[rmuesi]

I’ve always wondered about something, yet have never found anyone discussing it online. So maybe some smart people can help me out:

a lot of people install solar on their rooftops. Much of the time this is done with the assumption that it will pay off financially because energy prices are currently at a certain rate and will continue to rise.

But here’s my question: If its financially advantageous to install solar on your roof, wouldn’t it be greatly more financially advantageous (given the main cost for solar installation is the labor) for energy companies to install solar at scale? And if that’s the case, wouldn’t the energy companies eventually do this, which, given macro market laws of supply and demand, would eventually cause the price of electricity to go dramatically down for their end consumer, thus eliminating the financial benefit of privately installed roof top solar for homeowners?

I live in the southwest, and based on online calculators it “makes sense” from a 10 year outlook to pay the money now and install solar on my home, but that’s only if the energy prices don’t fall. But nobody seems to even think that’s a possibility.

[thinkcontext]

Can't believe all the comments so far and no one feels the need to justify their opinion with numbers. Drives me nuts.

You are correct, according to National Renewable Energy Lab (NREL), rooftop solar is over twice as expensive as utility scale solar[0]. The NREL estimate is helpful in that it details the components of the cost. And, as you would expect, the hardware and labor costs are lower for utility scale because of, well, scale, but the dominating difference is soft costs (land, marketing, profit, overhead, etc). Its worth noting, soft costs for residential solar are significantly lower elsewhere in the developed world (DE, AU) mainly because permitting and marketing are much easier.

[0] https://www.nrel.gov/news/program/2018/costs-continue-to-dec...

[brownbat]

I'm a big fan of that study.

It suggests there may be an opportunity for a company to push rooftop solar for big strip malls and other large footprint single owner buildings - they aren't utility scale, but the install efficiencies make them pretty competitive.

The incentives would be tricky, since the owners are less likely to be paying for utilities than the leaseholders...

[floatrock]

https://www.wundercapital.com

The problem with commercial solar is the cost of the financing. Home solar is on par with a car loan, banks know how to do that with personal credit scores. Utility scale solar is the realm of private equity.

Something like a strip mall is a weird in-between that requires enough manual review that the cost to do all of the risk analysis that financing requires kinda outweighs the potential returns. Will that KMart or Costco keep that store open for the duration of the project? What happens when the tenancy changes?

I don't have any relation with Wunder, but from my understanding of them, they built some stuff to streamline all the financing and permitting required of commercial-scale to make those projects pencil out.

[kragen]

On the contrary, personal loans from banks routinely charge much higher interest rates than commercial paper. Think about the interest rate on a money market account, which consists of bonds. That's the rate PG&E is going to pay if they float a bond issue to build a solar power station. Large companies, particularly including electric generation utilities, can also get loans from banks at similarly low interest rates.

This is precisely the genius of SolarCity: they were able to use the low interest rates banks would charge them to install solar power on people's houses at a much lower cost of capital than the same banks would have charged the same homeowners without SolarCity's intermediation.

[thaumasiotes]

> This is precisely the genius of SolarCity: they were able to use the low interest rates banks would charge them to install solar power on people's houses at a much lower cost of capital than the same banks would have charged the same homeowners without SolarCity's intermediation.

That sounds like a pretty interesting pitch as a business model.

But if I recall correctly, SolarCity failed and had to be bailed out by, um, Tesla. Why? Was the free money just not enough?

[cogman10]

I'm going to push back a bit. Interest rates can be favorable to a company but not money market fund favorable. That would be a better interest rate than a US treasury note.

PG&E currently has 2.4% bonds out. Better than what you can get, but not lower than a mmf (usually less than a percent).

As a rule of thumb, rates won't sink lower than ten year tnote rates. Nobody will purchase a bond from a company that has a lower rate than a tnote.

[kragen]

Thank you for the concrete numbers and the correction/additional information!

[bwb]

Walmart is doing it in a lot of locations.

I've heard they also believe if electric cars get going they can offer free recharge with people buying xx dollars of groceries.

[guntars]

Yep, I’ve seen their solar roofs covering the parking spots in Flagstaff, AZ. It’s a win, win - they get power and it keeps the cars cooler.

[anderspitman]

I saw a random magazine 10 years ago that claimed Flagstaff was one of the top 3 "greenest" cities in the US. Prescott (where I'm from) was top 3 skinniest.

[BenFrantzDale]

Wouldn’t one approach be for property managers to lease rooftop space too, making a place for businesses focused on leasing rooftop space, installing solar, and selling power?

[diogenescynic]

Owners of the malls would still hold the rights to the roof, not the occupants of stores, so you’d just have to pay them enough that it’s worthwhile for the owners. However, I like the idea of requiring it for new developments over X square footage.

[Tempest1981]

FWIW, California is requiring solar on new homes, in 2020:

https://fortune.com/2018/12/06/california-solar-panels-new-h...

Maybe not as cheap as large-scale solar, but cheaper than natural gas?

[qserasera]

If a moderate sized location goes out of business would solar panels have decent resale value?

[hutzlibu]

Well, the prizes for new panels are still falling. And the cost of moving them might be too high..

But even used solar panels will be in demand.

[namibj]

Unless you need to demolish, you want to keep them in-place.

[bartimus]

Why would we not want to move them elsewhere?

[pjc50]

The panels stay generating even if the shop below has closed. The building remains owned by someone who has a financial interest in keeping them running.

[riffraff]

They would make the property more valuable when you sell it.

[harry8]

Great post, thanks for the numbers link. I've never heard of land being referred to as a "soft cost" before!

I'm having trouble making sense of them in terms of the cost differential between something like (say) a coal fired electricity plant (and/or nuclear) including (say) 20 year running costs, vs a solar & battery power plant of equivalent scale including the cost of purchasing the land required to build each. There may be better comparison assumptions, maybe lives of plants are different for example but I think that would be a good place to start looking at a comparison. Is per watt DC the right measure? (Probably it is but I'd like to see the justification, given the use of high voltages at scale - again I'm not the expert to know.)

One would assume from there for a power generating utility company the cost of sales, marketing, billing, etc would all be the same regardless of how you generate it. Entirely separate to that one could estimate the additional goodwill available for solar over coal or nuclear in advertising "we're clean, we're green, just look at our stunningly beautiful field of photovoltaics." Which must have /some/ value.

I wonder if the sun-chasing required in choosing the location makes getting the power from the plant to the grid more expensive? Numbers would help.

I'm also having trouble making sense of the listed "soft cost" numbers for residential. Land is already purchased so cost is zero, use what you generate so sales also zero, zero tax, zero net profit and nobody values the overhead of their time for these things, for which assumptions are critical if you do (but definitely a nice saving on the power bill you pay with /after tax/ dollars) - These assumptions I just listed are obviously wrong in that chart but why??? No explanation for numbers that don't add up when you apply obvious assumptions about what you do know makes us all suspicious, right? They really should fix that so it's obviously right, clear, honest and direct in a field I think we can all agree is marred by a veritable mountain of BS and propaganda. I'm absolutely not saying this is BS, nor am I saying it's wrong or propaganda - just I don't understand the numbers on the chart and /can't/ from what is actually there. That sucks for me trying to understand it but maybe I'm not supposed to understand these numbers because they're designed for someone else who has the necessary context. Is providing that context too hard?

[pjc50]

To dig deeper, go to the PDF: https://www.nrel.gov/docs/fy19osti/72399.pdf

> Land is already purchased so cost is zero, use what you generate so sales also zero, zero tax, zero net profit and nobody values the overhead of their time for these things

Their basis: "We model a 6.2-kW residential rooftop system using 60-cell, multicrystalline, 17.2%-efficient modules from a Tier 1 supplier and a standard flush mount, pitched-roof racking system"

So what they've done is effectively get quotes for installing their sample system and then divide by its power output. Sales tax, profit etc are added to the bill the customer pays the installer. Other tables give a more detailed breakdown.

