Solar electric - not worth it.

By now, with the rapid decrease in the cost of solar panels, it should be worthwhile for every household and business to put solar panels on their roofs.  For years, energy pundits have said that when the cost of solar panels falls to $1US per nominal watt*, solar will compete with fossil fuel**. Panels are now being offered at and  below a dollar per watt.

*a nominal watt refers to the power a panel will give when facing into the noon day sun.  If you buy an 250 watt panel, it will give 250 watts of power at noon on a sunny summer day if it is at right angles to the sun.  If it operates for an hour at this rate, it will generate 0.25kWh (kilowatt hours- sometime called units) of energy.

**this will depend on other factors such as how many peak hours*** you have at your locality and how expensive your local electricity is.

***a peak hour refers to how much sunshine you have per day, averaged over the year.  The generation of your panel, on a sunny day will be a sine curve or if you like, a bell curve.  You will generate a little in the morning and afternoon and most in the middle of the day.   Peak hours are how many hours of noon-day-equivalents you generate, averaged over the year.  The very best locations in the world have about 6.5 peak hours.  Germany has between one and two, depending on location. Where I live in New Zealand we have a little over 3 peak hours per day although looking out my window today, it is hard to credit.
                                          So..........Onward

There is nothing wrong with the cost or the technology.  The problem is with the financial relationship between the small generator, the power company and the government.  There are fish hooks at every turn. 

In New Zealand It is mandated by the government, probably encouraged by the power companies, that any small user with a generating system will have a  meter with two read outs.  One read-out records any excess you  send to the grid, the other any top up you draw from the grid*.  Neither read-out ever turns backwards.  Most power companies will give you less for the power you send them than for the power they send you** although at present in New Zealand there are two companies that give you one to one up to a certain limit of excess power sent to the grid. 

 It sounds OK until you realize that for the most part you will be generating when you are not using and using when you are not generating.  If you are a working couple with kids at school, you will have a small peak use  in the morning as you get everyone off to school and work and a large peak of use in the evening after you come home. This will be more so in the winter than in the summer.  Your main generation, on the other hand, will be over a few hours either side of noon and on a seasonal basis, more in summer than in winter.

*  This is marginally better than the German system which measures every kWh you generate and every kWh you use. In New Zealand only the excess you draw from or send to the grid is measured.

**The German system gives you a FIT (feed in Tarif) which is approximately 3 times as much as you pay for power.  Sounds great!!  It is a scam.

Your first question will be, what is the problem.  If the power company will pay you the same for power you produce as for power you use, you are sweet.  No problem.  Suppose your power company says,"not to worry.  We will simply subtract one meter from the other and pay or charge you according to the difference".  You have to ask yourself why they insist on two read outs if this is their intention.  They are thinking ahead and hoping you are not. 

 If you don't have a contract with them they can change the rules at any time.  If you do have a contract, they can change the rules when your contract comes up for renewal. 

In addition, If you have a double read-out you will end up paying income tax at your marginal rate on every kWh recorded on your export meter for which the power company pays you (typically around 33%)  and GST at 15% on every kWh recorded on your import meter, that you buy from the power company. Here in New Zeland at present (june 2013), Contact Energy double taxes while Meridian subtracts one read out from the other for tax purposes (but not for billing).  Either company could change the rules whenever they want or when the government tells them to (in the case of GST)

You have probably spotted the flaw in the argument.  The power company has to earn money from their relationship with you so that they can maintain the grid.  Without the grid, you will need to buy a battery bank to store, not only enough power to carry you through the  morning and evening, but enough to carry you through some cloudy days.  To be secure, you might need, for instance, enough battery to supply 4 or 5 days of power and you will have to get new batteries about every 7 years*.  You can make your batteries last longer by not drawing them down so far but to do this you will need even more batteries.  If, for instance, you only draw down 10% of your battery capacity, you will greatly increase their life but you will need 10 times as many batteries to have a given amount of battery power available. 

* Note that the battery companies will tell you that their batteries will last for 14 years.  Not on your nelly they don't.

