Solar Farm 101

Brett Crable, director-new technology and energy conservation for Dominion Virginia Power.
Brett Crable, director-new technology and energy conservation for Dominion Virginia Power.

A book entitled “Solar Farms for Dummies” would never sell. Once constructed, solar farms are so simple to maintain that the biggest job is cutting the grass.

by James A. Bacon

Does anyone wonder how a solar farm works? From an electro-mechanical standpoint, it’s remarkably simple — nothing like a gas-fired power plant with its profusion of ducts, pipes, fans and vents. But there’s more to it than is evident to the casual observer. I got a primer this morning at the unveiling of Dominion Virginia Power’s “Solar Partnership Program” plant outside the Philip Morris USA manufacturing facility in Chesterfield County.

The 11-acre facility produces two megawatts of electricity at peak output, enough to power 500 homes. Though small by utility-scale standards, the solar farm is the biggest producer of solar electricity in Virginia today. That distinction won’t last long, for bigger solar farms are in the project pipeline. Still, it was large enough to give me an education.

That’s Brett Crable, director of the utility’s new technologies program, in the photo above. He took me on a quick tour — it was quick because, frankly, there is not much to see — and instructed me in solar farm basics.

The most complex part of the farm is the solar panel, which converts sunlight to electricity. There are 8,000 panels, each one generating about 36 volts of electricity under prime conditions. The panels are mounted on stationary aluminum frames, tilted at an angle to optimize exposure to the sun. In some solar farms the panels are mounted on mechanisms that rotate to track the movement of the sun even more closely, squeezing out more energy production but incurring more up-front capital expense and maintenance issues. Dominion decided in this project to keep things simple.

wireSo, where does the electricity go after the panels create it? Wires from the panels (seen at left) feed the low-voltage electricity to a collector box underneath the panel array (below). Those boxes consolidate the flow of electricity into a single underground electric line, which feeds the inverter boxes.

Each of Philip Morris solar farm’s inverters handles about 500 kilovolts; there are four in all. Their job is convert Direct Current (DC) from the solar panels into Alternating Current (AC) that we use in our homes and businesses. The four inverters feed into the transformer (below), the function of which is to step up the voltage to 35,000 volts so it can be fed into the local distribution system.


Under the terms of the arrangement with Philip Morris, Dominion owns and operates the solar farm, leasing the land for nominal fee. Although the solar farm is less than a hundred yards from a major sub-station, the underground line from the transformer plugs into the local distribution network some distance away. That’s because the purpose of the facility is to gather data on how the intermittent generation of solar power effects the quality and reliability of electric current on a lightly loaded circuit. (More on that in another post.)

The solar farm, which has been up and running for several months, largely takes care of itself. Dominion expects to send over people periodically to cut the grass and maybe twice a year to inspect the panels. The utility monitors electricity flows remotely. While the $4.9 million up-front expense of buying and installing the panels and other equipment is high per kilowatt of generating capacity compared to large, gas-fired facilities, the ongoing cost of maintaining the facility is almost nil.

The only thing he can think of that might make the solar farm less labor-intensive, says Crable, is to bring in goats to graze on the grass. Some people actually do that. His main reservation, he says, tongue-in-cheek, “I don’t know how you tell the goats they missed a spot.”

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29 responses to “Solar Farm 101”

  1. Nice pictures Jim. These solar installations in .5 – 3 MW range installed on commercial or industrial property are the sweet spot for solar as far as I am concerned. They are far cheaper than residential solar. They do not take farmland out of production as do larger scale arrays and they can connect to the local distribution system, avoiding the cost and disruption of substations and transmission lines. Coupled with some storage used for multiple purposes such as voltage and frequency regulation and energy storage to bridge the time between peak solar output and peak usage, these combined solar/storage installations are expected to be cheaper than other sources of conventional generation between 2020 and 2025, with prices continuing to decline in subsequent years.

    Having many of these units dispersed throughout the grid, especially with the regulation and storage value of the batteries, would contribute to a much more stable and reliable grid than we have currently which is vulnerable to outages from giant central station sources.

    Besides the initial lower cost, the energy price would be fixed over the lifetime of the facility rather than being exposed to the fuel price increase related to any other type of conventional generation.