[PuffinBlue]

that report puts a 76,800 square foot foundation (so perhaps triple that for total land usage) at $250,000. Is that anywhere remotely in the realms of reality for an area that might actually get permitted and connected at the other assumptions they've made?

It wouldn't be in my country (UK).

[Reason077]

UK solar farms generally don’t own the land they’re on, but pay a lease or license fee to the landowners.

A UK comparison would be the proposed Cleve Hill Solar Park in Kent, which will also have on-site battery storage. At 350MW it is almost as large as this LA project.

[cr0sh]

Not sure if it's still the largest, but this plant is a few hours drive away from where I live in Phoenix:

https://www.forbes.com/sites/uciliawang/2014/04/29/behold-th...

That's 2400 acres and it's up and running - so I assume permitted and connected to the grid. But I don't know the the total cost to compare things - I'd assume rather cheap, because Yuma is...not a "destination" (outside of maybe a stopover for the dunes).

[nachteilig]

Hey, could you please point me at some stats relating to the costs being lower, especially in Germany? Very interesting topic for me and I couldn’t find it in the study. Thanks!

[litany]

So the thing is the economics of rooftop solar are a lot different than power station solar. The DOE has public data on how much utilities pay for electricity. In a market like mine, Southern California Edison isn’t an electricity generator, they buy power at about $0.02/kWh but then they sell it to the residential consumer for up to $0.32.

So clearly it’s a very different calculation. Regardless of that generators are building large scale solar arrays to sell power to the utilities at very much lower rates than what a rooftop owner pays to generate their own power. It’s just the rooftop owner can bypass a lot, and potentially all, of the utility and grid fees which are >90% of the cost. The other thing is that many utilities are hugely subsidizing this with net metering policies, which basically means the utility is acting as a huge battery for only the grid connection fee which, depending on the market, can be as low as $15 a month. Which basically seems to make products like the Tesla Powerwalls a really tough sell. Why pay $5000 for a tiny powerwall when, assuming you want grid connect anyway, the utility will be a way bigger powerwall for free?

[TheSpiceIsLife]

> they buy power at about $0.02/kWh but then they sell it to the residential consumer for up to $0.32.

This is the most important factor in the whole discussion.

The electricity retailers, which consist of a call centre and a two billing systems, accounts payable and accounts receivable, buy electricity for virtually nothing, $1.00 buys them 50kWh, that's about double what my houses uses per day with two adults. edit to add: per day

I'm guessing the electricity retailers aren't making a lot of money after expenses, otherwise investors would flood the market.

How would a reduction in wholesale electricity price translate to a reduction in residential retail price given the wholesale price is already almost at zero.

[astanway]

Wholesale price is definitely not “zero”. It fluctuates wildly, and if a retailer is exposed to the real time market at the flow date, they can expect to lose hundreds of thousands of dollars. RTM prices can easily spike from $50/MW to $8000/MW in an instant if a generator trips. So, retailers buy hedges to cover this risk, at price premiums that reflect the inherent exposure insurance.

[TheSpiceIsLife]

I didn't know this, thanks for clarifying. Further investigation for my local area:

Here's a link to the Australian wholesale spot price and peak price https://www.aemo.com.au/Electricity/National-Electricity-Mar...

Where I live, Tasmania, the average for 2019 is $147.91 / MWh and the peak is $163.

That works out to Au$0.163. I pay AU$0.26 / kWh, plus a daily supply charge of, if memory serves me correctly, $2.30 - this is to cover network operating costs.

That's actually a fairly reasonable mark up on the retails side of things.

That makes the other commenter's $0.02 / kWh seem fairly misleading. Maybe for some places some of the time.

[caf]

The "peak" price they're talking about on that page is the average spot price over the peak electricity consumption time (7AM to 10PM weekdays).

It's not the highest spot price seen in the market. This time of year the east coast electricity market seldom spikes, but if you go to the historical data page you can see that in January this year the 30 minute spot price in Tasmania spiked above $2000/MWh four times (22-Jan 17:00, 23-Jan 12:30, 23-Jan 13:30 and 30-Jan 16:00).

[namibj]

There are many things you can defer, even at home. Mostly A/C related, but stuff like a self-cleaning oven or a clothes dryer doesn't need to run in the instant, necessarily. The dryer might be able to wait a few hours once the clothes are a bit dry (due to mold and such), as it needs to be ready when you get to it in the morning/afternoon. Until then, it only needs to prevent the clothes from water damage.

The oven can maybe just wait a day or a week even to clean itself. It usually works fine even if partially dirty, and just causes some smell due to thermally decomposing food contamination (cheese drips from pizza, etc.).

[TheSpiceIsLife]

I don't need to defer anything, as I'm on a flat rate. I don't like peak metering, as it would forces me to micromanage things in a way that doesn't work for me.

I don't have a clothes dryer, they use too much energy. I just hand my clothes on an indoor clothes airer and blow a fan on them. I usually leave the heat pump set to 16 degrees C while I'm out, the combination of mild air temp and the fan dries most of my clothes over night anyway.

Hadn't even heard of a self cleaning over. I don't bake a lot, so there's that.

[aoeusnth1]

That seems very odd to me. Maybe Australian regulations or trade situation is different and makes the math different, but in my area (SoCal), TCO for my rooftop solar installation was $0.08/KWh using a Net Present Value calculation, and utility solar is more than 2x cheaper than that. It’s very odd to hear wholesale prices above 10c when rooftop is so cheap.

[jddj]

Not really addressing your point, but a sidenote on the topic of Australian regulations -- Due to some subsidies/incentive schemes which came through in some states about 10 years ago, some residential Australian rooftop solar installations are selling any excess into the grid at a rate of 0.44/KWh and will be until (from memory) 2024.

[maxerickson]

Here the connection charge is less than $0.50 a day and electric is $0.095 per kWh.

(those are the retail prices for a small US town that isn't particularly close to any power plant)

[biddlesby]

Companies also need to pay tax and other per-kWh costs on top of the spot price: are you taking that into account?

[zaroth]

But what’s happening more and more now is that batteries are arbitraging those rate spike, and ultimately those spikes will disappear entirely.

[astanway]

Utility scale batteries are not yet a proven and deployed technology. Not to say there aren’t successes - Aliso Canyon and the AEMO installation in Australia have both been very well received by their respective system operators. But there’s a very long way to go before batteries will exist as a viable, general alternative to natural gas peaker plants.

[zaroth]

I did not say that they are an alternative to natural gas peaker plants. I said that in markets where the spot price can spike to $8,000 per MWh, grid scale batteries are being deployed in order to serve those load spikes more economically.

There is about ~1GWh of grid scale battery storage already deployed in the US alone. 150MW was deployed in 2019 Q1 - which represents 232% growth YoY . ~5 GWh is projected to be installed annually by 2024. [1] I think that this qualifies as proven and deployed.

[1] - https://www.woodmac.com/research/products/power-and-renewabl...

[tomrod]

You're exactly right. Thanks for adding the the knowledge pool today!

[jjeaff]

I think companies like Cal Edison do a lot more than billing and sales. They have to build out and maintain the transmission infrastructure. Which, considering they charge 32 cents per kwh marked up from 2 cents, it seems the infrastructure upkeep is a lot more expensive than the actual power generation.

[ZeroGravitas]

Most research suggests that net metering is underpaying the households that deliver it. This seems very counteri tuitive to people, but remember you're paying an average cost. Gas peakers can cost thousands of times that when load is high. If you use AC then solar and high demand are correlated. At the extremes that means building a whole new powerstation that might only be used for literally hours per year.

