Bad Utility Pricing Creates Solar Problems


bad utility pricing creates solar problems

In Australia, bad utility pricing creates solar problems for generators, utilities, solar installers, and customers.

I have indicated before that what is happening in Australia is a harbinger to what the U.S. will see with regard to solar energy and utilities’ reaction.  Australia has very high variable electricity prices, over 30¢/kWh, because they include fixed costs in the variable price. Solar produces power more cheaply than buying from the utility. The high variable prices have caused a deluge of solar installations, with over 1 million households and 2.5 million people having installed solar at an aggregate cost of over $8B AUS.

Now the utilities and state price regulators want to change the price structure of electricity, which will make many of these solar investments uneconomic and forestall additional solar installations. Existing solar customers as well as solar installers are forming lobbying alliances to fight these changes. They may very well be successful because they have grown so large.

I think the cost-effectiveness of solar is inevitable and I welcome it as a keystone to fighting global warming. But making it cost-effective as a result of bad pricing decisions by government and utilities is just sad. It’s too late for Australia, but not for the U.S. if we start to act now. Unfortunately, the utilities are only worried about the next quarter and the regulators are (mostly) living in the monopoly world past. Odds on we will repeat Australia’s (and Germany’s) mistakes even though we have had the benefit of their experience.

In the US, utilities are now seeking to protect their business models by pushing hard against net metering and seeking to influence the pace and manner of deployment of other technologies and new energy market concept that don’t fit the decades old model.

In Australia, much the same has been happening. RenewEconomy reported on the concerns of utilities in this article last month. Feed-in-tariffs have been wound back, as they were supposed to have been as technology costs fell, but now the pendulum is swinging the other way, and utilities – with the apparent complicity of state-based pricing regulators – are now trying to extract as much revenue from solar customers as they can.

It is a dangerous game. Leading electricity executives and market analysts suggest the rollout of rooftop solar is inevitable and “unstoppable” – unless, of course, by regulation and changing tariffs.

Little wonder then, that solar consumers and rooftop solar providers are starting to organise themselves to protect the interests of individual consumers, and the industry as a whole.

In Australia, a new solar campaign initative known as “Solar Citizens” is being launched this week to ensure the interests of solar owners are protected from changes to laws and policies by power companies and governments.

Solar Citizens sees its mandate as helping existing and would-be solar owners to advocate for their rights as energy investors and aims to push for panels on every Australian rooftop.

Solar Citizens Manager Dr Geoff Evans says 2.5 million Australians now live under a solar roof (one million homes have rooftop solar PV systems), and have invested about $8 billion. Some forecasts expect those numbers to triple by 2020.

via Rooftop solar owners vs utilities – the battle begins : Renew Economy.


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


Falling solar energy costs and non-competitive pricing threatens PG&E’s future.

“We’re an energy company. We install solar systems for free, and we sell the electricity at a lower rate than you can buy it from the utility. So given the option of paying more for dirty power or paying less for clean power, what would you take?” – Lyndon Rive, CEO, SolarCity

Make no mistake about it, solar competes with utilities for sales at the point of use. The customer decides, do I buy from the utility or from a solar company? SolarCity is clear about the competition.

Pacific Gas and Electric (PG&E) serves most of northern California, except for the sparsely populated Oregon border, the northern part of the Nevada border, small areas served by municipal utilities and the large municipal utility around Sacramento. It is the seventh largest investor-owned electric utility by market value, and number one in terms of number of retail customers.

PG&E’s marginal prices cannot compete with solar. Large residential customers pay 31¢-35¢/kWh, the same prices that cause the solar revolutions in Hawaii and Australia. Even worse, according to PG&E, “By 2022, PG&E’s top residential rate could reach 54 cents.” Residential customers represent about 40% of PG&E’s retail electric revenue.

Read more at Will PG&E Be the First Utility To Fall To Solar Energy? | The Energy Collective.


Will EVs Save the Electric Companies?


The major utilities in Australia think they might. As I have discussed, U.S. utilities need to start now (Disruption On All Sides – What Is A Utility To Do?) to save their businesses, protecting what they can while building the base for a new  business. The longer they wait, the closer they will be drastic economic losses and fewer options to save themselves.

Utilities in Germany and the rest of Europe are already there, having lost two-thirds of their market value since 2008 (Reuters: Renewables turn utilities into dinosaurs of the energy world). The utilities in Australia are now there as well, complicated by the fact that many of them are actually state enterprises.