    I would recommend sheep (grazers) over goats (browsers). Goats chew on anything they can reach.

  2. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    This seems quite reasonable if its done with proper siting and buffering so as to maximize protections of view-shed along with rest. Here, in these sorts of these matters, small adjustments done with large sensibilities can make all the difference. I am reminded of the Italian Dolomite’s. One of the most world most beautiful places in the world, including how that remarkable landscape is enhanced by human habitation and h0w people use that place. Those people care deeply about their towns and it shows, including the great numbers of people who use and enjoy it in the ways they do. Unlike so much we see in the USA unfortunately.

    1. There’s no vegetative buffering here, just a chain link fence. But, then, the solar farm is situated on an industrial property far from any residences.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        I am in favor of reasonable but strict enforcement of aesthetics here. We have already trashed up far too much land and we have done with great carelessness, particularly so in Virginia for some reason. But in Talbot County Md. I am aware of two quite horrible example of thoughtless and tasteless cluttering up of rather small plot of land situate in a key place. This plot with its panels now makes hideous the turn and entrance onto a stunning and otherwise pristine scenic byway. It’s clutter now assaults me daily.

        The other “farm” is far too large and dense for its site off a well traveled road that borders the metal solar farm installed directly off one of Chesapeake Bay’s most beautiful and historic landscapes. It is a perfectly gratuitous abomination.

  3. LarrytheG Avatar

    Good blog post! Informative! agree with TomH – goats will chew the wiring..if they can get to it!

    would like to know more about this:

    ” Although the solar farm is less than a hundred yards from a major sub-station, the underground line from the transformer plugs into the local distribution network some distance away.”

    is the substation REQUIRED to “plug in” to the grid?

    Perhaps Acbar knows some “stuff”…


    1. If you are going to supply electricity to the electric grid, you have to make sure it is the same voltage as the sub-system you are plugging into. The purpose of the big industrial power station near Philip Morris USA is to “step down” the voltage from the transmission line that runs through the property to a lower voltage that Philip Morris can use. The voltage from the solar facility is far lower, and has to be transported some distance to a local distribution system with low-voltage lines; the heavy-duty sub-station and transmission lines literally next door are of no use.

    2. This is not complicated. When you have a big transmission line and want to connect a bunch of radial lower-voltage lines to it, you usually want to consolidate the equipment in one place to minimize the environmental impact and, if possible, gain some efficiencies of scale. The stuff you need is transformers and switches and breakers and communications gear and enough space for maintenance and a fenced area to keep people out. We call that a “substation” — but you COULD disperse all that stuff (or some of it) if preferred for other reasons. Here, you’re already on a fenced, secure industrial site, and even the lower-voltage voltage distribution lines are industrial-sized. So, connect where it’s lowest cost to do so.

  4. LarrytheG Avatar

    re: ” The voltage from the solar facility is far lower, and has to be transported some distance to a local distribution system with low-voltage lines; the heavy-duty sub-station and transmission lines literally next door are of no use.”

    so … you don’t need a substation to put solar into the grid? What is a “local distribution system”? and how is it different from a substation?

    1. My primitive understanding is this: An electric grid has multiple sub-stations to step power up or step it down as needed. Between a transmission line and a home, electricity flows through multiple substations, getting stepped down to a lower voltage each time.

      1. LarrytheG Avatar

        re: homes and step-down…

        yep – understand that – but not clear what kind of connection is needed (or not) for a solar farm…

        can it feed directly into the grid (after going through the inverter)… or does the solar owner or VDP have to “step” it up?

        still trying to understand – where solar can be located – or not – relative to the grid and interconnections.

        perhaps your tour guy can shed some more light…

        1. The type of interconnection, Larry, is dependent on the amount of voltage being produced by the facility. This small installation in Chesterfield is sized to interconnect to the distribution grid, the lines that run around neighborhoods bringing power to residences and small businesses.

          The “Amazon” solar installation on the Eastern Shore at 80 MW output when finished, will interconnect into the transmission grid via a substation into and out of which runs a 138 kV transmission line. Lines carrying 69 kV of electricity and above are considered transmission.