[dkural]

The utilities often don't want to buy this power - if they felt that they were underpaying, they'd want to buy it. Could you cite the "most research" you speak of? In fact I've read the exact opposite - that solar rooftop is economically possible only because the utility is often forced to buy it back at retail rates.

[ZeroGravitas]

Utilities often get recompensated based on a percentage of what they spend.

If you assume they are rationally going to maximise their profit potential then saving money isn't really in their interest even before you get into externalities that they impose on others.

Another example of this is utilities moving coal and gas plants that are no longer economic into these kind of compensation deals to they get a guaranteed profit based on what the cost to run. This is why it's estimated that closing all coal plants in the US would save 10s of billions dollars just in lowered electricity costs, even before factoring in pollution and carbon.

For info on the research "value of solar" is the general term. It varies by geography and location (e.g whether demand is growing or falling, what the other power they displace is coming from etc) but it's generally pretty positive for solar. The number is even bigger when you include things that would save customers money rather than the utility, and as regulated industries they should probably be forced to consider those costs.

But what you said and what I said aren't strictly incompatible. You could get a prisoner's dilemma type situation in which it only makes sense for you to do something if someone else is forced to do something too, otherwise they would defect and gain even more. Doesn't mean it's not economically beneficial for both.

I have no real interest in whether solar makes economic sense for a household or for a utility. It clearly is at the society level and we should be organising ourselves so that we maximise the benefit, not throwing our hands up and saying "well, if it would involve changing a minor regulation on an already heavily regulated industry, then I guess I'm going to have to choose the more expensive option instead"

[astanway]

It’s overpaying if anything. Why should the utility be forced to pay retail RTM rates for power that they could have bought wholesale a month before if they actually needed it? Utility ratecase logic often has many ratepayer-unfriendly motivations but this line of reasoning is legitimate, imo.

[kragen]

We're talking about an average net-metering cost of about US$0.12/kWh, right? That's 3.3¢/MJ in SI units, US$120/MWh in the units used in most real-time electrical markets. LMPs do sometimes get as high as US$120/MWh and even higher — I've seen US$160 at times — but never anywhere close to US$12000/MWh, as your "cost thousands of times that" comment suggests. (US$40 is more typical, and sometimes prices go negative, so you can get paid to burn energy.)

[astanway]

RTM prices in ERCOT can easily spike to the price cap of $9000/MWh during bad days: https://www.spglobal.com/platts/en/market-insights/latest-ne...

[kragen]

Interesting! So even if the demand would justify paying $12000/MWh, ERCOT just permits brownouts or blackouts instead of paying that much? (I can't load the article you linked.)

[astanway]

Realistically a price higher than that wouldn't really have any effect on incentivizing generators any more, since there is a limit to how fast they can ramp up, how much spinning reserve capacity they have etc. So, it mostly just serves to protect the market from falling off the rails. The grid operation itself is actually largely disconnected from the market - the ISO primarily calls the shots with scheduling regardless of what the market is doing.

[nimish]

Because the powerwall allows you to "buy" power at the opportunity cost of $0.02/kWh vs paying up to $0.32/kWh ? If you end up generating a lot of excess solar using a lot of grid power at peak times, it could pay for itself.

But of course, you need to do the calculation for your situation.

[boringg]

I don't think powerwall has that functionality. At least original powerwalls only provided backup power. From a C&I perspective this is one of the sources of revenue for batteries - however there are many different ways for electricity charges to be passed on to customers. It isn't only kWh.

[benj111]

"I don't think powerwall has that functionality"

From wikipedia

"When originally announced in 2015, two models of Powerwall were planned: 10 kWh capacity for backup applications and 7 kWh capacity for daily cycle applications"

https://en.m.wikipedia.org/wiki/Tesla_Powerwall

I take it the daily cycle applications include that functionality.

[PuffinBlue]

You only need to think of the other things that solar requires in order to see where scale cost might arise - land and infrastructure. Labour is cheap.

Solar needs space and it needs a way to export it's electricity to where it's needed, or to where it is stored. Places where space is cheap enough almost universally don't have infrastructure.

So large scale solar does come with large capital costs.

Contrast to home owners/businesses installing solar on 'space' already paid for (or under mortgage) and there is something of a sunk cost advantage in those circumstances.

Plus there are many reasons to install solar, not just financial. Plus incentives in many parts of the world are being removed, like no guaranteed feed in tarif rates etc. Solar is just becoming cheap enough that in pure electricity bill savings it can start to make sense.

If you think about that then the expectation is that energy prices won't necessarily increase as you mentioned, and may possibly fall under pressure from decentralised generation. Already I believe some areas force citizens to pay an infrastructure charge at a base rate towards upkeep of large scale transmission lines and base load power stations etc. So the situation is much more nuanced that your comment seems to presume.

[Baeocystin]

>Plus there are many reasons to install solar, not just financial.

The thing that surprised us the most when we installed our home solar system was how much cooler the house was during the summer, just because of how much the air-gapped panels on the roof reduced the heating load on the house. We noticed a significant reduction in our AC bills during the couple of months we had the system installed, but couldn't use the power due to permit-waiting.

[Scaevolus]

Double-layered roofs are a really easy way to avoid daytime heat gain, and a slightly more sophisticated design minimizes nighttime heat losses too.

Here's a tropical house with multiple roof layers to stay cool: https://www.notechmagazine.com/2013/09/a-passively-cooled-ho...

https://wattsupwiththat.com/2012/09/12/something-practical-n... or the paper: http://callippe.com/blog/wp-content/uploads/2012/09/ORNL_roo...

[bostik]

I wish I could find the article - there was a report on the effect of installed solar panels and the cost of AC on the (single-family) properties they were on. Would have been in 2016 or 2017, maybe.

But in any case... The overall reduction in energy use was about 5% better than calculated. The article stated that this was discovered to be due to the improved airflow between the roof and panels. Because the panels are installed 40mm-50mm above the roof, they leave effectively a narrow wind tunnel between themselves and the roof surface. This means that with the panels heating up, they cause an increased airflow over the roof.

This increased flow, in addition to the panels heating up instead of the roof, was enough to further reduce the energy required to cool the house down.

You must have been experiencing the same effect.

[specialist]

I'm eager for architects to incorporate shading into their designs. I love the louvres on the south face of the downtown Phoenix library. I imagine future iterations will put solar panels on those louvres.

Here's a pic with the louvres open.

https://www.archdaily.com/255208/burton-barr-central-library...

Rooftop decks being so popular now, I expect someone clever will eventually add solar panels as shades.

[cr0sh]

ASU and Mesa Community College both use solar panel installs as covered parking areas; Fry's Marketplace over at Bell and I-17 has their parking lot under a solar panel shade structure, too.

So the idea is already there and makes sense; it's just a matter of time for it to be adopted on the consumer home market I suppose.

Now - if they would just manufacture homes to also suit the climate, and/or position them to stay cooler in the summer and warmer in the winter, etc.

Had the dome style of home taken off, especially here in Phoenix, things would be much better, because the roof wouldn't get nearly as much sun hitting it directly as standard ranch-style homes and others currently do. Monolithic dome construction, coupled with a mostly below-grade first floor, would do wonders for heating and cooling (I know of a house almost like that up in the New River area). Add in a solar chimney with evap cooling (Boyce Thompson Arboretum used to have a demo system like this), and you'd limit AC/heatpump usage to probably 1-2 months a year.

I wish I had the money to build such a home on a decent size plot of land somewhere, but I doubt I ever will.

[swinglock]

So it works double as another layer of isolation. Seems obvious but I had not considered that before, interesting.

[SwellJoe]

It's reflection plus air flow. Sunlight is blocked from reaching and warming the roof, while warm air rising at the top of the roof will pull in cooler air from the bottom, leading to surface cooling (sort of an accidental half-assed solar chimney). So, it's a couple of different mechanisms at work.