You will also need more panels to ensure that when the sun shines, your batteries will be fully recharged.   If you don't fully charge your batteries they will sulphate and you will loose capacity. Then you will need more batteries to hold the power when in the summer  you are generating lots of power.  Then you will need..................   You get the idea,  Short of a new type of battery*, it is pretty well impossible to balance your batteries with your panels and your use of electrical power.  With Lead Acid batteries,  excessive draw down and  incomplete charging, both degrade your batteries.  

*  At my last check, Tesla, the electric car manufacturer sells a 60kWh lithium battery for $10,000US.  Unlike Lead Acid batteries, it apparently can be fully drawn down and has no memory but I haven't got any information on other vital characteristics.  The above comments relate to deep cycle lead acid batteries.  A revolution in battery technology could change all this and some battery storage could be worthwhile.  I haven't got my head around this yet but it may be worthwhile to have a small amount of battery storage in your system as a buffer.  In this case, your batteries will be more likely to get fully charged fairly often and the capacity they hold may buffer you against short term fluctuations (the ratchet effect)  and stop your import meter turning each time a cloud goes in front of the sun.

The simple, honest solution to this dilemma is for the power company to simply charge you a line charge for being connected.  It is worthwhile for the small generator to pay this fee since it eliminates the need to buy batteries.  However here the government must mandate that the line charge will be the same for everyone; user and user/generator.  You can imagine what the power company will do if they can structure the line charge and power charge differently for the user and for the user/generator.

Clearly, it will not be worthwhile to install solar with the present double read out system.  You will virtually never be producing exactly the amount of power that you are using so at all times, one or the other of your read outs will be turning.  Once you have these two read outs, the power company and the government can change the rules whenever they want.  With a single metre, called net metering, your meter simply turns backwards when you are exporting power.  Incidentally, some solar panel salesmen call this two read out system net metering.  It is not.  We have one last fish hook to go.

Even with true net metering, the reconciliation period is very important.  Let's take a particularly onerous example.  Remember, your smart meter  talks (or soon will talk) to the smart devices in your home. This is very much to your benefit since you can turn devices on when power is least expensive.  

Your smart meter will also talk to the power company.  Once this is automated, they don't have to hire a meter reader and your meters can be read as often as they want at no extra cost to them.  Suppose the power company reads your meter once a day.    One day is your reconciliation period and let's say that your billing period is every two months. If you have exported power on a given day, this is recorded, if you have imported power on another day this is recorded.  Keep in mind that at almost no time during the day will your power use balance your generation.  One or other meter will be turning.  Let's say, for example, that over this two month billing period you have produced exactly the same amount of power you have used.  However some days will be positive, some negative.  The power company then adds all the positives together and all the negatives together and charges and pays you accordingly.

Of course, the government also demands Income tax and GST on the amounts on the respective meters.  If your reconciliation period was the same as your billing period; that is to say if  they simply checked your single meter at the end of two months, in our example, in which you produced the same amount of power that you used, your power bill and your tax bill would be zero.  We still haven't balanced summer with winter.  The principle is the same.

It can get even more insidious.  There is nothing to stop the power company from recording your meter reading every minute once you have a smart meter.  Run the case on that and see where you come out.

The best system for the small generator would be to read your single meter once a year - to have a one year reconciliation period.  Then it hardly matters how much they give you on your excess or charge you on your make up.  At the very least, reading your meters at the same frequency as your billing period would be a step in the right direction.

In case you think that the above suggestions would be  all for the benefit of the small generator, there are some significant benefits for the power company of having wide spread distributed generation.

Benefits to the Power company

1)You are generating power when businesses are operating and hence the power company is selling your power at a good rate.   

2) You and all the other small generators together constitute a new power station which the power company doesn't have to bear the capital costs of building.  They just buy and resell your electricity.

3) You are generating closer to the end user so there are less line losses. 