  5. As Jim suggested there are multiple levels of voltages. You have the highest voltages for long distance transmission, 500-765 kv. Intermediate distances using older lines are 245kv or maybe 138kv. Subtransmission lines can go to smaller load centers where a substation’s transformer will step down the voltage to distribution levels. There are several levels of distribution voltages, until a local pole mounted transformer will step down the voltage to individual household voltage. Higher voltages reduce the resistance which contributes to line losses. So the farther you go the higher the voltage. But all of that equipment is much more expensive. The voltage from the inverters must be matched to the voltage of the line the solar array is feeding into. So that is part of the system design depending on the location of the solar. The voltage of the solar output must match the grid connection. You see the transformer taking the voltage up to the appropriate level in one of Jim’s pictures. Creating an output at distribution voltages allows for distributed generation.

    The Value of Solar tariffs that are being developed (as opposed to net metering) allows for third party installations in commercial and industrial sites (as well as residential) to be preferentially located where they do the grid the most good. This value is reflected in the benefit or cost that is assigned to the solar generation. If more solar is put into an area that is already congested with variable solar inputs, it might require a greater investment in the local grid. So the amount paid for the solar would be less. If the additional solar helps support an area that is lacking in supply, the benefit and price for the solar is greater.

    If solar developers, utilities and PJM would collaborate in this way, more solar could be developed that would benefit everyone.

  6. LarrytheG Avatar

    re: ” The voltage from the inverters must be matched to the voltage of the line the solar array is feeding into. So that is part of the system design depending on the location of the solar. The voltage of the solar output must match the grid connection. You see the transformer taking the voltage up to the appropriate level in one of Jim’s pictures. Creating an output at distribution voltages allows for distributed generation.”

    okay. so the solar is feeding into the line that is feeding the transformers and the inverter gets the solar voltage to whatever the voltage on the line is. Is that voltage on the line – that feeds the transformer usually a standard wherever the transformers are so the inverter comes configured with the expected standard line voltages – or is the line voltage not standard and varies and the inverter has to be configured for whatever the line voltage is in each location?

    ” If more solar is put into an area that is already congested with variable solar inputs, it might require a greater investment in the local grid.’

    okay – so what would this additional”thing” (that has to be invested in) , be that deals with the multiple solar inputs?

    “If solar developers, utilities and PJM would collaborate in this way, more solar could be developed that would benefit everyone.”

    I presume that there is something “upstream” of the transformer that is feeding and maintaining the line voltage that goes into the transformer to get stepped down. So what would be a typical “line voltage” that would be in between the step down transformer voltage (240) and the much higher grid transmission voltages?

    substation? …steps down transmission voltages to line voltages?

    too much solar – screws up line voltages…and that’s not good for transformers if line voltages exceed the specs the transformer is designed to receive for step down?

    hopefully what I wrote above is understandable… if not… yell at me.. I’ve been known to write gibberish at times.

    1. LarryG, you are focused on voltage, and the inverter has nothing to do with voltage. It “inverts” the current coming out of the generator, which is direct current (DC), into alternating current (AC). Then you can transform the voltage (transformers only work with AC). Transforming a rooftops load collector’s output to household voltage (110/220 V) is no big deal, it’s usually built into the solar equipment package, and most distribution facilities out there today can handle that much two-way flow.

      I’m not that familiar with the Value Of Solar Tariff that TomH mentioned specifically, but in general, I’d be very surprised if PJM as the wholesale market manager went along with paying more for electricity from any one source than another. PJM is agnostic, fundamentally so, about what equipment the electrons come from or where they are going. Their planning goal is to accommodate the supply and the demand that shows up, NOT to steer it, other than by two undiluted economic signals: the locational marginal price in the energy market from time to time, and the requirement that every buyer in the PJM energy market must have enough generating capacity owned or under annual contract to meet its forecast annual peak demand (plus reserves).

      But there is a price signal from PJM to potential generators: the up-front cost of interconnection varies according to how much the grid facilities need to be upgraded, if any, to accommodate the new interconnection. If there’s a substation nearby with plenty of unused transformer and transmission line capacity, the interconnection cost may be very low. If everything is maxed out, one more generator may require a major rebuild of the entire regional grid. Most fall somewhere in between. This varying interconnection price tag certainly steers potential independent generators to locations where the interconnection costs are lower, all other things equal.

