Why Am I Paying $65/year for Your Solar Panels?

Below is a great article from Lucas Davis, a UC Berkeley professor that published a report a few years ago about the closing of San Onofre, the nuclear facility north of San Diego, and how replacing the nuclear energy with natural gas was the equivalent of adding 2,000,000 vehicles to the roads of California.

Why Am I Paying $65/year for Your Solar Panels?

700,000 California homes now have solar panels; what does this mean for everyone else’s rates?

“This is the future,” one of my neighbors recently told me, proudly showing off his rooftop solar panels, “Forget the old, inefficient utility.” The panels do look great, and, for a moment, I got caught up in my neighbor’s “green glow” of eco-righteousness. Should I be doing “my part” for climate?

But wait a second. I already am! As Severin Borenstein has been pointing out for years, a big part of the reason why rooftop solar is so popular in California is our electricity rates. And because of the way rates work, every time another neighbor installs solar, my rates go up. I’m tired of it. Why should they get all the “green glow”? Why should I be paying more for their rooftop solar, particularly given that grid-scale renewables are so much cheaper?

Almost 700,000 homes in California have installed solar, about 5% of all homes in California. Today I want to figure out what this means for the rest of us. No fancy econometrics, no complicated model. I just want to do a simple back-of-the-envelope calculation to try to figure out how big of a deal this is.

brick

Note: Green glow. Image licensed under creative commons.

 

Utilities have a lot of Fixed Costs

It is helpful to take a step back and think about what it takes to deliver electricity. Utilities have lots of what economists call “fixed costs”. For example, utilities have to maintain all the transmission and distribution lines used to deliver power. These costs are fixed (not marginal) because they do not depend on how much electricity is consumed.

truck

Note: Utilities have lots of cool trucks. Image licensed under creative commons.

 

Who pays for these fixed costs? We all do. Every time you use electricity, you help pay for these fixed costs. There is a long history in the United States of regulators setting electricity prices equal to average costs.  Economists have argued that it would be more efficient to set prices equal to marginal cost. But the truth is this didn’t matter much in the past, in part because people didn’t have much choice about whether or not to consume electricity.

Until now. Rooftop solar is an opportunity for consumers to radically reduce the amount of electricity they buy from the utility. In Hawaii there is a lot of talk of “grid defection”, but in 99.9%+ of cases solar homes continue to be connected to the grid. Solar homes use the grid just as much as other households, as they are always either importing or exporting electricity, it’s just that they consume much less grid-electricity.

What this means is that good people like my neighbor contribute much less to paying for utility fixed costs. The fixed costs haven’t gone away, but my neighbor now has a lower electricity bill so pays far less of them. This leaves the utility with a revenue shortfall, and it is forced to raise prices. So who pays for the fixed costs my neighbor used to pay? Everyone else.

wires

Note: Utilities have lots of fixed costs.

 

A key subtlety here is “net metering”. Households who install rooftop solar pay only for the electricity they consume “on net” after solar generation. This is easy and simple, but also wrong. Implicitly, this means that they get compensated for their solar panels’ sales to the grid at the retail electricity rate. This is too high, significantly exceeding what the utility saves from not having to supply that electricity. Under an alternative rate structure, in which households were paid the wholesale rate, you would not have this “cost-shifting” away from solar households.

Cost Shifting 

Ok, but how much cost shifting is actually happening? Outside California, Arizona, and Hawaii, probably not much. But California has a lot of solar, about half of all U.S. rooftop solar. How much have California electricity rates increased due to the 700,000 homes with solar?

spiral.png

Note: Utility Death Spiral? Source here.

 

This is tricky because we don’t actually know how much electricity is being produced by rooftop solar. Almost everyone is on net metering, so we only observe net consumption, not solar production. Fortunately, the California Energy Commission has poured over solar radiation information and other data and estimated that total annual generation from California behind-the-meter solar is 9,000 GWh. About two-thirds of this is residential, so about 6,000 GWh. To put this in some context, total annual residential electricity consumption in California is 90,000 GWh.