[Baeocystin]

It's definitely one of those makes-sense-in-retrospect kind of things. I'm just surprised it never came up as a point in favor of the systems when discussing with the various solar sales reps- we spoke to several different companies, and not one mentioned it.

[JaRail]

It's probably difficult to estimate these benefits. You don't want to come off as making shady (sorry) promises when selling something that expensive.

[ctack]

I wonder if it would be cost effective for a solar power provider to line the streets with their panels such that they shade the pavement on either side to some extent. If they managed it, they’d save on transport losses and possibly in cost of space. They could possibly even host their batteries in the panel supports.

[zizee]

That sounds very difficult to maintain. Land outside cities is cheap, and the percentage of loss transmitting electricity long distances (at very high voltages) is usually overinflated in most people's minds.

Better to put them out in a big barren field, fairly low to the ground.

[ctack]

Fair enough, that does make sense and sound cheaper. I guess the only thing going it vs your evaluation above would be the environmental impact. You wouldn’t need to affect that barren field, you’d be using already compromised land. But yes, the support structure costs would be prohibitive and possibly have a higher environmental impact in production vs just razing and sunblocking an unused by humans field. Also there is the aesthetic side where many streets might be improved with shading, where not many fields are improved by appearance of arrays of solar panels.

[zizee]

Thinking about this more, and extending/tweaking the kernel of your original idea of solar close to consumption, and providing shading: an ideal place for solar is to use it as shading in car parks. Underutilized land, demand in the nearby businesses and to charge parked cars.

Not really my idea by the way - I have seen a number of such projects underway on the web, and in real life.

[ChuckMcM]

Previous responses about my experience with my 5kW PV generation system in Sunnyvale, CA.

https://news.ycombinator.com/item?id=17509166

https://news.ycombinator.com/item?id=19163235

Based on your question though, you assume that utilities are somehow optimizing to provide energy at the lowest possible price. This is not true. In the US the utility is granted defacto monopoly status in exchange for its ability to ensure that it can make the capital investments in core infrastructure without going broke. Such arrangements allow the monopoly to demand rate hikes for any pretty much any reason (even for paying of litigation judgements against it when it was found liable for burning down a town).

With the existing system, there is no future in which the utility company makes any large scale investment in renewables at scale because it doesn't make enough money on that. It is sad but it is also the truth.

When a community decides to not use the state monopoly it can act a bit more rationally, but even then you need the equivalent acreage to provide the solar.

[amelius]

Okay, but other parties than the energy companies can make the investment of rooftop solar. A simple construct could be that the rent you pay for the solar cells is less than your current energy bill, but higher than the point where the company breaks even.

[ChuckMcM]

Yes, and that was (is?) the business plan of various solar companies where they put solar on your house for "free", you pay them for your power, and they price you at some going rate that pays their costs. This was made possible by legislation that allowed California to demonopolize public power. What we have learned however is that an undue burden falls on the company that owns the actual transmission lines and cables since those things need maintenance but not all of the power going through them are paying a margin to the person who is tasked with maintaining them.

If you force solar companies to both provide the panels and provide the wires to hook your house up the local substation and maintain those wires, well they can't do that at a competitive rate.

[new_realist]

In what world is the monopoly better off charging the same rates but with higher internal costs?

[ChuckMcM]

One where you have a service versus one where you don't. The establishment of sanctioned public utility monopolies goes back to the 30's at least in the US.

[Baeocystin]

We're starting to see things shift away from simple panel installs on a home being as quite a good deal as they were. They still make economic sense, but the caveats are coming. When we got our system in 2015 (Bay Area, California), the full tax credit and rebate system was in effect, which wound up shaving more than a third of the cost off of the total system price. Then, we were able to get on a rate plan (PG&E E7) that paid us quite well for our overproduction.

A year later (2016), PG&E 'retired' the E7 plan, as it was too beneficial for home solar users. We're now on the E6, which is not as good, but still better than the straight TOU plans PG&E currently offers. Next year, even the grandfathered E6 plans are going to go away, and solar customers will be on a time-of-use plan that extends peak hours until well past dark, making it again more difficult to recover solar's cost as a homeowner.

This will be able to be offset to some degree by systems like Tesla's PowerWall (I don't have one yet, will consider it in the coming years) but it's definitely a game where the utilities have a love/hate relationship with people who own their own systems.

[aussiegreenie]

You are correct but will talk about Australia.

Australian rooftop solar is less than half the US prices. A 6.6 kW system installed retails at(AUD 2700 /USD 1870) and yet we have some of the most expensive electricity in the world at USD 0.25 per kW-h. In many places, 1 in 3 houses having rooftop solar. We have over 9GW currently installed and increasing at 1.5GW per year.

All this new production is taking market share from existing generators. And if you add storage, the utilities are in trouble. Therefore, it would seem to make sense if the utilities own assets and continue to sell electricity to clients. But, it is not.

The three big electricity companies are vertically integrated. They own both generation and energy retailing. (aka Gen-tailers). If they started owning small scale PV they would be faced with devaluing their existing generation assets. Or worst the grid (poles and wires). As long as the gen-tailers can pretend that solar is "marginal" they can produce huge profits from worthless assets. Over the next few years, the companies will shut their old coal plants and go all-in on solar but the longer they delay it the more profits they make.

Eg the NSW Government sold an old coal-fired generator for $1 million, the company who purchased it revalued it for $720 million a few years later. Electricity prices rose and the Federal government removed a Carbon Tax making the plant highly profitable.

The Australian electricity market is broken and so people make rational decisions to use rooftop solar. But if the energy companies moved into rooftop solar, it would cause them problems in operations and Balance Sheet problems.

[sien]

A quick search gives figures of AUD 5-7K for a ~6KW system.

https://www.solarchoice.net.au/blog/6kw-solar-pv-systems-pri...

https://mcelectrical.com.au/blog/what-size-solar-system-do-i...

https://solaray.com.au/6kw-solar-power-system-price-output-s...

(The last one suggests that cheap 6KW systems are junk)

[cstrat]

There is a lot of negotiation room with solar installs. I paid just shy of $7K AUD for a 8.2kW Fronius inverter with 9kW worth of Suntech panels. The solar credit scheme contributes quite a lot of money to the installers so subsidise the setup. I checked wholesalers and I think the materials were worth more than the $7K AUD.

[zizee]

> A 6.6 kW system installed retails at(AUD 2700 /USD 1870)

That sounds too little to pay for a decent quality system which will last 20 years. For decent components, from a reputable supplier you'd be expecting to pay around twice that.

You're also discounting the need to have power after the sun goes down. If you compare roof top to mains, you really need to include the cost of a battery large enough to go off grid, which is at least another $10k, and quite a bit more if you don't want to have any lifestyle changes.

I have a 5.5 kw roof system that I am very happy with, but I won't pretend that it replaces mains power.

I also expect to be keeping mains for a long time yet. I have a desire to make my next car electric. I used to think that the grid would go into a death spiral inches batteries got cheap enough. Now I think electric cars will save it.

I think solar and storage are the future and really want that future now, and I think you do as well. But you do it a disservice by overselling the case.

[nordsieck]

> You're also discounting the need to have power after the sun goes down. If you compare roof top to mains, you really need to include the cost of a battery large enough to go off grid, which is at least another $10k, and quite a bit more if you don't want to have any lifestyle changes.

I don't think most people with solar are entertaining the possibility of going off grid. Rather they are comparing solar with net metering vs no solar. In that case, it is entirely appropriate to omit your suggested battery.

[zizee]

Please read my comment in the context that it was a reply to someone saying electricity companies in Australia are not moving into rooftop solar because it would undermine their current investments.