      The presence or absence of lots of solar power in the neighborhood isn’t, in my opinion, relevant to whether more should be allowed at the same energy price. It MAY be relevant to the interconnection cost as the physical characteristics of solar generation can affect how the grid operates — but that is not what TomH is describing.

      1. Acbar,

        The Value of Solar tariffs operate at the utility level in place of net metering tariffs. The ISO’s are not involved.

        Customers buy their energy at retail rates and are paid for their generation at the Value of Solar (VOS) rate. The VOS rate accounts for solar PV’s benefits to stakeholders net its costs.

        Austin Energy has a successful implementation of this concept. The idea is for a utility to assess various portions of its grid and assign costs and benefits to adding solar in that region. This includes the value of solar for reducing congestion, adding additional reliability, etc. and the costs of creating more voltage variation, the need for greater grid investments, etc. In this way, solar investments are incentivized to go where they do the most good.

        Customers receive compensation based on utility-specific benefits and costs of their electricity generation, instead of fixed retail rates that may span many regions.

        Customers pay for transmission and distribution services embedded in the retail rate of the electricity they purchase, thereby addressing cross-subsidization concerns associated with net metering policies.

        Rocky Mountain Institute has developed a comprehensive and fair methodology for states to calculate VOS should they choose to use it in replacing controversial net metering tariffs.

        Interestingly, Austin Energy discovered that the addition of residential solar always had value to their grid although in some locations the value was greater than others. This is why fixed fees imposed by some utilities for “fairness” actually harms the interests of the other ratepayers rather than serving them.

        1. I can see that VOS makes better sense than net metering — a low bar indeed. But what’s in it for the retail utility? And can VOS compete with a wholesale market using LMP, which gets at the locational value in a different way? To be continued on another post.

          1. The VOS is for retail rates. The benefits and costs to the retail utility are factored into the VOS rate. The calculation of benefits to the utility does consider their alternative purchases during the time of the customer solar input. To have a benefit the solar would have to be priced below the wholesale price of alternative conventional generation, plus locational marginal pricing.

            It is not hard to imagine that distributed solar, from 2020 onward expected to be installed for less than $1 per watt, being less than buying distant peakers at wholesale. After 2025, utility or customer installed batteries alone are expected to be less expensive than peaking units, new or old.

  7. ” so the solar is feeding into the line that is feeding the transformers and the inverter gets the solar voltage to whatever the voltage on the line is”

    Look back to the pictures in the article. There are four 500 kv inverters that take the DC input from the solar panels and convert it into AC. This output is fed into the transformer onsite that boosts the voltage up to 35,000 volts which corresponds to the voltage of the nearby distribution line that they are connecting to.

    “okay – so what would this additional”thing” (that has to be invested in) , be that deals with the multiple solar inputs? ”

    There are a variety of grid devices that maintain voltage and frequency control and other functions. It depends on the situation that needs to be remedied in any particular area. Storage can be part of the solution to many of these issues. That is why mid-size solar plus storage can create a much more stable and resilient grid than existed before the solar was installed.

    “substation? …steps down transmission voltages to line voltages?”

    There are many levels between transmission voltage and household service line voltages. This would never be done in just one step-down. But each system and regions within systems are different. That is why it is so important to have a dedicated company (a utility) be responsible for the wires and the integrity of the system. Many different companies can generate energy and help customers use it more wisely. But we need to recast the role of utilities to be the Distribution Platform Provider to create the platform for their and third-party transactions to take place.

    “too much solar – screws up line voltages…and that’s not good for transformers if line voltages exceed the specs the transformer is designed to receive for step down?”

    It can, but as I said, with proper design solar can actually improve the characteristics of the grid. But it is complicated. If there is a lot of residential solar contribution, it is more complex because different solar panels use different types of inverters. Devices like STATCOMM’s, tap adjustable transformers, and a variety of other devices can control things at the distribution level. The big change is that the distribution system was originally designed for one-way flow. Solar changes that. Much of our grid is many decades old and needs to be brought up to modern standards anyway. But is makes sense to install the improvements so that they can accommodate a high percentage of solar penetration since the price will become so cheap.