So how much “cost shifting” does this imply? The average residential electricity price in California is $0.185/kWh, while the average wholesale price is about $0.04/kWh. Accounting for electricity that is lost during delivery to the end customer adds about 9% more per kWh delivered. Thus, each time a California household produces a kWh, the utility experiences a revenue shortfall of about $0.14. Multiply this by total residential distributed solar generation, and you get $840 million annually. California utilities receive $15 billion annually in revenue from residential customers, so the total shortfall is about 5%.

This is a crude calculation, and it could undoubtedly be refined. For example, distributed solar proponents argue that local generation allows the utility to avoid distribution system upgrades, which would represent an additional benefit. These impacts have been found to be relatively small, but this continues to be an area of active research. On the other hand, I’ve also made an assumption that significantly decreases my estimate of cost shift. In particular, I’ve used the average residential retail price, but California customers actually pay increasing block rates so most solar customers face a marginal price well in excess of the average price.

Conclusion

The total revenue shortfall works out to about $0.01 per kWh, or $65/year for the average California household. This is more than I expected. And, I’d bet most Californians are not even aware that this cost shift is happening.

So why am I paying $65/year for other people to have solar? It doesn’t make sense. Sure, I’m concerned about climate change, but my $65/year could go a lot farther if it was used instead for grid-scale renewables. Moreover, this is almost certainly bad from an equity perspective, as we know that high-income households adopt solar much more often than other households. Rooftop solar isn’t getting rid of the utility. It’s just changing who pays for it.

To read the article please click here.

Lucas Davis

Lucas Davis is an Associate Professor at the Haas School of Business, Faculty Director at the Energy Institute at Haas, and Research Associate at the National Bureau of Economic Research. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy. His work appears in leading academic journals including the American Economic Review, the RAND Journal of Economics, and the Journal of Political Economy. He blogs along with other Energy Institute researchers at energyathaas.wordpress.com.

 

Strange Geographies: The Little Town That Los Angeles Killed (from MentalFloss.com)

A friend of ours in the Coachella Valley sent us a link to this MentalFloss.com article from 2009. In her email to us she wrote:

“If you haven’t seen this article on Keeler, CA, I thought you might want to read it. Keeler is a “living” ghost town of about 60 or less population in the Mojave. Its history is too reminiscent of what could happen in the not too distant future at the Salton Sea. This is a scary scenario for sure, but is extremely relevant in so many important ways.”

People talk about the Salton Sea being “Owens Lake on steroids.” Judge for yourself after you have read the article by clicking here. One more reason to pass Prop 68, the California Clean Water and Parks Act (SB5).

The end of the boat ramp at Red Hill Bay Marina, Salton Sea

Guests see Salton Sea in a new way at annual Bird Festival

From the Imperial Valley Press Online:

Guests see Salton Sea in a new way at annual Bird Festival

Posted: Monday, January 15, 2018 12:30 am

MECCA — Out of the 927 species of birds currently in the United States, 432 species make use of the Salton Sea either as their home or as a place to stay during the winter months.

As the Sea continues to shrink and contains record-high salinity levels, the more than 400 species inhabiting it are at risk of being lost from the area. In an effort to build more exposure toward the issue, the Sea and Desert Interpretive Association created the annual Salton Sea Bird Festival.

The fifth annual festival held Saturday and Sunday at the Salton Sea Recreation Area drew in about 200 people who were able to view the Sea in the same fashion as avid bird-watchers do through a series of guided tours, bird walks, lectures and nature walks.

“We want to inform people and to excite people about the bird life that’s here,” explained SDIA’s Debi Elton. “That’s one of the biggest things the Salton Sea has, and that’s why they want to try to preserve it and keep the wetlands to keep the birds coming through.”

SDIA was able bring the festival back this year, as it was canceled last year due to a lack of SDIA staff because of state park cutbacks.

Sunday’s festival events included a trip to the Coachella Valley Wild Bird Center and presentations from Chris Schoneman, project manager of the Sonny Bono Salton Sea National Wildlife Refuge, regarding environmental changes at the Sea and Bruce Wilcox, assistant secretary for the Salton Sea policy in the California Department Natural Resources Agency, on the Sea’s 10-year plan.