I am not arguing rooftop solar does not make sense to install. I have a system and it works for me. I think for a lot of people, especially Australian homeowners it is a sound economic and environmental investment.

[spydum]

|A 6.6 kW system installed retails at(AUD 2700 /USD 1870)

Is that right? Pretty sure in the US most kits that size are literally 10x that cost?

[zhoujianfu]

Yeah, or 20x? In LA I just got exactly that size installed from Tesla and I think it was about $35K? That did include one powerwall (they tried to suggest two but I realized with net metering even one only made sense for the fun of it).

[sgerenser]

Wow, hope the Powerwall was worth it. Recently got a quote for $16.5K for a 6KW grid-tie system installed (North Carolina, US). No batteries, but I’m pretty sure I’d come out way ahead just over sizing the array by 30-40% vs installing any sort of battery unless the prices come way down.

[mechagodzilla]

I just installed a 5kW system in NY, and after incentives it was about $6700.

[cortesoft]

As others have pointed out, wholesale energy cost is only about $0.02 per KW/H, yet retail is usually over $0.2 KW/H.

Even if the wholesale cost of energy drops to $0, you are only dropping about 10% of the total cost of energy.

Of course, this brings up another interesting question that has been a hot button issue; if power companies are supplying less and less power (since more and more people are getting their own power from solar), the economic model of paying for power infrastructure by paying a premium for kw/hours isn't going to work. The infrastructure cost is fixed, even if everyone is generating their own power (assuming people still want to be connected to the grid, and even people with solar generally want that). How do we pay for that infrastructure?

Power companies have tried to introduce surcharges for solar users, but that has gotten a lot of pushback because it seems to be punishing people doing the right thing. However, the alternative is to push more of the cost onto non-solar users, which doesn't seem fair either, especially since solar users still get the benefits of the grid.

It is not an easy question to answer.

[pilsetnieks]

It's not that complicated. There are countries in Europe that, in addition to metered price per kWh used also have a fixed price for grid usage. If you feel you're completely self-sufficient and can survive without the grid, you can cut it off and pay nothing. If you use your own power but want to keep the grid connection for backup, you pay for grid access but nothing for power (or get a discount or a refund, or money back if you feed your excess power into the grid.)

[AnthonyMouse]

The weird thing about fixed price grid attachment is that it encourages people to disconnect from the grid and to not install local solar to begin with.

If you pay a fixed price for the grid then your price per kWh goes down and it makes less sense to put solar panels on your roof because they need to beat the lower price per kWh unless you can get entirely off the grid.

But then you do have the incentive to get entirely off the grid if you can, because it gets you out of the grid attachment fee. So it justifies more in the way of batteries to avoid that cost.

In other words, it makes solar + grid attachment unprofitable, so your viable options become full grid or full independence. Then depending on which one has lower costs at scale, it either ends rooftop solar or ends the power grid.

And that could go either way. The power grid has economies of scale, but it also has transmission costs that don't exist for local generation, so which one wins?

[hokkos]

Almost nobody does that, because solar + batteries would need so much batteries for winter that it is completely unpratical. The only people that I know doing that are extreme ecologist in remote places. And grid access is so cheap like 10€/month.

[sgerenser]

If the grid connection fee is only €10/mo, then that doesn’t sound like it is really covering the full cost. Most US utilities have a monthly fixed fee around that amount. Just checked and mine is $15.05/mo. That fee is basically arbitrary and if everyone went solar and was only buying a nominal amount of energy from the grid there’s no way a few bucks a month from each customer would support the whole thing.

[cortesoft]

Except if we go that route, people who use very little power will get screwed, since the cost of the grid hookup might be a large percentage of their total power cost. This will disproportionally hurt poor people (who don't have a ton of gadgets using power, don't have the money to build solar, but still need some electricity)

[greglindahl]

In most of the US, industrial users pay a fixed price for grid usage, plus a variable charge for energy.

It's residential users who usually don't have a split bill like that.

[rmuesi]

>wholesale energy cost is only about $0.02 per KW/H

Doesn’t this contradict the oft repeated news that solar is so much cheaper than our predominantly oil generated power?

[cortesoft]

Even a fraction of a penny drop in that price will mean a lot of value given how many KW/H our society consumes.

[module0000]

If wholesale energy cost goes up because of reduced demand, wouldn't that financial impact fall mostly to people below the poverty line? IE, those people who cannot afford to install solar/wind/alternative power sources and only have the grid as an option - those people would be forced to pay higher and higher rates(widening their financial gap to ever get off the grid).

[johngalt]

You are underestimating how much of your electricity bill is going to capital costs. It's possible that the cost of electricity consumption will drop, but only if it replaced with other costs to subsidize the cost of the various electrical infrastructure.

Installing a small amount of solar to offset personal usage at the hottest part of the day is much different than ensuring that varied demands can be met across an entire city 24/7. This is also true on a personal scale. It is much more costly to go fully off grid, and the payoff times are much longer (if ever).

The only reason that rooftop residential solar makes economic sense is because of the way we price electricity based on consumption. Utilities are building most of the infrastructure regardless of if a handful of people using 40% less electricity on sunny days.

[solotronics]

So if municipalities tracked the cost to install and maintain the utilities accurately they could split out the infrastructure rate from the kilowatt rate. Once you pay off the cost of your portion of infrastructure then you would only pay for maintenance. This would result in more efficient pricing for watts used of electricity.

[zizee]

If they charged the true cost of the grid and dropped kw pricing to the true cost, people would have little incentive to conserve the limited resource that is electricity generated.

It is more like the supply/demand has set a price for KWs and the margin the electricity companies make on it is used to subsidize the cost of the network.

[bluGill]

Rooftop solar makes sense because cost of land is a sunk cost, and thus doesn't have to factor into the total cost of the install. This assumes that solar makes sense for the area though, some houses are shaded too much.

[zizee]

I think you'd be surprised how cheap land can get outside of cities.

[zAy0LfpBZLC8mAC]

But then you get increased losses when transporting the energy into the city, plus the costs for the distribution infrastructure. Rooftop solar tied to the grid can be used by your neighbours when you aren't using it, which means almost no transport loss, not even crossing a transformer.

[zizee]

Sure. I was responding to a comment saying the reason rooftop solar makes sense is the sunk cost in the land overwhich the roof lives. Rooftop Solar make a lot of sense, but probably the main reason is the electricity generated does not come with the cost of having to maintain a hugely expensive grid.

[TallGuyShort]

* It's as cheap as it is for residential solar because of government subsidies. Ultimately a subsidy just means somebody else is paying for it, so this falls apart at scale when you're talking about something that everyone will use somewhat equally.

* I looked at residential solar and it looked to me like if I paid it off for 5 years at the rate that it saved me money, I would be further behind than if I had waited 5 years and solar panel prices continued to decrease. So why buy now? They decrease in value faster than they save money. It wouldn't have been a financially motivated decision.

* The solar company said they could eliminate my electricy bills if I bought solar, and they did a bunch of upgrades like improved insulation. The insulation had a much higher return on investment so I did that anyway - it's easier for me to simply need less energy than to replace all my energy sources (similar to a lot of environmental issues, IMO - we could overhaul recycling infrastructure, or I could just buy food that results in less non-compostable waste).

[austhrow743]

>If its financially advantageous to install solar on your roof, wouldn’t it be greatly more financially advantageous (given the main cost for solar installation is the labor) for energy companies to install solar at scale?

This actually mirrors my thoughts on house ownership as an investment as well.

Every house I've ever rented has been privately owned by an individual and either managed by them or a company that manages tenants for them but has no equity stake. It's always struck me that if residential properties were such a great investment, these companies would move in to it rather than give up supposedly great returns for no reason. Or large financial institutions would buy the properties and then have the rental management companies as clients rather than a host of small time investors.

