TOU Questions

[Ampster]

Also with TOU rates, it is possible for me to generate net 0 kWh, but still have a sizeable credit.

Yes, I did that years ago when the rates were high all day. I had two EVs and charged late at night. I was a Net consumer but built up the solar credits at a higher rate than during off peak when I consumed most power. The two washed out and the result was I got all that extra power for free. Even with batteries at todays rates it is hard to repeat that scenario.

 

[Hedges]

Over-the-fence sale of electricity was allowed, I thought.
Question for us is how to best control blending with neighbor's grid power.

 

[Ampster]

Note that "retail" rates are only for generation, not distribution.

In California rates are bundled there is no distinction between generation and distribution unless you are refering to your own production as generation? The exception is if you have a CCA, in which the rates are unbundled and one pays the CCA for power based on kWhs consumed and a separate rate to the IOU for distribution at a separate rate based on kWh consumed. With Nem 2.0 NBCs have meant that consumption is at a slightly higher rate than export. With NEM 3.0 the rates for export are now significantly lower than consumption.

 

[zanydroid]

Over-the-fence sale of electricity was allowed, I thought.
Question for us is how to best control blending with neighbor's grid power.

Oh, I didn't know that. It probably varies a lot by state. Most places have some level of monopoly protection for the POCO.

The easiest code compliant way would be submetering, otherwise anything cheap (like, just wires and breakers) is probably not code compliant.

A proper solution probably involves some DC coupling and one stage of isolation to avoid creating a weird AC path between the houses.

 

[Ampster]

Over-the-fence sale of electricity was allowed, I thought.

If you are talking about NEMA or VNEM which was allowed for contigious meters but that recently was gutted. For NEMA the contigious meters have to be in the same name and VNEM they just have to be contigious.

 

[Mr.Hyde]

Yes. And that markup also has to go towards supporting the infrastructure, so it's not pure profit, as they say.

Or rather, suppose POCO buys at retail and sells to your neighbor at retail. How are overheads going to get covered?

In California rates are bundled there is no distinction between generation and distribution unless you are refering to your own production as generation?

In PA (at least in my area), there is a separate charge for distribution vs generation. So if my total rate is $0.13/kWh, $0.09 of that could be generation, the rest is distribution. So the "retail" rate that they power company has to pay out at the end of the year is only generation, not distribution. So at least some of their "overhead" is covered there.

 

[ksmithaz1]

?‍
Clearly the electricity that enters my home is worth the retail rate. So the electricity that exists my home is also worth that. I suppose they are missing out on the profit they would get due to the difference between wholesale and retail?

Spoken by someone who appears to have never run a business, and does not understand the concept of margins.

If I buy milk from the dairy down the road for $3/gal, and I decide to get a cow, and start producing my own milk then the dairy down the road should be forced to pay me $3/gal for the milk my cow produced if I bring it to them.

Let's turn it around. Your wife goes in part time and bakes cakes and sells them at the swap meet on Saturday for $10 ea. Now I start baking the same cakes, thus I can cart my cakes over to your table and make you buy them for $10 ea. Definitely sounds fair to me after all you are still going to get the $10 right?

Business runs on profit margins. Cost of goods sold and overhead make up your expenses, which are taken from your revenue. The gap between CGS and revenue for the product is your margin. If you go to Best Buy and get a fridge or washer-dryer, they likely have between a 30 and 40% margin, thus if you paid $1000 they paid between $600 and $700 for the product. These are relatively low margin purchases. The more expensive the item, generally the tighter the margin if there is a lot of volume. Jewelry though generally has a margin of around 70-80%. That means if you go to Zales and they want $1000 for the ring, they probably have about $200 in it. Automobiles are pretty tight.

The power company, in order to maintain the rates they are providing, must mix power from a variety of sources, based on what they can produce, and contracts with other power providers, blah, blah at scale. The annoyance factor alone of dealing with 100 someones providing a few hundred KWH of power, negates any cost benefit. You can however provide an overall grid benefit by reducing demand during peak times, allowing them to keep rates down by not buying or generating more expensive power and taxing the infrastructure. This is a relatively minor benefit to them in the grand scheme.

 

[Mr.Hyde]

Spoken by someone who appears to have never run a business, and does not understand the concept of margins.

If I buy milk from the dairy down the road for $3/gal, and I decide to get a cow, and start producing my own milk then the dairy down the road should be forced to pay me $3/gal for the milk my cow produced if I bring it to them.

Let's turn it around. Your wife goes in part time and bakes cakes and sells them at the swap meet on Saturday for $10 ea. Now I start baking the same cakes, thus I can cart my cakes over to your table and make you buy them for $10 ea. Definitely sounds fair to me after all you are still going to get the $10 right?