The festival on Saturday featured Sony Bono SS National Wildlife Refuge Biologist Matthew Salkiewicz as a tour guide for an Ironwood trail walk and two shoreline bird walks. Those who attended were also given the opportunity to participate in a north-to-south birding tour, in which eight caravans guided guests from the Recreational Area to Sonny Bono Unit One to see the best bird locations along the way.

“I think this is a good opportunity to bring people into an area they’re completely unfamiliar with,” stated Salkiewicz, who is in his fifth year as a tour guide for the festival. “Typically when we get people to come down to these events they’re brand new to the area and seeing the Salton Sea for the first time.”

On Saturday afternoon, Salkiewicz guided about 11 guests for an hour-long walk down the Sea’s shoreline, stopping at popular bird locations and giving facts about the Sea along the way.

Among the group was Joey Ryan, a bird enthusiast for more than 50 years, who travels from her home in Philadelphia, Pa., to Palm Springs during the winter and makes it a point to attend the festival whenever she can.

“It’s a good event to come to because the folks that lead the birding tour for the festival are really experts in what they do, and they take the time to explain the birds and what they see and also the history of the area,” expressed the Philadelphia resident, whose favorite part in her third year at the festival was seeing a Sage Thrasher bird.

Salkiewicz hopes that guests not only enjoyed the bird-watching, but also took away the importance of saving the Sea.

“If it wasn’t for the Sea, these birds would have no place to go and this is the last stand for a lot of these birds in the Pacific Flyway,” said the tour guide. “All the coastal areas they inhabited are gone, destroyed. If we lose this, we’re going to lose a lot of our birds.”

Dead Seas

The following article appeared on E&E News. We are posting this article because it highlights the work of an incredible public health champion, Aide Munguia-Fullton, a nurse that runs the Imperial Valley Child Asthma Program. A local leader in environmental justice.

The Imperial Valley Child Asthma Program (IVCAP) is a community-based grant-funded program, the only program in the Imperial County designed to improve the quality of life of children ages 0-18, with special emphasis on low-income Latino families with children ages 0-5 who suffer from asthma. Tthe program seeks to prevent or reduce hospitalizations by enhancing parental asthma management skills through care coordination, case management education, home visitations, community education, and encouraging the adoption of standards of care for asthma among medical professionals What is special about our program is the unique partnerships that allows IVCAP to provide essential asthma management coordination services to both local hospital emergency rooms, pediatric departments, and the coordination of referral services to local pediatricians and clinics. Another important aspect of the program is the asthma staff participations in different coalitions created to advocate clean air policies and a healthier environment for asthmatics.
Aide Munguia-Fullton of the Imperial Valley Child Asthma Program

DEAD SEAS
Shrinking lake spawns public health nightmare

IMPERIAL COUNTY, Calif. — A dust bowl is coming, and people here are scared.

Aide Munguia-Fulton, a nurse who runs a community program for children with asthma, has been seeing referrals for assistance soar in the last three years as the Salton Sea has begun receding due to water management schemes and a persistent drought.

Receiving 400 referrals last year alone, Munguia-Fulton has funding to enroll no more than 200 kids a year. She’s managed to include more children, but she knows the lake is expected to shrivel more quickly starting at the end of 2017, exposing thousands of acres of a dusty, toxin-laced salt bed and exacerbating already high asthma rates.

Munguia-Fulton has worked here for more than two decades, and, three years ago, she too was diagnosed with asthma. Just as she tells her patients, she hides indoors from unrelenting dust on windy days. She carries a dust mask with her at all times.

She doesn’t know how the cash-strapped area will cope if air quality continues to deteriorate.

“I am so concerned for our hospitals that are going to suffer the heavy loads,” Munguia-Fulton said. “We have to be prepared. And I know we are not.”

The recession of California’s largest lake (350 square miles) is exposing a lake bed saturated with arsenic, lead, cadmium and other toxins. By the end of 2017, the shrinking will accelerate under terms of state-backed water transfer from this agricultural area to coastal San Diego (Greenwire, June 13).

More than 100 square miles of toxic salt flat could be uncovered in the coming decades. The Pacific Institute, a nonpartisan think tank, estimates that by 2045, the lake bed could be putting 100 tons of dust per day into the air.

