The Price of Renewables? How Does “Free” Grab You?
November 9, 2015
Time of day pricing is a sensible idea that renewable energy advocates have been putting forward for decades, without a lot of success. Now, in Texas, a huge excess of power from the wind is forcing the issue.
In Texas, wind farms are generating so much energy that some utilities are giving power away.
Briana Lamb, an elementary school teacher, waits until her watch strikes 9 p.m. to run her washing machine and dishwasher. It costs her nothing until 6 a.m. Kayleen Willard, a cosmetologist, unplugs appliances when she goes to work in the morning. By 9 p.m., she has them plugged back in.
And Sherri Burks, business manager of a local law firm, keeps a yellow sticker on her townhouse’s thermostat, a note to guests that says: “After 9 p.m. I don’t care what you do. You can party after 9.”
The women are just three of the thousands of TXU Energy customers who are at the vanguard of a bold attempt by the utility to change how people consume energy. TXU’s free overnight plan, which is coupled with slightly higher daytime rates, is one of dozens that have been offered by more than 50 retail electricity companies in Texas over the last three years with a simple goal: for customers to turn down the dials when wholesale prices are highest and turn them back up when prices are lowest.
It is possible because Texas has more wind power than any other state, accounting for roughly 10 percent of the state’s generation. Alone among the 48 contiguous states, Texas runs its own electricity grid that barely connects to the rest of the country, so the abundance of nightly wind power generated here must be consumed here.
Wind blows most strongly at night and the power it produces is inexpensive because of its abundance and federal tax breaks. A shift of power use away from the peak daytime periods means lower wholesale prices, and the possibility of avoiding the costly option of building more power plants.
“That is a proverbial win-win for the utility and the customer,” said Omar Siddiqui, director of energy efficiency at the Electric Power Research Institute, a nonprofit industry group.
For utilities, the giveaway is hardly altruistic. Deregulation in Texas has spurred intense competition for customers. By encouraging energy use at night, utilities reduce some of the burdens, and costs, that the oversupply of wind energy places on the power grid.
Similar experiments are underway elsewhere.
Meanwhile, utilities like CPS in San Antonio are offering customers free solar panels in another “win-win”, helping customers with bills and the utility to meet demands in a cost effective manner.
This new initiative between CPS Energy and PowerFin Partners will help more people be less reliant on the grid.
“All it takes is looking at the Texas sky to see how much potential there is for saving money and improving our environment by investing in solar, said Anne Clark with Environment Texas.
“We are looking for houses and businesses in CPS territory to host PV equipment on the rooftops, in exchange for hosting equipment they are going to receive a solar credit on their monthly utility bill,” said Jason Pittman of PowerFin Partners.
Pittman said SolarHost would save the average homeowner about 20% on their electric bill which CPS said can equal about $30 a month.
To qualify your roof must face south to southwest with nothing blocking the sun. To pre-enroll for the program, visit their website.
For the past seven years, CPS has offered residents the ability to put solar panels on their roof under a net metering model—homeowners use the electricity the panels produce and then sell the excess to the grid. This effort has managed to sign up about 2,100 residential and business customers with a combined capacity of 24 megawatts distributed throughout the service territory. Which isn’t bad.
But Raiford Smith, vice president of corporate development and planning at CPS, said there’s a flaw in this strategy. When people consider solar for their rooftops, the main barrier typically has to do with the structural characteristics—the roof has to point the right way and has to support the panels, and there can’t be too many trees around. But CPS noticed that a second barrier loomed much larger: finance. While leasing programs do away with the need for big upfront payments, they still require credit checks and long-term financial commitments, and don’t necessarily offer immediate financial returns. As a result, the rooftop solar program “was just appealing to a very small group and it was tightly clustered in its geographic dispersion,” Smith said. Which is another way of saying that the vast majority of San Antonio residents putting solar panels on their rooftops tended to be well-off people in gated communities in the Stone Oak area. And the fact that an intermittent power source like solar (the sun shines only during the day) is so concentrated in a particular area has made it more difficult to manage the impact on the grid.
So CPS hit on an insight. It could rebalance the grid, and rebalance the rollout of solar, by putting its money where its low-emission plans were. The idea? CPS, which as a municipal utility can borrow money at lower rates than solar installers or homeowners, would start a program. It would make deals with local solar companies, which would buy panels and place them on roofs in the city. These companies would maintain and insure the panels, and reap the associated tax credits. CPS would commit to buy the output of the panels, which would be funneled into the grid, at a price that is competitive with what it pays for electricity from other sources.
And in exchange for offering up their roofs for a 20-year period, homeowners would get a credit on their monthly electricity bills of 3 cents per kilowatt-hour of electricity produced. Smith said a typical customer could get a credit of about $30 per month simply by hosting the panels.
Climate Denial Crock of the Week 
November 9, 2015 at 10:32 am
Texas wind at 10% market penetration, and already wanting – perhaps needing to, at this point – to give electricity away for free. How much electricity could be given away for free when renewables make up 100% market penetration?
How much electricity could be given away for free if utilities were publicly-owned, and their capital costs were already paid off, you know, like a homeowner who has paid off his rooftop solar loan? Would it even be considered ethical to charge for electricity, beyond maintenance costs, at that point?
