Will PG&E Be the First Utility To Fall To Solar Energy?

PG&E will not be the first, and in fact no utiliity will fail this century because of solar. This meme has been getting traction, but beyond poor brand relationships, why we collectively believe that solar panels will somehow put our electric system into a tailspin is beyond me.

Utilities are regulated entitiies. Long ago we made a trade of monopoly rights for supervision and public benefits of electric service. 

Does solar change things? Sure. Just like EE does. And prepay (which has huge conservation effects). But, really we’re going to put utilities out of business? Come on. And the first to go is going to be a progressive utility in a de-coupled market?

A more plausible outcome? First, Solar and EVs are the force that will upend the baseline system in many utilties. It’s gone far enough. We all pay the same rate for gasoline, and the same will soon be true for electricity. As Doug mentions, rates are not costs; and rates, not costs are driving most solar investments. Watch out for that to change. Second, we’re going to see some adjustment to pure volumetric rates. Despite solar advocates shouting, there are small costs to solar, and regulators are going to have to admit that. Finally, utilties are not dumb. They are backing the financial funds on solar, and re-thinking deregulation. I don’t think PG&E will do this, but look for some of them to re-examine whether they are better off just being a T&D utility with a nice regulated rate of return.

Tom, T&D looks like a safe bet as long as there is electricity to transmit and distribute. Why is the deal any sweeter for natural gas generation utilities (the guys who keep the lights on at night and on cloudy days, on whom solar is completely dependent) who now have a middleman? What keeps them afloat?

With the levelized cost of solar well above any other form of power generation, the only reason costs are not driving solar investments is subsidies, which put solar well out of the “de-coupled market” spectrum. Taxpayers are footing the bill for solar, not free enterprise. Not making a value judgement, but lets call it what it is.

My problem with this article is first and foremost the title;  Will PG&E be the fist Utility to fall for Solar Energy?  At best, this is a leading question.  At worst, it is meant to assuage fossil and nuclear fuels.  It is obvious that fossil fuels are causing global climate change and that nuclear power is a threat to human existence both in the present and in the future with the waste created.  You don’t ‘fall’ for solar.  What we are seeing, finally, is the market dictating common sense; the use of a non-leathel energy source that is renewable and continous.  The oil and gas industry has done and continues to do everything in its power (which is quite extensive including owning most of our politicians) to stop or delay solar power.  It’s greed knows no limits.  We are reaching the point were solar is cheaper than any other energy source and instead of celebrating and moving forward at full speed, we speak in negatives.  I celebrate solar even though I know that the nuclear industry is lurking behind the scenes. 

Douglas,

In Distributed Gen cost matters to the consumer but for strategic considerations, which is what you are talking about, one must start with what % of load the tech can actually supply.

three factual items on your article:

1) Solar prices will not continue to fall endlessly unless somehow the major solar companies have figured out how to make money with a 0% gross margin.  margin reduction and share competition is responsible for majority of price drop in solar not technology or scaling.  (your comment is pure solar PR not reality)

2) Sans net metering solar is not competitive so if the utilities manage to drop net-metering the entire solar industry is screwed well and truly because then they will need to have storage.  (also you are quoting peak prices not avg.)

3) all of this, specifically cost, is apart from the fact because in the type of distributed scenarios you are talking about solar could not steal a substantial share from grid because it does not have the deployed intensity to supply a substantial share. (try checking the San Francisco net zero planning solar estimates in distributed. 100MW technical resource or roughly a maximum of <3% of supply for SF for current load and that does not factor is growth of 25% during the time period or potential EV penetration). Then you are left with central solar which gets to compete with natural gas at four times the cost.  So solar and SF = BS.

Yet another article that expounds on solar while completely ignoring the hard physical limits on solar in the very scenarios that are the subject of the article. 

Here is where you lost me: “ nuclear power is a threat to human existence both in the present and in the future with the waste created.”