The European utilities were first; their executives can be forgiven for not seeing the future. The Australian executives much less so. The U.S. utility executives will have no excuse.

EVs of some sort must be part of the answer to offset the loss of electricity sales. Utilities must understand they now have a competitor with an exact substitute at the point of use, so their price and customer relations matter. They have  customers, not ratepayers.

Giles Parkinson sums up the situation nicely:

The more utilities appear to declare war on their customers, and seek to make solar unattractive by increases in fixed charges, and raising tariffs, and regulatory barriers, the more battery storage and distributed energy seems appealing. The more utilities feel they are competing against their customers, the quicker they will become estranged.

The only reasonable option seems to be to encourage people to consume more. Mandating them to turn on more air conditioning, or re-install wasteful appliances, obviously won’t work. Time to think of something new.

That option could be electric vehicles.

via Electricity suppliers look to EVs to save their business models : Renew Economy.


Do You Think Utilities Should Be Able To Own Rooftop Solar?


If utilities own the solar on customers’ roofs, it will increase penetration, save the distribution grid, and set the stage for a new business model. In Idaho, natural gas exploration representative David Hawk said that’s not the utility’s business.

Idaho Power is struggling to do the right thing by its shareholders and its customers. It wants to keep prices as low as possible and to make profits. It still sees those as tied to kWh sales.

Last week Idaho Power’s Integrated Resource Plan Advisory Council met. Rocky Barker of the Idaho Statesman covered the meeting in some detail. Based on the coverage, it appears that Idaho Power is hampered by a belief that solar prices will not continue to drop and so has not included solar in its integrated plan.

Not surprisingly, many on the Council and in attendance disputed this position. Rocky Barker reports the following exchange:

Idaho had hundreds of people eager to build solar systems as the price of panels dropped – until Idaho Power filed a proposal with state regulators that removed the financial incentives.

“Idaho Power brought a case to kill it,” said Peter Richardson, an energy attorney.

That brought a terse response from David Hawk, who represents natural gas exploration companies.

“I don’t think building solar units on individual houses is the role of a utility,” he said.

Hawk was apparently against allowing third-party financing of solar installations as is done in California, because “electric prices are higher in California than they are in Idaho, making such programs more useful and profitable.”

There should be no doubt that the price of solar will drop precipitously; the Department of Energy is investing millions to ensure it does (DOE Sunshot Initiative). More importantly, a big chunk of the investment targets driving down residential rooftop solar costs. Distribution utility focus on making distributed generation and storage work ensures a future for them, and a big part of that could be owning solar and storage at customers’ sites.

If we do not give utilities a chance to own the solar and storage, we will doom them to eventual bankruptcy. Before that occurs, of course, we will pay too much for a poorly functioning grid because they will not have the funds to invest, which brings hardship on customers as well as investors. Let’s give the utilities a path to save themselves instead.


Virginia Power: Feed-In Tariff For Very Small Amount Of Solar


Virginia Power, owned by Dominion Resources, has received approval from the Virginia regulatory commission to have a feed-in tariff (FiT) for up to 3 MW of solar power from residential and commercial installations. This would be a buy-all, sell all arrangement as was the case with Germany’s FiT. That is where the similarity ends, however.

Virginia Power has low electric rates, and the variable portion of their prices are too low to make installation of solar panels economic today. Their FiT of 15¢/kWh, while significantly higher than their variable price on a percentage basis, may still be too low to make the economics of solar work at current solar costs. And, the cap of 3 MW will ensure very little solar gets installed in any case.

There is nothing wrong with utilities having low prices, as long as the cost of their pollution is included in the variable portion of their rates. If solar does not work at current prices, that is OK too. Let’s just make sure we recognize this for what it is, which is really not much.

Dominion Virginia Power’s demonstration Solar Purchase Program will allow qualifying solar customer-generators to sell all their sun-generated electricity to the utility company for five years and at the same time purchase all of their electricity from the company at their current rate.

“We will buy all of their generation and pay them 15 cents a kilowatt-hour,” Corsello said, “and the customers will buy all their energy from Dominion at an average price of about 10.5 cents per kilowatt-hour.”

via Dominion Virginia Power to buy electricity from small solar power generators – Richmond Times Dispatch – Richmond VA.