Why not simply make free energy production the charter of public utilities. Why not nationalize the system and pay the maintenance upkeep costs as part of our Federal taxes?
November 9, 2015 at 10:42 am
hold that thought. we are now in the territory of disruptive technologies. many changes coming, and we need a lot of creative thinking.
November 11, 2015 at 11:34 am
Errr, would the supply be “too cheap to meter?”
Actually I garner a great deal of amusement out of reports about new advances in fusion power and the usual idiocy that fusion power is just around the corner. I am now firmly of the opinion that by the time fusion power actually becomes practical we will not need it because of renewables and batteries.
November 11, 2015 at 11:48 am
LOL Fusion power IS “right around the corner”—-in a galaxy far far away in someone’s imagination.
(Great Gravatar image by the way. Care to tell the story? How does the other guy look?)
November 11, 2015 at 6:01 pm
Well, you don’t have to go to a galaxy far, far away. We have a huge fusion reactor right in our own backyard, astronomically speaking. It sits at the center of our solar system.
The challenge has always been using that same power in something *we* can control. Mostly so far, we’ve just been doing that by digging up ancient plant by-products and burning them.
November 12, 2015 at 9:04 am
Yep, you’re right on all counts. I was referring to our actual harnessing of such things on a small and local scale, i.e., with an on-off switch. Only in the imaginations of science fiction writers.
We DO have the (almost) next best thing, though—nuclear fission—which can take the place of “digging up ancient plant products and burning them”. Too bad we’re so cognitively dissonant that we can’t use it.
November 9, 2015 at 10:42 am
people are already paying for the fossil fuel power stations running idle to compensate for lack of wind, plus various support schemes and tricks, hence excess power can be “given away for free”.
As Gingerbaker noted, electricity companies are for-profit, so whatever is given away, you know it isn’t really and never will be.
November 9, 2015 at 2:16 pm
Actually, here in the U.S., about half of them are non profit and/or publicly owned to some extent – the most commons-owned sector of the economy as far as I can tell.
So, it would not be much of a stretch to convert them all to publicly owned. If people keep putting up their own PV systems, it won’t be long before the companies beg to be nationalized, as their for-profit business model just doesn’t work any more.
November 9, 2015 at 4:39 pm
Coal companies are already on their LONG TRIP “south” towards death. Oil companies will come AFTER coal…..and then the natural gas companies.
But after the fossil fuel companies…..will be electric utility companies turn. That will be a dying business….. It’s a LONG way off….but its coming.
November 9, 2015 at 6:49 pm
More solar in the mix; Solar in the day wind at night. You do not have to be very far from the power lines for it to be cheaper to go off grid than pay the cost of a few poles, lines and connection fees.
November 9, 2015 at 7:17 pm
“Time of day pricing is a sensible idea that renewable energy advocates have been putting forward for decades, without a lot of success. ”
California has been doing this for a decade or two, Summer afternoons cost more.
February 12, 2016 at 1:13 am
Do they? Still?
Looks like Californians need more rooftop solar. Here’s how things are in South Australia as of 3 years ago.
http://reneweconomy.com.au/2013/rooftop-solar-reshapes-energy-market-in-south-australia-18272
We’ll be closing down our one remaining brown coal plant this year. Southeast Queensland also now has a middle of the day “problem” with negative power prices on the wholesale market during the middle of the day/afternoon because of their rooftop solar dispersed power station.
November 10, 2015 at 11:01 am
One man’s price is another man’s revenue. It’s hard to see how wind can stay solvent if turbines give away their product for free (absent massive subsidy, of course).
Texas’s deregulated grid is sending a massive, obvious free-market signal: Don’t Build Any More Wind In Texas.
November 10, 2015 at 2:45 pm
Hard to imagine how fire stations can stay solvent if they just give away their product for free.
February 12, 2016 at 1:01 am
“… a massive, obvious free-market signal …”
I got a different signal from my receiver. I’d say the signal tells us that investing in an interconnector with other states/grids would be a clear winner. Especially if it’s backed up with similar investment in batteries _within_ the grid system generating all that luvverly power so that the grid operator can time the delivery of power into that larger grid at higher prices than those depressed by bright sunlight or windy weather across a large region.
November 10, 2015 at 1:52 pm
[…] OO Texas: The Price of Renewables? How Does "Free" Grab You? – excess wind power is being given away at night to customers, while a San Antonio utility is giving free solar power to customers who will let the company use their roofs. […]
November 10, 2015 at 2:00 pm
[…] OO Texas: The Price of Renewables? How Does “Free” Grab You? – excess wind power is being given away at night to customers, while a San Antonio utility is giving free solar power to customers who will let the company use their roofs. […]
November 10, 2015 at 2:17 pm
[…] OO Texas: The Price of Renewables? How Does “Free” Grab You? – excess wind power is being given away at night to customers, while a San Antonio utility is giving free solar power to customers who will let the company use their roofs. […]
November 10, 2015 at 6:03 pm
[…] “The Price of Renewables? How Does ‘Free’ Grab You?”, from Peter Sinclair’s Climate Denial Crock of the Week. […]