    What I am recommending is that we should prepare our electrical system for a disruption similar to what cell phones did to landlines. Edison and Tesla would recognize nearly every part of our current electrical system. It is time we take the next step in its evolution. Like transformative changes in other industries, change will come rapidly once a tipping point has been reached. That change is coming in the next 5-10 years. Moving monopoly industries and regulatory schemes into a new business model will be more challenging than letting unregulated industries adapt to the new marketplace.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      TomH says – “Moving monopoly industries and regulatory schemes into a new business model will be more challenging than letting unregulated industries adapt to the new marketplace.”

      That is a very pregnant, provocative, thought provoking sentence.

      How much “monopoly” is going on here, and by whom? How does one alter “regulatory schemes”? What replaces “regulatory schemes?” In so doing, what is the risk profile of change with such a matrix of circumstance?

      Are their any “unregulated industries” is today’s America? Can we afford the unbridled risk of such “unregulated industries” within the current context? Say the risk of a new intense and voracious utility land-use that might easily sweep across the National landscape in a decade or two?

      Here, I am reminded of Old Route 1 between Richmond Va and Philadelphia Pa. How incredibly convenient that strip suddenly and surprisingly was, until just as quick it morphed into a gunked-up thicket chocking to death on itself but had to be abandoned and left behind to fester because it was too hard to clean up. How it still bleeds and festers today. And does so without resolution – take Dumfries Va. for example.

      And yet still how else can national industries effectively adapt without such messy long term trial and error freedom?

      This only puts a few scratches in the surface of possibilities.

      1. Reed,

        What you have identified and other factors, is why I am recommending a revised set of regulations to stimulate a new successful business model for our monopoly utilities. Perhaps I did not write a very clear explanation. My intent was to say that changing regulations and changing the mindset and habits of an industry that has been operating in the same way for over 100 years will take longer than having unregulated businesses adapt to changes in their markets.

        Utilities are important in the future energy system. That is why we need to keep them financially healthy without placing an unnecessary burden on the ratepayers. With the current trends they will become charity cases which will not be good for shareholders or the ratepayers.

        However, even with unregulated businesses rapid adaptation is not assured. In the next 15 years we will see a major disruption in the automotive industry. Within that time, electric vehicles will approach the price of internal combustion engine vehicles. With higher performance and 90% less operating and maintenance expenses, new car buyers will favor the EV’s.

        Currently, cars are used just 5-10% of the time and everyone wants the independence of having their own. However, with autonomous driving capability, many will be attracted to using “transportation as a service” rather than needing to own their vehicle. Vehicles will then have a 70-80% usage rate and far fewer vehicles can serve the same or greater population. This will drastically reduce the number of cars sold. Even though unregulated, many of these companies, accustomed to building the same type of vehicles for the past 100+ years will have difficulty adapting to the new situation.

        EV’s will also share a virtuous cycle with solar and a modernized grid. Batteries that were paid for with the price of the car can now be used for storage during peak solar production. Then the energy can be fed back to the grid during times when the sun is not shining. This lowers the storage price for solar, decreasing the cost at which it becomes “dispatachable”. EV owners can earn perhaps $100 a month towards their car payments, more quickly closing the price gap between EV’s and ICE vehicles.

        We have seen the speed at which these chip based technologies take over (computers, cell phones, etc.). Improvement rates with these technologies range from 20-100% per year. This is why you can get price and performance improvements of 100-1000 times in just 10 years. That is why they are called disruptive technologies. These technologies plus the internet of things (IoT) are just beginning to enter the energy sector. Delaying our response to their presence, or worse yet erecting barriers to their entry, just increases our costs and makes the ultimate adjustment to their presence that much more precipitous.

        1. Reed Fawell 3rd Avatar
          Reed Fawell 3rd


          As you and I have discussed before, no doubt there is momentous change coming our way. Your scenario, grounded in serious study and experience, deserves serious consideration as to emergent possibilities.

          Likely now, as over the past 150 years, the kind of change that you suggest is coming with increasing speed and impact by reason of our growing ability to wield newly found keys that are unleashing a raft of explosive new technologies that are changing ever more things and behaviors large and small in our lives. And are doing so at a time when the mass disruptions that had earlier ruled our past – forces of change like war, plague, famine, rape, pillage and disaster that were happening most everywhere around us – these threats seem to many younger generations of Americans to have now receded, or to have been erased from the collective memory of Americans generally by the gross failures of American education over the past 50 years. So likely the stoppage and suspension of history is now America’s greatest illusion or delusion. And also our greatest obstacle to future success.