Low Income Subsidizes Solar In Queensland, Govt. Struggles With Solution

Solar-powered households could be forced on to time-of-use tariffs, which would limit the bonus residents receive from selling power to the grid. Source: The Courier-Mail

Solar-powered households could be forced on to time-of-use tariffs, which would limit the bonus residents receive from selling power to the grid. Source: The Courier-Mail

Government agencies begin to struggle with the disruption caused by solar photovoltaics, mis-priced feed-in tariffs, and mis-priced residential electric rates.

Update 3/26/13: To get more of an idea of how the government is tying itself up in knots, see Qld solar PV households face dramatic tariff changes. This is what happens when there is a dramatic shift in costs and technology and the market cannot react, in this case because of poor government pricing policies.

If you have an item that is easily mass produced, people can purchase a lot of it in a short time if the price is attractive. Solar panels are mass produced and mass installed.

Queensland paid too much for the feed-in tariff for too long; $0.44 AU/kWh, far above the average price of $0.23/kWh. They included fixed costs of distribution in their variable prices for retail electricity. They now have a political firestorm on their hands between the solar power haves who are getting a fat subsidy, and the solar power have nots who are paying for the subsidy. And they are positing that the subsidizers are those least able to afford it (relatively low income) while the subsidizees are those who need it least (relatively high income).

The government authorities search for a way out that makes both happy; likely they will make neither happy with associated political consequences. Once you get into this mess with government as the price setter, it is extremely hard to get out. In the U.S. we have a small window to correct our price structures for the retail consumption of electricity and the recompense for excess solar electricity (typically net metering). If we fail to act within this short window, we will be in Queensland’s predicament.

Queensland Competition Authority recommends time-of-use tariffs be mandatory for solar-powered households

SOLAR-powered households could be forced on to time-of-use tariffs to ensure they pay their share of network charges.

A report ordered by the Newman Government has recommended the highly-controversial move after finding the current solar schemes were hurting lower income households.

The report found that by 2015/16, the cost passed on to all electricity users from paying for home-produced solar power would drive up the average annual power bill by $276, or about 17 per cent.

“When those doing the paying are likely those least able to afford it and those enjoying the benefits are those likely to be most able to afford to meet their true costs, then something is truly wrong,” the Queensland Competition Authority report said.

Industry insiders are convinced thousands of solar households maximize the benefit of the 44-cent feed-in tariff they receive by selling all the power they produce during the day and using only grid-produced power at night.

This way they received 44 cents per kWh for the solar power they produce while paying the retail rate of about 23 cents per kWh for what they use.

The QCA report found one way to reduce the impost being passed on to other consumers would be to switch solar households to the time-of-use tariff, which is currently voluntary.

Time-of-use tariffs offer off-peak price discounts but make power more expensive at night when there is increased demand.

“In this regard, it would go some way to reducing the problem of PV customers avoiding a portion of the true cost of their network access due to their net consumption profile, which leads to higher average variable network charges,” the QCA said.

via Queensland Competition Authority recommends time-of-use tariffs be mandatory for solar-powered households | The Courier-Mail.


Tensions rise in CA utility versus solar debate


Utilities accused of trying to obstruct growth of solar. Image: SDG&E.

I think things are going to uglier before they get nicer. Utilities have to get their prices in line with their costs if the grid is going to be there when people with solar need it. Idaho Power applied for something similar to what the California utilities did and, like the California utilities, kind of bungled it. See Solar energy companies upset over Idaho Power proposal.

Tension between California’s solar installers and the state’s investor owned utilities boiled over today at the Cleantech Forum in San Francisco.

Bryan Miller, vice president of public policy and power markets at residential solar company Sunrun, said that utilities are the biggest obstacle to rapid growth rates of solar.

via Tensions rise in utility versus solar debate – PV-Tech.


Europe: EON Closing 3-Year-Old Natural Gas Power Plant


EON SE’s Irsching-5 in Bavaria, Germany.

Almost new fossil plants shutting down. 30% of fossil capacity uneconomic because of wind and solar. This is Europe, and the uneconomic fossil plants are new, efficient natural gas plants. Natural gas is expensive, so the plants are uneconomic. Coal plants, even dirty lignite (brown) coal plants, are economic because coal prices have fallen as have CO2 emission credits (i.e., it’s cheap to pollute).

In the U. S. we will be facing something similar. In our case, natural gas is cheap and increased pollution restrictions make operating and retrofitting coal plants more expensive. We will also shut down a lot of excess fossil capacity, but it will be coal.