Are you serious, do you  really think Nuclear Scientists and its  proponents are are that stupid or uncaring about our mutual planet, or are you simply being  a religiously fanatical RE evangelist and Nuclear Hater?

Paul, I am a Nuclear Hater.  Do I really think Nuclear Scientists and its proponents are that stupid or uncaring about our mutual planet . . .?   I think that is the wrong question.  It’s like asking a policeman if he thinks the world is dangerous.  Of course it is, he or she will respond.  And every home should have bars on it, an alarm system, a gun for protection, etc.  The same with a nuclear scientist.  Do we need nuclear energy?  Of course we do, he or she will respond.  Why?  Because I’m a nuclear scientist and without nuclear my job is obsolete.  The nuclear scientist is the last person to ask about the safety of nuclear power.  Common sense is were you begin.  And anytime you are going to have a waste stream that is going to remain dangerous to human existence for a longer period of time than recorded human history and, in some cases, longer than the existence of humanity itself, I think it is the height of arrogance and ignorance to create such waste.  I don’t need to listen to a nuclear scientist telling me not to worry my pretty little head on such matters.  I also would argue that one Fukushima-Daiichi is one too many.  Why would we want to expose anyone, anywhere to such a possibility?  Until nuclear power is as safe as solar power, until nuclear waste is as dangerous as the water I drink, the nuclear path is the road to human extinction. 

Just imagine if we started becoming dependent on nuclear power in this country.  We would be building hundreds and hundreds of new nuclear power plants.  Within fifty years, between the leaks, human errors, Black Swans, and nuclear waste created, we would be living and breathing  radiation on a massive scale.  We already are.  It just would get much, much worse.  Does this make me a fanatic?  It’s better than the alternative.      

Sorry. did not mean to come down so hard.  have been in this area for a while and the solar stuff is just getting silly at this stage.  To the point where you have Chu, a nobel laureate, repeating the “moore’s law” solar talking point when in fact solar price reductions are in the opposite state, ie exponential decay not growth.  That is a pretty egregious warping of reality.

On cost – a home installation according to LBNL data was around $5K a KW on the low side.  The incentive programs for solar and sunshot are in fact in my opinion the problem.  They do two things – 1) they restrain innovation in the area by creating a bubble market insulated from non-solar competition (your opening quote is a great example of that because solarcity and sunrun would not have a business without massive state and federal incentives which is why they only do business in states with big incentive programs).  that drives investment dollars into incremental (usually less than 3%) materials science improvements instead of real solutions because in the policy environment we have a 3% cost reduction on a technology that is in real terms 2-4x as expensive as its competitors becomes and attractive ROI proposition.  talk about the inmates running the asylum.  2) All that rolled together means solar sucks an inordinate amount of investment and research dollars with almost no ability to significantly supply demand outside of centralized facilities which would require a truly massive transmission investment.  the upshot of that being we have invested about 80% of the dollars we had in the last 20 years on something that has a very low chance of ever really working due to very low energy density.  Add to all that that the price “reductions” in the last few years have mainly stemmed from share competition between the major suppliers and oversupply.  Same thing happened in wind in 2002.  Price went down to $1200 a KW installed. 2 years later after the competitive landscape sorted itself out the price shot right back up to $1800-2200 a KW because 0% or negative margin operation (as Trina was doing) is unsustainable.

Regarding net metering – without net metering for solar you need a storage system (which is why they pushed net metering in the first place to get rid of that cost).  That means instead of being 2-4 times more expensive solar would be 4-8 times more expensive in real terms.  Net metering or FIT’s are just another subsidy so solar can compete without having to actually compete which has all the same repercussions I mentioned above.