4)You allow the power companies to leave water in their dams during the day which they can use during the high demand period in the evening which is caused by household use.  The worse time for the power companies is in the winter in the evening.  Fortunately, the winter is when, in general, most water is available here in New Zealand.  Overall you allow them to use less of the expensive fossil fuel power* and more of the inexpensive hydro power.

        5) You allow the power company to avoid buying power from a rival which here in New Zealand can cost them far more than the 25c we pay for power.

*The direct cost of fossil fuel is only part of the story.  New Zealand has generously signed up to Koyota so our carbon dioxide production cost the country as a whole.  A large uptake of solar technology will reduce the tax burden for all New Zealanders.


Benefits for New Zealand of a high uptake of solar.

1) We reduce our carbon footprint and hence our financial obligation under Koyota.

2) We enhance our clean green image to the benefit of our exports.

3) We gain the internet effect.  Diffuse generation is far harder to knock out by natural or man made disaster than point source generation.

4) In the near future we will be able to charge our electric cars during the day when we are at work at a preferential price.  This depends on us adopting the Space Shuttle version of demand balancing rather than our present model T ford system.  This involves power charges being related to power availability rather than to a certain time of the day as is the case at present when you heat your water cylinder.

5) We wil reduce our import of fossil fuel as electric cars penetrate the market to the benefit of our balance of payments, reducing the amount we have to borrow each month.

6) An improved balance of payments puts downward pressure on inflation with benefits to all Kiwi's.

I'm sure with a little creative accounting, the government and power companies can put more fish hooks  in the system  but we will have to face them when they arise. The first battle  is to get simple, single read out, net metering in which your meter turns backwards when you are exporting power.  A line charge will be necessary to make the system fair to the power company.  There is no need for the ridiculous, unsustainable FITs (feed in tariffs) that exist in other jurisdictions in which they pay you three times as much for the power you produce than for the power you buy.  All we need is simple net metering.

Smart technology is coming which will allow you to turn on your devices in the house during the day when you are generating most power.  This will be a benefit to you and the whole system.  If you can do your dish and cloths washing, heat your water and so forth when demand is low and power is cheap, you reduce the demand for electricity when the demand is high.  The power company can decide when power is in excess and send a signal to turn on your devices at a preferential rate.

Below are some other articles on renewable energy

http://mtkass.blogspot.co.nz/2007/07/solar-electric-government-role.html
http://mtkass.blogspot.co.nz/2007/09/kiwisaver-and-solar-panels.html
http://mtkass.blogspot.co.nz/2007/10/excess-energy-what-to-do.html
http://mtkass.blogspot.co.nz/2007/11/tracking-solar-water-heater.html
http://mtkass.blogspot.co.nz/2008/01/car-id-like-to-drive.html
http://mtkass.blogspot.co.nz/2008/03/feed-in-tarrifs-how-to-structure.html
http://mtkass.blogspot.co.nz/2008/04/double-metering-its-insidious.html
http://mtkass.blogspot.co.nz/2009/11/legislation-for-electric-cars.html
http://mtkass.blogspot.co.nz/2010/07/wind-turbine-effects.html
http://mtkass.blogspot.co.nz/2010/07/electric-cars-in-new-zealand-uptake-of.html
http://mtkass.blogspot.co.nz/2010/08/why-renewables.html
http://mtkass.blogspot.co.nz/2010/10/mining-royalties-and-renewable-energy.html
http://mtkass.blogspot.co.nz/2011/02/wind-energys-no-good.html
http://mtkass.blogspot.co.nz/2011/11/car-chargine-power-points.html
http://mtkass.blogspot.co.nz/2013/04/solar-electric-whats-missing.html
http://mtkass.blogspot.co.nz/2010/07/enabling-wind-farms.html 

ps. (September 2012)

I made a rash statement at the beginning indicating that the technology is everything it should be.  Since I have started on the road to putting solar panels on our little shop (use profile much more closely matched to our generation profile than the house), I find it is not so.