If we replace the old depreciated plants with new, electricity prices will increase. This will make renewable and distributed generation more cost-effective and will help start us down the path Germany has already trod. See Nuclear Industry Withers in U.S. as Wind Pummels Prices.

Three years ago, Germany’s largest utility spent 400 million euros ($523 million) building a natural gas-fired power station. Later this month, the company may close the plant because it’s losing so much money.

EON SE’s Irsching-5 in Bavaria last year operated less than 25 percent of the time as slumping power prices made burning natural gas unprofitable by record margins. As Europe’s weak economy holds back electricity demand, cheaper coal, requirements to buy renewable energy and the collapsing cost of carbon permits are undercutting gas-fired plants.

The pattern is repeated throughout Europe as utilities including France’s GDF Suez SA and Centrica Plc mothball gas plants. The impact is both environmental and commercial. Switching to coal increases emissions, while it lowers profit for gas plants, which generate almost a quarter of European power, and shrinks the market for suppliers led by OAO Gazprom. (GAZP)

“Gas-fired plants are stopped three days out of four,” Gerard Mestrallet, chief executive officer of GDF Suez, France’s former gas monopoly, said at a briefing on Feb. 28. “The thermal industry is in crisis. There is overcapacity.”

The difference between the cost of fuel and the price paid for the power generated reached a record low today. The so- called spark spread for the month ahead fell to as low as minus 18.35 euros a megawatt-hour ($23.87). Gas plants are also unprofitable in France, the Netherlands, Spain and the Czech Republic, according to data compiled by Bloomberg. In the U.K., they’re barely breaking even.

At the same time, spark spreads for coal plants are profitable in every European market tracked by Bloomberg as prices for the fuel drop.

via Europe Gas Carnage Shown by EON Closing 3-Year-Old Plant – Bloomberg.


Nuclear Industry Withers in U.S. as Wind Pummels Prices – Bloomberg


Wind-generated electricity supplied about 3.4 percent of U.S. demand in 2012 and the share is projected to jump to 4.2 percent in 2014, according to the U.S. Energy Information Administration. Photographer: Konrad Fiedler/Bloomberg

[T]he U.S. wind-energy industry went on a $25 billion growth binge in 2012, racing to qualify for a federal tax credit that was set to expire at year’s end.

The surge added a record 13,124 megawatts of wind turbines to the nation’s power grid, up 28 percent from 2011. The new wind farms increased financial pressure on traditional generators such as Dominion Resources (D) Inc. and Exelon Corp. in their operating regions. That’s because wind energy undercut power prices already driven to 10-year-lows by an abundance of natural gas.

We continue to go down the path already trod by others, in this case Germany. While in alternative energy circles Germany may be better known for solar power, they were also the driving force behind wind power development. The problems Bloomberg talks about here, negative prices in some off-peak hours, shutting down of coal and nuclear plants, is exactly what has happened, and is happening, in Germany.

I am a little befuddled when this appears as a surprise to some in the industry; the handwriting is on the wall, written not only in Germany, but Australia and Hawaii, too. People all over the world like renewable power and, generally, dislike utilities. When told the utilities are losing money, their reaction is “Good!” People won’t feel the effects for awhile, and when and if they do, the utilities will not have a reservoir of goodwill to fall back on; instead, they will be blamed for the problems.

What is next as we follow Germany down the renewables path?

The Stoxx Euro 600 Utilities index, with its January 1, 2008, level rebased to 100, now trades at 46, compared with 81 for the all-industry Stoxx Europe 600. The eurozone-only utilities index is at 35 and has lost 312 billion euros ($407 billion) in market cap. Reuters: Renewables turn utilities into dinosaurs of the energy world

Look for electric energy conglomerates to lose up to two-thirds of their value, on average, over the next 5 years. Distribution companies can thrive, but only if they take steps now to correct their prices and their relationships with customers.

via Nuclear Industry Withers in U.S. as Wind Pummels Prices – Bloomberg.


COLUMBIA, SC: Report: Gov’t incentives favor nuclear over renewable energy in SC


As SCE&G and other utilities work to complete atomic power plants, the law that made construction possible gives power companies less incentive to use solar, wind and other forms of alternative energy.