[hnick]

It's just a different risk profile. They see themselves as good at managing multiple properties for a steady income, rather than leveraging highly and managing just a few for an uncertain outcome (markets change for better or worse and they don't want to be left in the lurch).

Likewise, airlines use a lot of fuel. They could save money by buying fuel producing companies... but they're not in that business and don't want to worry about it. You can vertically integrate but you also have to recognise what you are good at and what you want to focus on.

There are REITs (Real Estate Investment Trusts) by the way, but they did quite poorly during the GFC in Australia at least.

[sfifs]

This has mostly to do with martching age horizon of source of funds and utilisation of funds. Banks borrow short (from deposits of individuals and companies) and lend long which exposes them to a certain amount of financial risk. The big banks usually don't hold the paper and mitigate by securitizing the loans. Some smaller banks and merchant banks who know their customers better tend to hold the paper. Actually owning the property is a much longer time horizon activity than simply lending long - so the entities who do that are the ones who actually want to hold - ie. Individuals and families

[gwbas1c]

I bought my panels via a loan.

Based on my loan, my current cost of energy is much lower than if I bought it from the grid. (About 4-5 cents per kwh, instead of 20 cents per kwh.)

My monthly payment never goes up, but it's unlikely that my cost of grid electricity will fall below 4-5 cents per kwh during the lifetime of my loan.

Remember, the cost we pay for electricity includes the cost to run and maintain the grid between the generator (or battery) and our homes. The system in the article is a little more than 3 seconds per kwh BEFORE the costs of the grid are involved.

[aoeusnth1]

Wow, what was your price per W? At ~$2.5/W before tax breaks, and a 5% yearly discounting rate, I calculated my TCO was about $0.08/KWh after tax breaks using a spreadsheet to calculate the net present value of the future electricity.

Usually the salesmen will quote you a cost per KWh based on the total energy generated over 25 years divided by the cost of the system. This is usually very far off (in their favor) for two reasons:

- Time discounting: at a generous 5%/year, discounting makes electricity in 20 years only worth 37.6% as much as electricity now.

- Risk: presumably, future increases in panel efficiency and manufacturing techniques will make electricity even cheaper than it is now. By signing a contract or buying a system, you're buying future electricity flows without knowing how much they'll be worth yet.

[gameswithgo]

A house has some advantages:

* less transition losses

* the "land" to put it on is free and not being used for anything else

That said, here in Austin they have been shifting some of the tax dollars from home-solar incentives to large scale solar farm incentives instead.

[geegoo]

I worked for a electric meter data analysis company that worked with local government owned utility companies. This is a complicated issue with a lot of potential reasons. My professional opinion is that yes, it often is cheaper to for municipalities to install solar in the long run, but there is a lot of uncertainty about the technology and the fragility of the proposed systems.

Depending on the energy generation, utility companies have long term fuel contracts which often work against long term investment in renewable energy generation. Local tax payers will have to pay for the deficit or potential contract penalties if the city reduces their energy generation requirements while still having a fuel purchase contract. That coupled with the investment cost of installing solar/wind generation infrastructure is a hard sell for elected officials who depend on short term impact to maintain their constituents happy.

There is also the question of legality, as some states have strict laws on who can generate electricity and who can store it/sell it. Typically the smaller and less progressive the region, the more likely they are to go towards the path of least resistance and just let the homeowner brunt the cost.

So some consumers install it for the long term gains without placing any bets on how local utilities will react, while others might do it as an investment on the property itself. These are just a few scenarios (without talking about commercial energy consumption) out of the hundreds being discussed.

It is becoming more common now for utilities to have energy surplus buy back programs that reduce the energy cost to the end user while they wait for the industry to progress past their latest infrastructure investment (a lot of local municipalities had huge infrastructure investments in the 90s / early 2000s that they are still paying for)

[castratikron]

In that sense it's an investment. Your savings are determined by the price of energy, so there's no guarantee the price will stay the same (or increase) over 10 years.

It isn't just the utility's price that can change. There can also be changes to laws regarding net metering. In fact there's loads of cases where local/municipal/state utilities will try to change the law and eliminate net metering so that they don't have to pay for residential solar.

I really think there needs to be some kind of state owned grid where market forces determine the cost of energy. Everyone who wants to hop on the grid gets a meter installed and there would be a marketplace where people would be free to pick where their energy comes from. In that way the cost of energy becomes democratized and takes power away from entrenched utilities that have every incentive to keep them in control of the energy supply and to keep the price of that energy high.

[pat2man]

You are probably right, but home solar has a few advantages. You already have the space for it. And you don't need to transport the energy anywhere.

[dragonwriter]

> But here’s my question: If its financially advantageous to install solar on your roof, wouldn’t it be greatly more financially advantageous (given the main cost for solar installation is the labor) for energy companies to install solar at scale?

No, because the law in many markets requires energy companies to buy the net product of customer-premises solar at retail price whether or not they need it, so building more production capacity with the same basic output profile as the rooftop solar that has been deployed because of government subsidies, customer environmental concerns, and expectations of future retail price moves (and soon government mandates) would be counterproductive.

[rb808]

One of the differences is that industrial production is paid differently that residential costs. Eg on a Windy and Sunny cool afternoon the spot price of electricity is very low, but residences are charged the flat rate (say 10c), so any energy you generate saves you money. On a hot, windless cloudy day the price is very high but you can buy at 10c. So as a residential customer you can game the system. Industrial Generators can't do that. Its unfair on them and inevitable we'll move to constantly changing residential prices too - some areas already have. Then solar farms will be move efficient (despite transmission)

[bufferoverflow]

People install solar or various reasons. The main ones I noticed are:

1) Long-term climate change effects

2) To reduce the electric bill

2a) To blast the AC when the sun is the brightest.

But you also have to account for land costs, as large-scale solar installations require large fields of panels.

[mikorym]

I can answer partially for the South African context.

Our state owned entity Eskom pushes the prices up every year and in theory this should make solar power both residential and large scale more attractive.

First off, battery theft in SA is a USD 100m business [1] and secondly, our utility infrastructure allows about 10–15% renewables [2] before drastic infrastructure changes are needed. Thirdly, the policital scene is quite a hotpot and most foreign businesses don't want to own non-movable assets here.

Despite these challenges, your observation seems to still be correct and I know of two large scale solar installations in the Northern Cape. We don't see a lot of people installing their own solar panels (despite all the load shedding) and I suspect that this is due to both the stalling economy and theft/procurement/etc issues.

I think that if that 10%–15% limitations can be overcome and if the political situation stabilises, solar power would explode here and we would rival Spain in homegrown solar technology. But I also think that air-to-fuel solutions (if not a pie in the sky) would take off very quickly.

[1] An unnamed engineer that builds large commercial buildings in SA. [2] A talk by the Stellenbosch solar research group. I don't understand fully how this works, but the intermittent supply of renewables and current infrastructure layout does play a roll. Interestingly, a virtual square of land in the Northern Cape that is less than 5% of the province area IIRC could power the whole country.

[liquidise]

Indeed this is already a thing. Denver has a ton of sunlight hours per day/year and Xcel Energy offers homeowners the ability to have Xcel's panels installed on their roofs. In return Xcel fixes your energy bill at some fraction of your present average over the next 5-10 years.

Many of my coworkers took the deal as it feels like a win-win for all parties. Xcel gets a great ROI curve while families feel like they can run their AC's without fear for cost or environmental impact.

[snarf21]

There are two data points you are missing.

Land purchase and annual taxes add cost. To get to the scale of 1000 house, let's just pretend you need 100 acres. So where are you going to get that much land close to people so you cheaply transport it? Also, developers will make far more from that land near a suburban neighborhood than you can as a solar farm provider meaning you would have to overpay for the land. Most solar farms you see are in useless desert land. If solar farms were cheaper and more profitable than coal plants, the energy companies would have switched years ago.