On your last point.  It is not that solar will not.  It is that solar cannot.  It simply does not have the power density per m^2 to supply a significant % of demand when one looks at its deployable area in DE scenarios which are the only scenarios of relevance in your article.  LA is a good example.  Deployable area in LA is 17% (that is a solar study so a bit generous).  Avg. building height is 4 stories.  when you calculate the production from the available rooftops at 25% efficiency and the energy intensity of the m^2 of a four story building, using an avg. of residential, commercial, and industrial intensity, the solar can supply around 5-9% of the building load.  When you factor in the other load center energy consumption (public transport, water, sewage, infrastructure, etc.) that figure drops well below 3%.  As I noted if you don’t believe me just check the San Fran net zero initiative estimates.  They are 3% and NREL had a study a few years back that came to the same conclusion.  Urban centers and the surrounding areas where the vast majority energy consumption happens are also anticipated to grow another 25% in the next decade or so and that is not including if EV’s penetrate.  EV’s would double the avg. home energy consumption with 20% being lost in storage.  It does not matter how low solar’s price goes because solar cannot supply the demand in any meaningful way.

Given all that our solar policy is borderline insane.  We have burned through more money than the manhattan project trying to get something to work economically that cannot do the job physically.   It is like spending $30 million on a donkey to win the triple crown.

The reasoning of a five year old internet tin foil hatter.
Nuclear scientists are sell outs only looking out for their mediocre jobs you cry.

The reality is nuclear was developed by some of the worlds top scientists and engineers the types of people who could get a job almost anywhere. The Manhattan project had over a dozen noble prize winners working on it for instance.

It is also good to note most the worlds nukes were built a generation ago by states. There was no vested interest or a utility seeking a profit but a national grid owned by the people trying to provide for the people in the best way they thought possible at the time.

The failing of nuclear was that at the time management practises were so poor that the refuelling/maintenance stage of operation took a ridiculously long time so reactors were only operating at around 50% capacity factor. Now with lean manufacturing and six sigma type operations they have got refuelling down to an efficient art with reactors able to achieve 98% CF. If they had placed more emphasis on achieving a higher CF countries like the USA may have gone to 80%+ nuclear when building them did not have a huge additional political cost.

IK, the Manhattan project was a wartime endeavor.  I would argue that the nuclear industry was born in secrecy, grew up in deceit, and lives on lies.  The biggest ones being safety and the waste created, two subjects you did not address.  You may see my arguments as coming from a hater.  I see them as coming from common sense.  Why demanding safety and environmental responsibility is considered ‘hating’ is beyond my understanding.  It seems to me the onus should be on you to prove me wrong with more than personal attacks. 

Once more. The majority of the reactors on earth were built by the state so there is no secret private group plotting to irradiate your children

The world is tending towards 1 home for every 2 people. That means 5 billion homes for 10 billion people.

Say 4kwp on each home that gives you 20TW and somewhere around 20,000 TWh of annual generation.  Thats more thab usa plus china plus Europe plus Russia currently use. 

Plus there is no need or logic in installing solar on residential roofs there is plenty of land it can be placed on.

Energy density is not an issue.  It is not much less dense than a coal plant. The issue is 

storage and cost neither of which is impossible to get over. 

Prices will fall with more and more automation as has been the case with virtually all machine built goods. The storage problem is overcome with a global (or many nation) grid. Solar has the potential to become cheaper than FF and also provide a lot more energy and power.

However Ido think nations are less likely to embrace a global grid than they are nuclear so in the medium term nuclear will probably win but in the long term its also certainly going to be solar  

So what land exactly that does not require transmission?  1) land needs to be clear cut everywhere but the desert.  2) coal has a power density of 1KW per m^2.  Natural gas is 5KW per m^2.  solar has an power density of 10 Watts per m^2.  so order of magnitude lower power density, not roughly equivalent unless you think a mouse’s weight is equivalent to a whale’s.  3) Chemical storage has hard physical limits and the cheapest storage is $250 a kWh so a 1 KW system would need roughly a 50 kWh system for weekly leveling.  4) already dealt with cost. storage doubles something that is already 3 times as expensive.  solar cost reduction has been in the area of diminishing returns since around 1996.  the diminishing returns usually show up when a “new” tech has started to hit its physical limits

Actually power density is the key parameter in what the article is about which is DE and utilities “being put out of business by solar”.  There is no point in working on cost if the tech cannot physically acheive its goals.