The legislation in South Carolina, Georgia, and Florida that allows utilities to recover construction costs for nuclear power as they incur them, instead of when the asset is used and useful, is (I don’t know how else to say this) economically stupid. It makes the time value of money, and the cost of risk, equal to zero. As it turns out, we have always and systematically underestimated the cost risk. And the time value of money, well, it compounds, especially when the nuclear plant is delayed. (And this is on top of the exemption from the costs of insurance associated with a nuclear problem at the plants.) With these types of guarantees, well, we could put rooftop solar on every roof.

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Duke Explores Rooftop Solar



An installer for Stellar Solar carries a solar panel at a home in Encinitas, Calif. Rooftop panels are gaining popularity as the industry faces “anemic” growth in power demand.

“It is obviously a potential threat to us over the long term and an opportunity in the short term,” Rogers said in an interview after the meeting. “If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery technology and a power management system, then we have someone just using us for backup,” he said.

If the CEO of Duke is positing that solar panel costs and installation costs might not come down, that would be whistling past the graveyard. But, if he is sending up a trial balloon to get his board and executives to start thinking seriously about disruption, then he might want to push harder, faster. Once solar becomes cost-effective, it will be too late to get on board the train. See SolarCity Winning Competition With Utilities For Customers.

via Duke Explores Rooftop Solar as Panels Slow Demand, CEO Says – Bloomberg.


Nebraska public power groups oppose solar gardens bill



LINCOLN, Neb. (AP) — Utility officials warned lawmakers on Tuesday that a plan for so-called community solar gardens could increase energy costs in Nebraska, but environmentalists said the proposal would make it easier for residents to use solar power to provide electricity to their homes.

Apparently the public power groups are confused or really concerned about something else. I think they are afraid to give up control and to do something “new”. Note that while Nebraska has one of the best wind resources in the U.S., it has almost no wind turbines. They do continue to build new coal power plants, though. (Note that there are no investor-owned utilities in Nebraska, only public power utilities.)

Solar gardens allow individual entities to purchase one or more panels in the garden and to own the output from the panels. Some rules allow a kWh credit of production from the panel against the customers’ usage. Others cash out the value of the power produced by the panels (usually pursuant to a purchased power agreement (PPA)), with the dollar value credited against the customer’s utility bill.

The Nebraska public power utilities might be confused because they raise the issues of the current net metering law and rising rates for customers without solar in conjunction with solar gardens. The current Nebraska net metering law states that excess production at one site cannot be used to offset production at another site. Obviously solar gardens would operate differently because the whole purpose of the proposed Nebraska law is to allow people to buy panels in the garden to offset their usage.

Moreover, solar gardens ensure that every customer has a chance to participate in solar power. Customers may not have an appropriate location for solar panels on their home or office. Customers may be renters who pay the utility bill but cannot install solar. Community solar gardens address these issues.

By crediting kWh on the customer’s bill, the proposed law will reduce sales. Depending on how the utility structures its prices, it may increase per kWh prices. But since solar gardens are available to all customers, everyone has a chance to reduce the kWh consumed on their bill.

What it does do is remove decision-making control from the public power utilities. Many of the leading utilities in the country with regard to renewable power are publicly owned utilities (Austin Energy, Sacramento Municipal Utility District, and Vineland Municipal Electric). This is because they are not concerned about their shareholders’ profits, but instead are concerned about meeting their customers’ needs at the lowest total cost (not necessarily the lowest price).

The Nebraska public power utilities seem to operate more like investor-owned utilities than like true public power institutions. It might be time for them to re-examine their roots and their purpose, and shake off the old utility mindset. The people of Nebraska deserve nothing less.

via Neb. public power groups oppose solar gardens bill – Businessweek.


Solar energy companies upset over Idaho Power proposal


BOISE — Alternative energy companies are at odds with Idaho Power over a proposed change in fees.Solar Power companies say Idaho Power is running them out of business, but Idaho Power says they’re looking out for the hundreds of thousands of…

Idaho Power is doing the right thing by trying to get its prices lined up with how it incurs costs. However, it is making several mistakes that will make its proposal harder for regulators and the public to accept. I know that “proffered advice stinketh,” but I will proffer some anyway.

First, Idaho Power is cloaking its proposal in the name of fairness to all customers yet ignoring the obvious benefits that accrue to the company. People will not buy this. Instead, Idaho Power should explain how its current prices do not reflect how it incurs costs and that this means people with solar are not paying the cost of serving them. Included in this should be a calculation of what things would look like if nothing changes and all residences had solar. Let others determine what “fair” is.

