Should Homeowners with PV Get Paid Retail or Wholesale Prices for their Excess Electricity?

I've been doing some research, trying to get my arms around the problem of the longterm sustainability of renewable energy in the Unites States. Here's one big challenge as I see it.

Many customers with PV pay retail prices for electricity they buy from their utility, and get retail prices when selling their extra energy to the utility. Seems fair until you consider that the utility has to pay for generation of electricity (at wholesale prices), distribution, public benefit charges, and other fixed costs. All these costs figure in the retail price. Wouldn't it be fairer and more sustainable for the utility to pay wholesale prices for the extra electricity they buy from their PV-owning (or renting) customers? After all, the customer is acting like a supplier of energy, not a retailer, since it doesn't have to pay the kinds of fixed costs mentioned above that the utility does have to pay.

Utilities say that they end up paying more for the customer-generated energy than they receive from the customer, even though the customer benefits from receiving energy from the grid when their PV panels aren't producing electricity.

Solar PV advocates say that the prices utilities charge represent too big of a profit margin to begin with (which is really a whole another question), and paying PV customers for their excess energy supports a growing solar industry that produces jobs and lots of other societal benefits, including environmental ones that don't usually get quantified in the buying and selling of electricity.

Utilities also say that, since their PV customers tend to be high-end customers, the money they loose on these customers ends up being made up for with higher rates to their low-end customers. 

Solar advocates (this one at least) also say that the utility rate structure for residential and commercial customers is very complicated and allows the utility to tweak the structure so that they make plenty of money to cover their costs and get a prophet. This could be done in a way that was fairer for everyone but still supported solar and other renewable energies.

If you want to get a much more nuanced look at the issue, I suggest you take a look at a report commissioned by the California Public Utilities Commission, which had a study done to explore the issue. (Confession: I read the executive summary and skimmed the rest).

Here is a link to the report:

I'm going to go out on a limb and say that, taking away the problem of whether the retail prices the utilities charge are fair, for the sake of the long term viability of solar, given that we will probably always need some kind of distribution system that needs to be maintained, as well as a variety of sources to meet our energy needs, and on behalf of a basic sense of fairness, I think that customers who sell excess electricity back to the utility, from any renewable source, should pay wholesale prices.

What do you think?

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When the Renewable Energy storage options are improved everyone will have the options of becoming and not needing to be connected to the grid.  Why waste the $ to improve it now-it will be obsolete in a few years.

I should not be punished for the utility companies failure to stay with the same ole same ole design of yesteryear!

Real good point! LBNL just announced progress on the next generation of lithium-sulfide batteries:

Not everyone will put solarPV (or a distributed generation) on their property. There always will be instances where the property doesn't have the available resources.  

So consider the following case if a majority can put batteries on their home systems and disconnect.  But a neighbor further down the street - does not have the adequate isolation for solar,  natural gas isn't available and electricity from the grid is the only option.  If all those earlier houses do not use the grid - the local distribution system may have been removed -- or never installed.   The new house would either need to pay the ENTIRE cost of the distribution line --- and may also need to buy utility easements.  The normal arguments of eminent domain might not work - because the other neighbors could perhaps argue that other alternative -- including biomass energy is available.

Suggesting that all solarPV customers just take their energy and disconnect from the grid - can actually be more destructive to the grid long term then net-metering.   Net-metering is as much about sharing in the responsibility of generation of the energy needs.   It isn't about making a quick buck by transferring cost from one class of customers to others.  A long term reliable and resilient electric grid needs a very diverse mixture of energy sources supply energy into the grid.  That lets the grid endure the forces of mother nature when there are droughts,  hurricanes and earthquakes.   Distributed generation reduces the losses in the neighborhood distribution lines by moving the generation closer to the loads.  Line losses go up with the SQUARE of the current --  ( I**2R ).  Add all the electric vehicles to the grid and the local distribution network is going to be having very high losses.  Offset the EV charging with local solarPV  (might be a neighbors EV) and the losses to the utility decrease..

Suggesting solarPV only be paid wholesale - would significantly reduce the installation of solarPV.  It could also then be argued as why natural gas peakers are paid premiums well above wholesale!

In California SolarPV production coincides with the peak electric loads for about 60% of the time.  That is enough that it will eliminate the need for the peaker plants to run UNTIL after the sun starts to go down.  Remove all the solarPV and the $0.40/kWh peakers are used instead.  Instead of trying to argue that solarPV should be paid only at wholesale - ask what it is doing to the price of the electricity during the daytime -- and the answer is it is driving the price DOWN.  Peakers come on after the solarPV is gone and they can sell for the premium price.