First, when the power of the grid goes down, your system disconnects from the grid.  That is perfectly fine.  Otherwise you would be sending power to the grid to the danger of anyone who is coming along to repair the  grid.  But here is the rub.  I always assumed that when your system disconnects from the grid, if you have sun, you would be able to use your own power that you are generating.  Not so.  When the grid is down, despite the fact you could potentially generate your own power, you can't.  Your system stays down until the grid comes up again.  I have heard there are hybrid systems (hybrid between stand alone and grid tie) and I must investigate this.  It seems silly to have your own expensive system and not to have power when the grid goes down.

Secondly, when you generate excess power it goes to the grid.  This is fine and depending on the relationship you have with the power company, this should defray some or all of the cost of the power you buy from the power company.  However, you are far ahead if you can use your own power.  You may want to dump excess power into your electric car or even to use it to heat water in your hot water cylinder.  

We need a system with a couple of outputs, one to your regular house and one to dump power into an electric car, water heater or any other sort of system that can take power when it is available.  If you are still generating more power than you use, then this can go to the grid.  Basically we need a system which in technaleze says "when there is excess power to what is been used in "A" class devices (ones you use on demand) then the power is sent to "B" class devices (your hot water cylinder and electric car, for instance).  Only if there is still power left over or if your car is fully charged and your cylinder fully heated up, is power sent to the grid.

Net metering

I've put this information on a number of blogs and below there is a list of the URL's of essays on renewable energy.  However, I want to try to make the situation clear in one place and hopefully with the title "Net Metering" it will be found by people who are hoping to put solar panels on their roves.

Net metering is a system in which the amount of power you export to the grid and the amount you import from the grid are simply subtracted from one another and you are charged or paid depending on whether your balance is positive or negative.  It is automatic if you have a meter that turns backwards when you export power.  The old analogue meters with the horizontal rotating disks that you could see, through the glass do this automatically.  Digital meters can be built that do this too.  Net metering, when you have two meters or a single meter with two read outs is a different kettle of fish. In fact it should have a different name.  It may be net metering when you sign up but enjoy it while it lasts.  They can change the rules any time they want or when any contract you have with them runs out.  They may hook you in by saying that they simply subtract one meter from the other to determine whether to charge you or pay you but this will change and surprisingly quickly.

In either type of net metering, you use your own power but export any excess or import any needed make up power through your meter.  One read-out records when you export power, the other when you import.  From now on, let's call the type of net metering where your meter turns backwards "real net metering".

Real net metering is necessary if you are actually going to get a reasonable return for your investment in solar, a small wind turbine or home hydro scheme.  If you have the two meter system which many jurisdictions insist on, whether it is so called net metering or the even more insidious German Gross metering system,  it will not be worth your while to install solar or other home renewable generating system.   Let's look first at the most benign two meter system.

The company or the government gives you some plausible reason for having two meters.  One will measure the net power you export and the other one the net power you import.  Furthermore they tell you that they will simply subtract the reading of one meter from the other and pay you or charge you accordingly.  They will say that you have to have a smart meter that will talk to your devices in your home.    If you are a very trusting person, you may go along with this story and install your system.  Ask yourself why they want to go to the expense of installing a new meter if this is what they intend*.  Your present meter will do this automatically.  Ask yourself what is to stop the government or the power company from changing the rules.  They both do it all the time.


* One of the reasons they will give is that they want to install a smart meter.  These are meters that will interact with smart devices which are in the pipeline, such as your dish washer or hot water tank.  It is equally easy to build a smart meter with a single read out and marginally less expensive than the two read-out meter.


After they have lots of people hooked on the system, they will simply start to charge you according to your import meter and pay you according to your export meter.  Sounds OK doesn't it.  Guess what.  The rate will not be the same and even if you are generating as much  power as you are using over the year, you will be paying for you power at the differential between the two rates.  Neither metre turns backwards.  One turns forward whenever you are exporting power and the other turns forward whenever you are importing power.


Worse still, even though you are generating as much power as you use over the year, or even more than you use, besides paying the differential tariff to the power company, you will be paying GST (Value Added Tax) on every kWh on your import meter and Income tax on every kWh on your export meter (at your marginal tax rate).