Second, Idaho Power is applying the increase in fixed and demand charges only to customers with net metering, predominantly solar. This, on its face, appears unfair and contradicts their fairness argument. Instead, they should apply any price structure change to all customers. Moreover, it just changes the incentives such that customers still put in solar but eschew net metering so they can still avoid high variable prices. It encourages the adoption of energy storage that is, from a societal perspective, uneconomic.

Third, Idaho Power is making a large change very fast. This looks unreasonable to government price setters (regulators), and especially antagonizes a relatively small interest group, making acceptance of the change harder. Instead, they should propose a series of revenue neutral changes every six months for all rate classes, the result of which will bring them toward where they want to be over a reasonable period, say five years.

Fourth, Idaho Power should propose to purchase excess power at their avoided cost based on the time it is delivered. There has to be good faith in the calculations which take into account avoided capacity, transmission, and distribution as well as line losses and energy. And they should seek the opportunity to invest in rooftop solar at their regulated rate of return to both show that they support solar and customer generation and that they are indifferent as to where they own generation.

Idaho Power’s proposal will not stop distributed generation, it will only twist it in uneconomic ways. Net metering does not work on a large scale (unless it is changed so much it is not really net metering) because if everyone installed enough distributed generation, there would be no net sales of kWh but  there would still be the costs of generation. It is time to begin selling and buying retail electricity at prices that reflect costs. Our window to get this right is short.

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New Electric Industry Paradigm Collides With Old In Queensland


The state-owned electric utility in Queensland crunched by new electricity economics, failure to adapt

Queensland Premier Newman and his team were quick to blame solar, carbon, Gillard – anyone but themselves –for the big rise in electricity bills announced on Friday. Perhaps it’s time for Queensland …

I have reviewed the effects of rooftop solar on traditional utility operations and pricing several times (German Rooftop Solar Juggernaut Is “Unstoppable”The economics have changed, new baseload power is likely deadThe Death of Load Response – By Solar, On The Roof, With The Battery; For the U.S. Electricity Future, Look To Australia; and Disruption On All Sides – What Is A Utility To Do?).

Utilities must recognize that the change in technology means they must get their prices aligned with how they incur costs. They must change prices relatively slowly to give customers a chance to respond, which means they must start now. They must figure out how to do business in the new cost world.

But they don’t. Until it is too late. And it is even worse if the politicians control the utility and the prices, because there is no market cost of capital discipline and an even slower response as they try to maintain relations with large donors and angry voters.

Some selected quotes:

“Energy experts say the Newman policy cocktail – a combination of state subsidies on electricity use, price freezes, tariff designs that add fixed costs and do not encourage peak demand reduction or energy efficiency, and his choice of demonising new technology rather than embracing it, will simply accelerate a spiral towards stranded assets rather than an efficient network.”

“In the residential sector, the same trend is appearing. Standing charges will triple under the QCA recommendation, lifting the share of fixed charges on total bills to nearly a quarter in some cases. It penalises those that use less energy – either because they cannot afford it, or because they have solar or are being energy efficient.” [Note: this price change must happen, but it is too rapid and the costs too large from alleged "gold-plating".]

“Rob Passey, from UNSW, says the network operators face a conundrum – they (and the state government owners) are keen to protect their financial viability, but they are doing it in a way that makes it difficult for energy efficiency and distributed generation such as solar. He suggests the better model is to turn networks into service providers, rather than bulk billers.

Otherwise, as network costs rise more people would be given an incentive to leave the grid – a concern expressed by some retailers. The warning signs are there: Even the ABC radio and the mainstream print media in Queensland have been interviewing homeowners who are looking to go off-grid. Passey’s fear is that the same rules that apply to the water supply – homeowners pay for the mains going past the house whether they use it or not – will be used for electricity.”

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Solar energy to become cheaper than grid electricity in South Africa


While solar energy was currently cheaper than energy derived from diesel plants and generators that were often used as a substitute to conventional coal-fired power, it remained more expensive than coal-fired electricity generation.

PPA Energy forecasts the crossover to take place in 3-5 years. They make two assumptions: South African solar electricity costs will continue to decrease at 10% per year, and the national electric utility, Eskom, gets its requested annual 16% rate increase for the next five years.

I think at this point, any electric utility, almost anywhere in the world, that contemplates significant, continual price increases dies by its own hand. Customers have continually increasing alternatives and utilities cannot take them, and their purchases, for granted as in the past.

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