          If that is so, than one grand question now on the table is whether the technological change that is about to engulf us next (including your vision of it) will or has any chance to help to save us from what would otherwise be our next apocalypse, or will inevitably compound it?

          And even if those historic forces in our past do remain dormant or off to the side during the lives of the next several generations of Americans, the great question is, as always, how best to manage that change to achieve the greatest good and avoid or dilute the greatest harm that change might entail, given the inherent flaws and limitations of human nature, and Murphy’s ubiquitous Law. For the threat of immense harm, and the opportunity to cause and compound that harm is everywhere in times of great change. Trans-formative carries the greatest risks. And they often unravel lightening fast and everywhere, in ways unexpected and unintended. They can and easily do derail many industries, organizations, institutions, and societies, as well as cultures, nations and alliances.

          So how do we manage it? Some suspect that the technological change now upon us in spades better arms us now with the means of managing risks now and in the future. That is highly debatable. A stronger case might may well be on the argument’s other side. And some also suspect that the coming change will likely give us even greater tools that will help us better manage that future change? No one can know. Indeed, what has happened to us of late by reason of rapid changes in technology surely holds within it the keys to causing us to do great harm to ourselves and others in the midst of the great pressures of inevitable disruption we’ll soon be forced to confront, if we are not very careful or very lucky in the way we confront it.

          Who knows. Nobody.

          Tom – These comments do not properly respond your particular vision of the best future of energy production in Virginia. Still, if we assume that your vision, or some reasonably close variant of it, is or might be our future, then I ask what are the risks and challenges of our trying to get there. Or indeed the risks of getting there only to find we’d up the wrong tree? Or to discover half way up that we don’t know how to get to the top, and do not know then how to get back down, either?

          In many respects this is an unfair question on my part. You have spoken so knowledgeable and responsibly on this subject here on this website for now many months. Over that time I have not responded to your comments in kind. You’ve earned your comments. I have not earned mine. Still I worry that so much is yet between the lip and the cup of the future you lay out. Here, I am constantly dawn back to Andrew Grove’s extraordinarily well informed book written in 1999:

          “Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company.”

          To me what he teaches in that book apply to all risks of change or moving up into the unknown without a tether or assurance of getting back down, whether such risks are posed to a company, an industry, a nation, or an individual trying to climb a mountain for the first time.

          Andrew Grove’s wisdom built on hard demanding experience gives no plain and simple answers, indeed answers at all, but offers only a process and discipline by which, when forced to move through highly disruptive change, one has to arm and discipline oneself to best control or avoid the risks and seize the opportunities giving him the best chance TO SURVIVE the CHANGE and come out stronger on the other side.

          1. Reed,

            Thank you for your thoughtful comments. They are always well grounded in history and philosophy.

            One of the reasons I am proposing a change in our energy system is because I think the components of it are better suited to the times. I left the utility business to start a computer-related organization in the town where IBM was founded. It was very enlightening to experience the difference between those industries.

            In times of rapid change it is usually better to respond with projects that have shorter lead times and smaller investment requirements. This provides a much greater ability to shift with changes, increasing or decreasing the intensity of activity depending on the feedback received from the marketplace. Energy efficiency and solar projects can be implemented in just a year or two and are in a decreasing cost cycle, with relatively small capital requirements. It is easy to respond with more or less development as the economic conditions advise.

            Long lead time, capital intensive projects such as central station power plants and pipelines might look good when you begin them, but conditions can change by the time they are completed or in the early years of their service life. They are also in an increasing cost cycle.

            In designing successful systems you try to match the response to the circumstances. I believe that from a risk management and strategic point of view our habitual responses are not a good fit for the rapid changes we are beginning to encounter.

            For long-term sustainability it is wise for us to wean ourselves from extractive technologies and live more in harmony with natural rhythms and cycles.

            I am also concerned that many of the foundational systems in our culture such as the financial sector, our large businesses and our governments have become corrupted by an overriding concern for short-term economic gain. Not many generations ago the notion was to leave your land, your home, your community in better condition to pass along to those who came next. Nowadays, we have far too many leaders willing to torch other institutions or middle class wealth in order to get a bigger bonus next quarter.