That dust — called coarse particulate matter by regulators — is by nature dangerous because it can penetrate deeply into the lungs. It will make breathing even more difficult in an area whose air quality already ranks among the nation’s worst because of dust from farms and desert.

That pollution is broadcast from this remote corner of southeast California by frequent wind storms whose gusts hit 80 mph.

It’s a “really salty dust, it burns your eyes,” said Bruce Wilcox of the California Natural Resources Agency. “It only lasts for 15 to 20 minutes. But it’s the longest 15 to 20 minutes of your life if you are standing in it.”

Winds carry that dust toward some 650,000 people — a population that’s expected to double in the next 30 years.

Hit hardest by prevailing north-to-south winds is the Imperial County near the Mexico border. With the state’s highest childhood asthma rates, the county is more than 80 percent Hispanic, suffers a 20 percent unemployment rate and nearly more than 1 in 3 of its children live in poverty.

North of the Salton Sea, asthma rates are also high as shifting winds carry dust there.

And new data suggest asthma rates are rising closer to the lake, local health officials say.

You can read the complete article here.

KPBS: The Shrinking Salton Sea Endangers Region’s Health

The Shrinking Salton Sea Endangers Region’s Health

Monday, January 15, 2018

West Shores High School principal Richard Pimentel slips on a cowboy hat before stepping outside. It is a nod to fashion as a response to the region’s harsh desert sun.

The school sits about halfway up the western side of California’s Salton Sea. Modern buildings, concrete patios and walkways and an artificial turf sports field stand in stark contrast to the desert community that surrounds the campus.

Tumbleweed and sand are common fixtures of the town’s yards.

“We are about 30 miles from anywhere,” Pimentel said.

Pimentel’s manner is relaxed and comfortable as he walks among his students during lunchtime.

A smile, a question or a joke come easily.

The Salton Sea at Red Hill Marina

“They’re my kids,” Pimentel said. “You have to take responsibility and ownership of that. These folks have entrusted me with the welfare of their kids. It’s a big deal.”

RELATED: A Look At The Incredible Shrinking Salton Sea

Dust swirls in windy desert valley

Pimentel can guide and encourage, but he cannot shield his students from the dust that swirls in this windy desert valley.

“Any time there’s any kind of a wind, you see the dust clouds,” Pimentel said.

The dust in those clouds contribute to the Imperial Valley’s highest in the state asthma rates, and most people who live here expect things to get worse. That is because the Salton Sea is shrinking, exposing thousands of acres of possibly toxic lakebed to the hot sun and the region’s powerful winds.

Inside the nurse’s office at West Shores High, Pimentel unlocks a metal cabinet. It contains plastic bags from more than 40 of his students who need to bring prescription medicine to school so they can cope with their asthma.

He holds one up and looks through the translucent material.

You can continue reading this great article here.

Assemblymember Eduardo Garcia Celebrates 2017 Legislative Victories and Outlines Priorities for New Year

This is an excerpt from a press release posted on Imperial Valley News:

CA Parks/Salton Sea

With the success of SB 5 – Park Bond voters across our state will soon have

Assemblymember Eduardo Garcia and Senator Ben Hueso

the opportunity to invest $4 billion for parks, recreation and safe drinking water with 20% of the bonds funding designated for disadvantaged

communities. This measure additionally allocates $200 million dollars to fund the 10-Year Salton Sea Management Plan, $10 million for the New River parkway and specifically prioritizes funding for Imperial County State Fairground improvements.

“By bringing human health impacts to the forefront of these conversations we have been able to garner greater state support and resources toward Salton Sea mitigation.”

Climate Change/Air Quality

“The passage of AB 398 – Cap-and-Trade Reform  and AB 617 – Air Quality established a comprehensive, statewide program that will allow us to achieve our ambitious climate goals, while ensuring the market stability necessary to retain industry jobs and address vital public health and air quality issues. Importantly, these measures will help further climate equity in disadvantaged areas and directs the Air Resources Board to help region air districts to identify communities in need of air quality monitors; often low income communities of color that historically have been disproportionately impacted by pollution. The community plans developed will be essential to mitigating problems and improving air quality for our families”

“We will continue to fight for our region to receive its fair share of climate investment funds.”

You can read the entire list of accomplishments by clicking here.