It is fairly simple.  Take an avg. metro core and roughly 50-75 miles around it.  80% of electricity consumption happens there.  75% of that happens in the core so DE supply needs to happen in those areas otherwise it is not DE  Take the consumption annually and divide it by the area and you have the consumption intensity.  NY is 120kWh per m^2 per year, SF is 57kWh, London is 66kWh.  Solar’s production intensity for say SF is 1.2kWh per m^2 per year.  Basically meaningless or if not meaningless certainly not the area you would want to focus 90% of your efforts on.

All you are doing with “but in the long term its also certainly going to be solar” is repeating the talking points you have heard from people that have never run the numbers or have a vested interest in obfuscating them.  There is not a single comprehensive (economic/technology/effect) study that highlights solar either as something that will or could make a significant contribution to global energy demand.  EIA and most studies agree that this century solar will never be more than 2-3% of the mix unless something radically changes in the cost of transmission or our financial markets.

I think you know the inner working of the utilities better than I do.  I would find it strange that their sunk costs and debt service would be put into a tailspin by a 3-5% variation in revenue unless they are heavily weighted toward making their money on residential services where the main impact of distributed solar would be and where the supply capacity when limited to single family homes is better than the general landscape.

I guess I would look at other 3-5% revenue variations and see whether those were sufficient to put utilities into bankruptcy.  So local recessions usually have that kind of effect on electricity consumption.  I do not think local economic fluctuations of that scale have put a lot of utilities under.  

I could though see where the 3% revenue loss when combined with cost of net-metering or FIT’s and dealing with the introduced intermittancy from centralized and distributed RE could have a compound effect on their cost of business.  Especially as many of the associated costs have been forced onto them by local govs.

If that is the case you are right, it would not take much to push them over.  Your point of the regulated atmosphere would generally compound that as it would limit their strategic options.  Again you know this better than I do.

I would say that if one or two big ones fail due to this, the others will start taking a closer look at how they can stop the hemorrhaging and they would likely employ the same technique that solar has for the last decade (lobbying).  If I were them I would go after net-metering and RPS’s and more specifically technology carve-outs in those areas (e.g. illinois 25% solar requirement).  Basically roll back what the various RE lobbies’ have achieved.

My money is on the guys with the $1.9 trillion dollar industry.  Not the guys with the $80 billion dollar industry.  I just do not see solar having any type of long term effect in power on any facet of the sector other than increasing costs for the utilities and consumers.  Sooner or later that boondoggle will end.  At the end of the day it is all about supply capacity and solar just does not have enough to make its benefits felt even if it gets cheap.

Another smart move by the utilities would be to gang-up with NG and throw a lot of money at CCS and carbon scrubbing which has gotten minimal investment thus far.  Anything breakthrough in that field would basically gut the effect the RE is having on utilities.

wouldn’t you maybe say that solar is the straw that may break some backs?  rather than highlighting it as a main factor that somehow is going to roll through utilities like Sherman through the south or Patton?

I could be completely wrong but i think over the mid-term the reality will sort itself out and the whole solar thing is going to look a lot like oil generation looks today, a remnant tech that market blew by.   

I do think you will have solar in apps that make sense like the bigbelly trash compactors or public device chargers but that is going to be a much much smaller market than what you are seeing today with the current massive subsidization.  basically once the gravy train ends solar generation may go the way of the dodo.  that is especially true if you get some advanced renewable with high power density.

Think the utilities would be well served to have a mass market consumer products guy doing their pricepoint strategy.  To your point a pricepoint increase weakens a product against its competitors and can have the overall effect of reducing revenue if it is too far above the resistance level (i used to be in consumer).  