Business runs on profit margins. Cost of goods sold and overhead make up your expenses, which are taken from your revenue. The gap between CGS and revenue for the product is your margin. If you go to Best Buy and get a fridge or washer-dryer, they likely have between a 30 and 40% margin, thus if you paid $1000 they paid between $600 and $700 for the product. These are relatively low margin purchases. The more expensive the item, generally the tighter the margin if there is a lot of volume. Jewelry though generally has a margin of around 70-80%. That means if you go to Zales and they want $1000 for the ring, they probably have about $200 in it. Automobiles are pretty tight.

The power company, in order to maintain the rates they are providing, must mix power from a variety of sources, based on what they can produce, and contracts with other power providers, blah, blah at scale. The annoyance factor alone of dealing with 100 someones providing a few hundred KWH of power, negates any cost benefit. You can however provide an overall grid benefit by reducing demand during peak times, allowing them to keep rates down by not buying or generating more expensive power and taxing the infrastructure. This is a relatively minor benefit to them in the grand scheme.

As much as I appreciate you resurrecting a nearly 4 week old thread to lecture me on business margins, its all besides the point.
PA law gives the rules for how the power companies have to compensate for net metering, whether you or I think they are fair or not.

My question on this thread was for people's experience with this combined with Time of Use billing. Maybe we can keep on topic.

 

[ksmithaz1]

You did bring it up, perhaps your wording was sub-optimal. So, "clearly" if you have laws on the books that allow you to get credit for the power you feed back at retail / TOU rates, this benefit is not sustainable, and I would expect it to change. YMMV. Many places that had these rules, bootstrapped these subsidies so rich people could nail up some solar on their roof and not pay as much, have already lost them, and if they are still in play are likely going to lose them at some point.

Thus as it relates to TOU experience, I'd say if you could capitalize on it with some sort of guarantee of a time frame, I would factor all that in if you are trying to get an ROI on your solar investment. TOU/Peak shaving can be a significant benefit if your peak rates are high enough, but I wouldn't bet on any significant buyback sticking around. I know some folks here are still grandfathered into some generous agreements. If you want to grid tie here you must now run on a demand plan not TOU. I would expect to see more of that as well, because the biggest advantage to the power company is that demand shaving. Since utilities are heavily regulated, you can always use the pressure of the voters box to vote your desired subsidy in.

The math on the benefit of TOU/load shaving is fairly straightforward, I would just factor in a 20% loss, and discard any potential back-feed credit, then you should do better than your estimate. The maximal ROI is going to be with micro-inverters, the power company would prefer you had a small battery setup to smooth the dips on partly cloudy days ( if you want to be a good Samaritan ). If your peak TOU rate is not over ~$0.18 then you are likely not going to get any ROI.

Here, winter TOU is < .08/.11ish. It's obnoxious, 5-9A,5-9P. The PM setup it eay, the 5AM is tough without sufficient battery. You really need a good handle on usage if you don't get an excess of battery. My winter usage is around 45KWH/day, pretty consistent day/nite depending on the heat pump. With 60KWH of battery at leas 60%, I can make thru the nite. When that fails, (it's been crap the last 5+ days) I'll leverage TOU times and directly charge the cars from the grid, otherwise I just shut down the output on my inverters until I get enough battery buffer. It's not really worth the $$ to try and save 3 pennies a KWH, for at most 8 hours, figuring 2kwh/hour that yields a whopping 0.16*3 = 0.48/day at best. The summer is a totally different game, TOU is 1300-2000 pretty much the heart of solar output, with peak rates hitting 0.24 in July and August. In this case with a modicum of battery, you can get a huge benefit, as my electric usage hits 100+ KWH / day, and the battery stretches my output well past 8PM. Even so, the ROI is not all that great, TOU with rates much lower than what I'm paying simply would not pay pack.

Since wholesale (negotiated) non-demand rates run about 0.03+/kwh over most of North America, I would not expect to see any off peak rates much below 0.07/KWH. . . . Back to that margin thing. Demand rates OTOH can really spike, so depending on the capability of your power company to ramp up to meet high demand, they may have to purchase at obscene rates. Long term, if solar builds out significantly in places like here where there is a direct correlation: More sunshine = more demand, an abundance of solar could actually stabilize or even lower TOU peak pricing, since they can provide service without tapping into more expensive generation, or spot-market pricing. I think the general cost of generation is going to continue to rise, which is also likely to narrow the TOU benefit gap from a percentage standpoint, but could improve overall ROI for a solar investment.