photovoltaic system there's a certain amount of wind balances it, results in the optimal subsidy.
Battery, UPS, Storage Considerations, Panels as Simple Appliances
EVW: Have the lead acids worked out well for you in terms of load balancing and whatever?
KA: Well we don't normally cycle them. They're only there for the power failure.
EVW: Is that healthy for them to just be charged all the time?
KA: It's better for them. These are flooded lead acid, a different type than are used in cars. Which are AGM [Absorbtive Glass Matte]. The flooded lead acids roughly have a lifetime of ten years or a thousand cycles. So if you cycle them daily they last three years. And if you let them sit fully charged at a proper float voltage they last ten.
EVW: Did you consider anything more exotic or that was simply the way to go?
KA: As far as battery technology?
EVW: Power storage.
KA: Well we're not cycling them daily. The storage is only there to provide the house at night if the grid fails.
EVW: It's almost like UPS.
KA: That's all it is really. And that's one of the big advantages of the solar system is that as long as you've got this inverter there all you have to do is add battery and you have a whole house UPS.
EVW: I guess the genesis of my question is that I have read too many articles about fairly exotic UPS schemes. Certainly the traditional tried-and-true companies tend to win out for now because they know what they're doing.
KA: You mean like spinning energy?
EVW: Sure, like turbines or flywheels.
CONTINUED NEXT WEEK...
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