One final observation about the CPUC study when you really look at it.  They method they used for determining  if there was a cost transfer --- has significant implications for individuals considering doing deep energy retrofits.   The CPUC calculated how much energy the residential customers would have used if solarPV wasn't attached.  Then they calculated the solarPV generated.  And finally they subtracted the generated amount from the energy used.  This new "net" was the loss revenue for the utility.  The CPUC did not use the exported only value for the study.  This is an important difference because a deep energy retrofit without solarPV has the potential for effecting the same kind of deep drop in the energy use of a house.  At the end of a monthly billing cycle - the impact on the utility is the same.  Both the solarPV and the deep retrofit house would have used far less energy from the utility -- resulting in a lower revenue stream.

Thanks for expanding the picture and making a good argument against charging utilities wholesale for homeonwer-produced PV power. The whole infrastructure is evolving and the more we stay on top of the kind of details you mention above and make wise choices the better. As "scottscontracting" mentioned above, adding batteries with serious storage capacity and the right kind of charging and discharging dynamics and the system for getting our electric power get's a little more complicated.

I tend to be agnostic when it comes to technology. It's only as good as the people who use it and the goals they have in using it. We need  a lot of watchful eyes and the ability to tweak the system to serve everyone optimally. Or as optimally as can be in this complicated universe.

My comment on Storage wasn't 100% meant in re to batteries.  I read lots of info and think that other forms will be available soon-w/ hydrogen being just one.

Long ago (1990) while in drafting college, the teacher said: our class would see "future homes will produce their own energy and recycle the water out of necessity".  I thought he was nuts.

Now 20 years later it is the Future!

ps: the old conservative teacher who said my buildings with funky angles and diagonal siding was foolish, maybe he wasn't as conservative as I thought? (I see/realize now that: funky angles and diagonal siding is wasteful.)

Yes, and buildings with complicated roof lines are hard to air seal and insulate properly!

Scott,  in fact if you look at the sankey  diagrams from Lawrence Livermore.  They have energy flows and carbon flows available ( ).  I believe in the archive they  also have a study done on how to go mostly carbon neutral for the transportation sector.  Hydrogen plays a big part.   A diverse mixture of energy sources is absolutely required if the goal is to reduce CO2.  

EIA and a number of other studies have shown that when there are major unplanned shocks to the prices in the fossil fuels that we all use -- the result often has economic impact - including triggering or/worsening recessions.   A more diverse energy mix reduces impacts caused by disruption from a single source.

As for buildings with funky angles and shapes....  some of the really early ones were more energy efficient then we realize.  And they were powered entirely be renewables!   Sometimes the walls just need to be built with enough mass and diverse materials....    Of course it helps to have a staff to keep the building running....


Those suckers were built to last.

About 125 years - and they were deemed government property that was no longer needed, so the government in power "slighted" the buildings.  (wrecking ball)...

Oh yeah, as with many government projects they were considered to be quite expensive -- about 15,000# (pounds) -- over budget and really late to meet the original intended need...  but they did have some of the most impressive defense apparatus.

the result often has economic impact - including triggering or/worsening recessions.

In a situation where adequate solar is not an option I've heard good things about the Mosiac aspect or buying solar credits.  

In a inquiry to my local utility I posed the question:

  • Property Owner of 2 Properties A & B.  Property A did not have adequate space for Solar.  Could Solar Array be placed on Property B and credited to Property A?

And received this answer:

  • was not an option as each solar array is tied to a meter not an account holder.

Utilities want to sell electricity.  Any solar arrays are in direct conflict of their business.  And just as I fight for clean energy and energy conservation.  The Utilities are trying to protect their business and are fighting to keep it.  

They know their time is limited, so they are doing whatever they can to slow the progress.  (Just like the tobacco industry attempted)

Any building that still standing as long as those castles have been are/were built to last indeed!

We also might be less than ten years from the start of significant adoption of microCHP.  CHP being Combined Heat Power.  NRG is looking at Dean Kamen's microCHP that uses stirling engine to run generator and produce hot water. There are multiple companies in US that are working on fuel cell boxes that would be compatible with residential applications.  In Europe I've seen Bluegen, Baxi Innotech's and Hexis  solid oxide fuel cells.  Japan has pilots going on also.  They use natural gas (including sour -- sulfur) the natural gas is filtered internally, processed and powers the fuel cell at high temps.  Some of the excess heat is used for the water.  Electrical efficiency is about 60%,  with the recapture of heat - they get about 85% of energy from the gas.

So the boxes heat hot water for consumption,  heat for warming the house, and between 500W and 1000W nearly continuously.  No concerns about sunlight - and the production is grid ready.  Add about 3kW of solarPV to roof top,  make the envelop -- low energy and you have a small residential power plant - capable of easily producing more than it can use during the daytime. Nearly any day of the week.

Add up a 1000 such homes and it may even be possible to have a virtual power plant that can dispatch 50kW or 100kW on demand any time of the day.   A very different model from the idea of centralized generation. 

Here's a new thick wall construction technique that is eco friendly / sustainable and I feel has the greatest benefits to meet today's building needs.  Since I'm also from a Farming background from North Missouri I welcome anyway a Farmer could generate income from the land.

Hemp Crete House:

Stronger and Lighter than Concrete!  Withstands 130mph winds.


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