The flip side is that people installing this on their house don't have this issue. They already own the land and pay the same taxes. They also gain some level of energy independence which is important to some people. Additionally, a lot of these were installed to take advantage of generous tax breaks or other discounts. That is why one of the big hopes of SolarCity was that new construction could come with panels built in and remove a lot of the installation costs. Eventually, we'll all probably have solar shingles and this all won't matter much.

[xyzzyz]

So where are you going to get that much land close to people so you cheaply transport it?

Why would you need the land to be close to people? Electricity transmission losses over 100-200 miles are minuscule, and there's plenty of cheap land in the radius of 100-200 miles from literally any point in the US.

[bluGill]

cheap land can still be expensive. For the rooftop it is a sunk cost and so "free."

[temp-dude-87844]

Yes, it's highly likely the continued rise of utility-scale solar and lower retail electricity prices will impact the financial sensibility of home solar. Of couse, California recently mandated solar power on much of new home construction, so the state forced the issue and we're likely to see more legislative and legal efforts from its opponents to fight it, and from its supporters to try to remedy those impacts that defeat its point. Net metering is a widely-deployed incentive to encourage home solar, but is opposed by plenty of influential lobbies. Homes with solar have some unique benefits, like added resilience from grid fluctuations, but it remains to be seen what monetary value people will place on such features.

As with many things, the story of home solar will likely be one of early adopters duped by bad numbers and opportunistic businesses, of jurisdictions mandating the issue and running into all sorts of unintended consequences, and a tangled web of policies enacted to fudge the numbers until the observed costs to the affected people pencil out to a socially-acceptable level of hardship or benefit.

[throwaway5752]

Homes with solar have some unique benefits, like added resilience from grid fluctuations, but it remains to be seen what monetary value people will place on such features.

What are you talking about? It's extremely easy to put a monetary value on it: how much rated capacity, how much exposure, cost of local electricity, and voila. It is worth the number of kilowatt hours it generates at the retail cost the electric utility would charge you.

Every early adopter I know has run the numbers. It's as easy as a simplified NPV spreadsheet.

[robocat]

Simply too expensive, and large scale can undercut: "We know that residential rooftop solar is much more expensive than grid-scale renewables. At least 4 times more expensive, according to Lazard estimates.", from "Does Rooftop Solar Help the Distribution System?" https://energyathaas.wordpress.com/2018/06/25/does-rooftop-s...

Also the home owner takes on the financial risk of the install. If a utility installed on homes they would need to have a lien on the home, legal costs, marketing costs, and they would still have other risks of default.

The article mentions one place it does make sense: "Cohen and company find capacity benefits exceeding $60 kilowatt-year in the top 1% of all locations. This is about 10 times what they find for average capacity benefits. It makes sense that, for example, certain circuits are very close to needing a capacity upgrade, and that benefits would be large in these places."

[solatic]

> wouldn’t the energy companies eventually do this, which, given macro market laws of supply and demand, would eventually cause the price of electricity to go dramatically down for their end consumer, thus eliminating the financial benefit of privately installed roof top solar for homeowners?

No, because your local utility is a monopoly, albeit a regulated one. Local utilities may be interested in solar if it generates supply at lower cost compared to legacy sources, but the cost of supply is completely independent from the question of retail pricing. Utilities are not required to pass savings onto consumers; in markets, pressure to do so is caused by competition, which is non-existent here because the utilities are monopolies.

So the question you're really asking is whether governments will use their regulatory power over utilities to pressure them into dropping prices as their costs go down. An optimist will answer you yes, political pressure will force regulators to force the utilities to pass savings along to the customers. A pessimist will answer you no, the utilities will come up with whatever reason du jour why they can't drop prices - rising labor costs, infrastructure maintenance costs, administrative costs, expansion costs, building up a warchest, whatever, and regulators will permit them to pocket the difference. A realist will answer you with a question: given that you have a stable price on achieving certainty / stability (the cost of a rooftop installation), would you rather pay the price to get stability or take a bet and risk losing some multiple of the initial outlay in the difference over the years you'll be a homeowner?

Given that homeowners are statistically more likely to prefer stability (comes with the commitment of signing multi-decade mortgages), it doesn't take much to understand why rooftop solar is popular among homeowners. Stop wondering about how people make rational decisions and start understanding that most people make emotional decisions and then use the online calculators etc. to justify the emotional decision they made.

[jussij]

> but that’s only if the energy prices don’t fall.

You also need to consider what happens if prices keep rising, because if that happens the investment is paid back sooner.

I can only speak for what I see happening here in Australia.

Energy prices in Australia have been rising rapidly for a very long time and for several reason and don't look like falling any time soon.

From here: https://finance.nine.com.au/personal-finance/residential-ene...

Residential prices increased 63 per cent since 2007 and the average household bill was about $1524 plus GST.

It is this very sharp rise in electricity price that has driven the boom in rooftop solar here in Australia.

At those prices rooftop becomes very attractive.

[SigmundA]

Why do people buy cars instead of using more cost effective mass transit?

Maybe not a perfect analogy but at least for me there is a certain amount of wanting to be self reliant and personalize the system and be in control of it.

My Dads 7kw array in the south lines right up with peek demand for air conditioning. Even with no batteries it gives them a 1500w emergency output if the suns out and the grids down. If you add a battery system you can get full output and use it into the night.

The ability to create shade from the panels is often overlooked, not only are they converting 20% of the suns energy to electricity with enough air space underneath they keep rook temperatures down and reduce heat load.

Would love to see a world where all cars are electric and all parking lots are covered parking with solar panels charing the cars.

[benj111]

Do you think you'll ever be paying 2c/kwh daytime 3.3c/kwh night time including fixed fees?

I would guess not because you also need to pay for the grid, and call centres for when peoples power goes down and debt collection and taxes and all the other costs of business that you wouldn't have as a homeowner.

The actual answer depends on a lot of variables, are you staying on grid, what do you get paid for feeding electricity back to the grid, grants/ tax credits.

So I don't think its impossible that roof top solar ends up cheaper, I might go further, as in the medium term (10 years) theres going to be massive capital spending on the grid, so cost benefits are likely to be seen after that point.

[jefftk]

This is a great question! In our case, in MA, rooftop solar was only economically viable because of two subsides:

* New metering, where the power company has to act as our battery for free. Even if we produce more than we're using, which we do most afternoons when few of us are home, each kWh we send into the grid reduces our bill as the end of the month by one kWh.

* SREC II subsidies, where we just get money per kWh we produce.

Both of these are available to homeowners but not to commercial producers.

(We also got a tax credit, but it's possible that companies also get similar credits.)

[avip]

Let's fix some false assumptions first.

1. The cost of a solar power plant is dominated by real-estate and infrastructure.

2. Energy companies are already building large scale solar farms, and have been for over 15 years. As any non-trivial large-scale construction project, these take years to approve and execute.

3. Electricity is far from a free market. In many countries (not sure how US works wtr), there are long-term commitments from grid operators (which are commonly the state) to buy zero-carbon electricity at a set price (in short, clean energy is subsidized pretty much everywhere).

[invaliddata]

The cost for generating electricity is much cheaper at utility scale, but electrical generation costs are only a part of what it costs to provide electrical service. A similarly large cost goes to electricity distribution. By generating where it's used, the electrical distribution system is less taxes (provided it doesn't have to absorb a lot of surplus electricity). So to a certain extent, rooftop generation still makes sense as an efficient allocation of resources.