Now you have probably spotted the obvious flaw in this plea for single read-out net metering.  The power company has to maintain the lines and they can't afford to buy your power for the same rate that they sell it to other users.  They have to make a profit to pay their workers and maintain the lines.  You are getting a benefit from being connected to their grid; the benefit being that you don't have to expend large sums on expensive batteries and renew them every six years or so.  The simple, honest and most straight forward way is to have a line charge.  This is a charge that every user, whether a simple user or a user generator pays for the privilege of being connected to the grid.  Just one proviso here.

The line charge must be the same for the simple power user and the user/generator.  The power company like any company will want to maximize their profit by charging the user/generator a large line charge and a small power charge (and hence a small payment for excess power).  For the simple user, they will charge a small line charge and a large per kWh charge.  They must be allowed to set up the payment system as they deem fit but with the proviso that the line charge is the same for anyone connected to the grid.  This will keep them honest.

And don't feel to sorry for the power company.  They are getting a pretty good deal.
*If you have solar panels, the power company is receiving the power during the day when power is being used by factories and businesses and when they charge the highest rate for their power.
*They are  getting power from a source which is far closer to the user than when they import it from a distant power station.  The line losses are less. Further more, with a large input of power from a whole array of small generators, someone else (you or Yous as seems to becoming popular) has/have paid the capital costs.  The power company doesn't have the expense of paying the interest on the loan to build more generating capacity.  You have paid for their new generating capacity.

Assume that you get true net metering in your jurisdiction.   Congratulations.  But you aren't out of the woods yet.  Now we have to look at the reconciliation period.  That is to say, the period over which the company calculates how much to pay or charge you according to how much net power you have sent to them or imported from them.  And note that even if they say that the amount per kWh is the same in both directions, this will change.  You will pay more for any make up you need than for any power you export to them.  Let's look at a one day reconciliation period.  They only bill you, say, once every two months but they do the calculation on what you have used or supplied each day.  Suppose in a given month you use exactly what you produce but half of the days you are exporting and half the days you are importing.  If they do the calculation each day and tote up the results, you will show a import of power and an export of power and will pay at the differential rate.  Oh, and by the by, pay income tax on your earnings and GST on the power you exported.  If the reconciliation period is one month, your bill will be zero.  Even better if the reconciliation period is one year.  Then cloudy seasons will balance sunny seasons, summer will balance winter and so forth.  It hardly matters if they pay you nothing for the net power you send them or charge you a large rate for the power you import.



Here are some links to other essays on renewable energy in chronological order.

http://mtkass.blogspot.co.nz/2007/07/solar-electric-government-role.html
http://mtkass.blogspot.co.nz/2007/09/kiwisaver-and-solar-panels.html
http://mtkass.blogspot.co.nz/2007/10/excess-energy-what-to-do.html
http://mtkass.blogspot.co.nz/2007/11/tracking-solar-water-heater.html
http://mtkass.blogspot.co.nz/2008/01/car-id-like-to-drive.html
http://mtkass.blogspot.co.nz/2008/03/feed-in-tarrifs-how-to-structure.html
http://mtkass.blogspot.co.nz/2008/04/double-metering-its-insidious.html
http://mtkass.blogspot.co.nz/2009/11/legislation-for-electric-cars.html
http://mtkass.blogspot.co.nz/2010/07/wind-turbine-effects.html
http://mtkass.blogspot.co.nz/2010/07/electric-cars-in-new-zealand-uptake-of.html
http://mtkass.blogspot.co.nz/2010/08/why-renewables.html
http://mtkass.blogspot.co.nz/2010/10/mining-royalties-and-renewable-energy.html
http://mtkass.blogspot.co.nz/2011/02/wind-energys-no-good.html
http://mtkass.blogspot.co.nz/2011/11/car-chargine-power-points.html
http://mtkass.blogspot.co.nz/2013/04/solar-electric-whats-missing.html
http://mtkass.blogspot.co.nz/2010/07/enabling-wind-farms.html