On the second one I used to buy into it.  After all its seems logical.  Then I did an in depth analysis after I had a paper get shot down in peer review.  Unfortunately the returning margin to scale element effect just does not seem to be in evidence at the levels that are claimed once you take into account all the factors.  On the surface it may appear to be the main factor when you are looking at just the price over the last 3-4 years.  It fits the typical curve.  Once you start looking into the main companies’ quarterlies it becomes clear that the price reduction is not due to any massive market shift or new technology.  These guys are in a price war for share.  Price wars rarely result in a long-term price reduction because they are unsustainable.  Add to that the example of the same thing in wind a few years back and the probability falls on the side of solar either stabilizing (possibly due to tech advance if they are lucky) or going back up fairly soon (say within the next 3-5 years).  Even if what you say happens it is still far more expensive than the alternatives.

BIPV cost is ruinous and it within the context of cost and efficiency it is just not a great idea.  The MIT waveguide technology has promise there but when you consider that on average only 25-35% of a given installation will actually be producing at any given moment (and less during peak hours due to the angle of the sun) and considering that that would then boost the BIPV install cost by the inverse factor it is hard to imagine it making a big splash unless we decide to go subsidizing it to death again.  Also BIPV could only gather in certain spectrums or only use partial area otherwise no light is going through the window.  Silicone has a pretty good capture angle based on its refraction so a lot of the light gets trapped. 

I am not sure solar is going to be able to sustain their political positioning once it becomes increasingly exposed just how out of whack it is with reality.  2 years ago no one was talking about the degree of subsidies solar was getting even relative to other cleantechs except a few boneheads like me lamenting the effect it has on investment and innovation.  The wind seems to be starting to blow in the opposite direction.  In Mass they removed the $.28 per kWh floor on the REC’s and according to a friend his solar projects in the pipeline reduced by 50% within 4 weeks.  Anecdotal but telling.

 Problem is solar may well have a sunny outlook if the landscape does not change much, but the effect that will have on our ability to respond effectively to climate change in the next 20 years will be debilitating.  Solar is very dangerous in the current situation due to its opportunity cost.  I also feel that those who look at clean tech, especially solar, have a disturbing tendency to assume everything else will stand still.  Fracking is a good example regardless of how you feel about it.   

My main issues with solar are moral and physical.  I should also clarify this is mainly a problem with PV.

Morally I believe when you make a bet and it is a bad one, you should call it a day and take your licks not try to insulate yourself from your own mistake simply so you can make your bonus, especially if there are serious climate repercussions.  Going to the point of introducing memes and talking points like solar’s “Moore’s Law” goes well past the point reasonable promotion to the level of chicanery on multiple levels.  

Physically solar has no where to go.  Once you place something in the plane of the sunlight that is it.  There is no second bite at the apple.  Once the photons are absorbed in the p/n junction they are done.  There is no way to increase the resource unless you thin the atmosphere or increase the solar output.  That is not true of other areas that have seen much less investment and attention.  There is leeway in thermal based energy sources.  Long term it is my belief that solar will not be able to compete with more advanced technologies.  My worry is those advance technologies, be it generation or CCS or scrubbing, are going to come too late due to the market’s and government’s obsession with solar despite its obvious flaws. 

I K, do we live on the same planet?  The state built nuclear power plants?  What do you mean?  Here in Texas, nuclear power plants were  built primarily by power companies.  The recent attempt to build new power plants here in south Texas were being designed and built by TEPCO, Tokyo Electric Power Company.  The same company that owns and runs Fukushima-Daiichi.  Before the tsunami and disaster at the nuclear power plant, five people on the energy company board in San Antonio, behind closed doors and without any public input, committed $100 million to start the nuclear construction process.  Their argument was not whether we should proceed with nuclear power but if we did not, we would lose the $100 million.  Nothing secretive, huh? 

Yes.  In boston area.  will email.