[kartickv]

If you lock your money in any asset, whether solar panels or a house, you're taking a bet on the future value of the asset. That, naturally, is a downside. As compared to investing in a fund of some kind that invests in a diversified manner across different forms of renewable energy like solar and wind. Then, if solar prices go down in peak hours, your investment in wind will protect against that to some extent, as opposed to putting all your eggs in one basket.

[taneq]

Really good question. The difference is that you pay retail rates for power, but generation costs are better reflected by wholesale rates. The difference between the two is the cost of maintaining the grid. In the past, power utilities have amortised the cost of maintaining the grid into the cost of power, but realistically we need to start charging a lot more for grid connection and a lot less per kWh or the power grid's going to go into a death spiral.

[heimatau]

The main issue with utility solar is regulations. Sure it's cheaper on a per watt installation basis but they'd be connecting to the grid with fluctuating generation which causes more expenses with needing to ramp up/down based on the new solar generation.

Batteries aren't cheap enough yet but when they obtain an affordable range, we might be seeing the situation that you're describing because they'd meet current regulation restrictions.

[barneygumble742]

Energy companies see rooftop solar as competition. Their primary motivation is profit. I do not doubt that they will all eventually go 100% renewable, it's just a matter of ensuring that they lock in their profits. Another issue is the amount they can charge customers. The utilities are also charging for maintenance of the power lines. With rooftop solar, that fee is lost unless the home owner pays the monthly fee to tie their system to the grid.

[_ph_]

In principle, you are right, but in practise, there are a few differences:

- the homeowner gets the usage of the roof space for free

- anything you can do yourself is cheaper than paid work

- the calculation is different. The grid provides electricity 24/7. Your solar provides electricity, when the sun shines. Your solar is on your roof top, so no expensive lines are needed. And so on. So, if you can use your own solar electricity well, it is extremely cheap, as a lot of costs don't apply.

[MRD85]

A decent amount of your electricity bill is related to supply. Modern countries have a lot of rules around the reliability of their energy supply so companies spend a lot of money to guarantee that infrastructure is up to scratch. You're not paying for just the energy but for the transport of that energy.

A home system that uses its own electricity has the advantage of reducing the demand on the grid. A commercial system doesn't.

[pjc50]

In my case it was an easy decision: at the time I installed the panels I locked in 20 years of subsidy-fixed pricing for the electricity they produce.

But I'm up here at 56 degrees north, and the question is not so much power during the night as during the winter. I need the grid, and so does everyone else, and the stabilization services that go along with it. So that sets a price floor.

[jchook]

The government covers a big part of the cost iirc. In 2010 (dated I know), the US paid 30% and North Carolina would also chip in 30%.

Also I did see some arguments against solar since they have negative environmental impact over time due to toxic elements and no formal recycle plan for all the panels 20 years later.

[m463]

Yes, but in some markets (via regulatory capture) retail power is SO expensive that rooftop solar is a great deal.

PG&E in California has tiered electricity costs of $0.28-$0.42/kwh

Meanwhile in other parts of the country, retail power could cost $0.06/kwh

bottom line: you are correct about utility scale power if there were a free market

[foxhop]

There is risk in any investment.

I bet that for the next 10 years, the price of energy will continue to sky rocket.

https://russell.ballestrini.net/fulfilling-childhood-dreams-...

[lazyjones]

On the major exchanges, electricity is basically free or in some cases even carries a negative price during the day, so there's no money to be made with solar alone. This will get worse as more people install solar at home.

[ttul]

Ahh, but the “income” your rooftop solar generates (by offsetting your utility bill) is not taxed. At least not unless you declare it, which nobody does...

If your marginal tax rate is high, rooftop solar pays off just like utility scale solar.

[PeterStuer]

An undervalued aspect of distributed rooftop solar is the resilience of it in face of grid breakdown, either intentionally through targeted attack or as a result of systemic collapse.

[jabl]

Most rooftop solar installations don't work if the grid is down. Yes, it's doable but costs more so the vast majority of installations skip that part.

[PeterStuer]

True for now, but house batteries are gaining traction.

[RhodesianHunter]

You're assuming improvements in efficiency will necessarily lead to a decrease in cost.

The Jevons paradox tells us that this increase in efficiency may well lead to more demand instead.

[antepodius]

I'm not sure that ends up disproving predictions of lower cost. By the Jevons paradox, more efficient steam engines led to steam-based eneegy being cheaper (you need less coal per unit of mechanical power), but people kept paying about the same in total- just using more mechanical energy. So the equivalent would surely be electricity costs dropping, and people using more power (air conditioning, etc.)

[supportlocal4h]

Drive across the southern tip of Nevada sometime. It's becoming wall to wall solar farms. PV, molten salt, and I don't know what else. Acres and acres of panels.

[mattferderer]

Solar farms are spreading & starting to take over a lot of quality farmland in the northern midwest because of the scale/price reasons you suggest.

[outworlder]

Farmlands are already solar arrays. They are just making power rather than produce now.

[beat]

Wind farms, maybe. I'm not seeing a lot of utility-scale solar (yet) around here. I'm in MN and travel to IA regularly, past the enormous wind farms. A wind farm has negligible impact on farmland use.

[mattferderer]

MN has been a big proponent & has several. IL just passed a energy jobs act & looks to have a few being built. ND is about to build their first one to supply electricity to MN I believe.

There are studies on mix use farmland & solar. Some crops work well. Also in some scenarios it seems as if solar farms are becoming more profitable than crops.

[scotradamus]

Worked as a physicist at LANL on energy related issues. Biggest problem is not energy production, it is energy storage.

[bagacrap]

For a long time the government subsidized rooftop solar which boosted the economics beyond utility scale efficiency.

-random guess

[jayd16]

Even if something is profitable it might not be worth the risk, opportunity cost, or capital investment.

[wait-a-minute]

The financial benefit to the end consumer is that their electricity bill goes down since the panels generate electricity on their own.

[NTDF9]

Long term profit vs short term profit.

Corporate execs and short term investors just want to line up their pockets RIGHT NOW! Fossil fuel based infrastructure has been built over a hundred years. The only thing to do to make profits is keep the machine running.

Why invest and work hard to create something whose fruits will be reaped only after they death?

This logic applies to a lot of baby boomer politicians if one cares to correlate.

[m0zg]

Frankly I don't get why people install solar except in consistently sunny places like Hawaii, Arizona and some parts of California. Financially you're pretty much always better off paying utility rates. If you _really_ care about the environment, there's currently no cleaner tech than nuclear, even after you factor in things like nuclear waste and a couple of major disasters. If you only "woke" care about the environment but not really, utility renewables are much better both in the short and the long run, so again, just pay your utility for electricity and vote in the lawmakers who will set up the incentive structure to make that happen. You'll be paying twice as much for electricity (as Germans are now finding out), but I'm sure it's worth it to some.

[stubish]

Prices have changed in many parts of the world. People now buy solar with the expectation that it will pay for itself in under a decade, and any lifetime beyond that is profit. Financially you are not better off paying utility rates vs. other low risk investments like cash or bonds. Adoption has been driven by economics for a number of years, even now government subsidies are drying up in many (most?) regions.

[m0zg]

I've done the math where I live, and concluded it'll never pay for itself even if I exclude maintenance and live in the same house for 30 years (the claimed lifespan of a solar installation). We have roughly the same amount of sunlight as Germany. Were it up to me, I'd rather have nuclear in our state. One of those new thorium reactors maybe. I'd even pay a little more for that, especially if they shut down the remaining coal/gas/oil power plants when nuclear comes online.

[zAy0LfpBZLC8mAC]

> for 30 years (the claimed lifespan of a solar installation)

It should be noted, though, that this "lifespan" generally means a reduction of output by not more than 20%, not that you are left with a pile of trash. Depending on technological development, possibly replacing solar panels by then is the economically sensible thing to do, but there is no reason why you necessarily would have to throw away a solar installation after 30 years.