            Our government leaders from both parties are all too willing to pander to their constituencies and mortgage our grandchildren in order to win the next election.

            I don’t know what is going to happen in the next few decades. My guess is that it is going to be quite different from what we have seen before. I believe that by creating a lower cost, cleaner, more flexible energy system, it is more likely to keep the lights on so we can at least see what is going on.

  8. Maybe I’m just not seeing the light here.

    If industry in general transforms to solar, because they will get a rate cost reduction and a big tax write off, what happens to the regular electric rates for us residential/small business peons? Won’t we be getting charged a bigger piece of the old fashioned grid maintenance costs?

    Which would mean our rates would increase even more than they do now.

    There aren’t too many cul-de-sac neighborhoods around that have 11 acres of open land and $5 mill out of pocket money to play this game. Heck, we got people in Tidewater that can’t even pay a measly 40 bucks a month in association fees. Imagine what would happen if a board decided to assess 10 grand on each household because they determined that solar is just the environmentalist thing to do.

    I like solar, but the Dominion “Gotta Control Every Little Piece” Plan is not my idea of solar.

    1. That is precisely the reason I am suggesting a transformation in the business and regulatory models for our utilities. If they maintain business as usual, there will be increasing defection by businesses in particular seeking to lower their usage and rates by a variety of means. That leaves the remaining ratepayers having to pay a greater amount to sustain the utility enterprise. Especially, if the utility has invested in long-term projects that are going in the opposite direction of cost-declining new technologies.

      The typical response by utilities in the U.S. so far has been to add user fees to stem the loss of utility revenues from the transition to a more modern energy system. But this just gives customers more incentive to do something else that does not involve the utility.

      We need an revision in our state-wide energy system to avoid such an outcome.

      1. TooManyTaxes Avatar

        There needs to be a “standby” fee charged to any entity/person that provides its own power or that obtains it via a non-utility-owned transmission line if that customer retains the ability to access power from the utility under any circumstances. The charge should be comparable to what other customers pay for use of the electric transmission and distribution grid. Similarly, a entity or person that wishes to access the grid to sell power to the utility or other entity should pay the same monthly charge. This type of charge levels the field among those who have the capability to access the power grid.

        A person or entity that is totally off grid, such that it cannot obtain electric power or transmit electric power under any circumstances (i.e., no connection whatsoever) should not be charged the standby fee.

        1. I’m not sure a standby fee is always the best way to tackle it, but I agree, any user should bear their share of the value of the grid connection. That is part of what is addressed in the Value of Solar tariffs. But urban residents pay a higher proportionate value for their grid connection than do rural users, otherwise it would be too expensive to connect customers in rural areas. That is one of the reasons big utilities leave the rural areas to co-ops.

          However, in many states utilities have levied fees far in excess of the cost of the grid connection to discourage solar. But charging customers more to use less of your service might be a short-term revenue gain, but it is a long-term losing proposition.

          The reason utilities want to discourage solar is not just that it reduces what a customer pays the utility. It affects what a utility gets paid for its generation. I’m making up the numbers here, but it is an important point to illustrate why utilities operating under a 20th century regulatory model are reluctant to allow renewables unless they own them and can earn a rate of return on them.

          Let’s say a utility bids a baseload or intermediate load plant at $50 in the ISO auction. If the demand is such that the clearing price for that unit of time is $70, all sources of generation contributing to meeting that load will be paid the market clearing price of $70. When peak hours come along the clearing price for that peak hour might be $100. Utilities love when they can bid generation that costs them $50 and they can get paid $100 for it. Renewables are bid in a separate auction in PJM, but whenever renewables contribute to meeting the load it is always at a lower price than conventional generation. So the amount needed from conventional generating sources is reduced when solar and wind (from whatever source) is lowering the amount that is needed from conventional generation. If the peak clearing price was $100, it might be just be $85 after solar has removed the need for some expensive peaker plants which would have increased the auction price. All of the generators would be paid $85 instead of the $100 they might have earned during this period without the contribution from low-cost solar. So the utility revenue is decreased by the amounts saved by customers with their own solar and the by the amount they lost because of the lower auction clearing prices for all of their generation.

          Some utilities charge extra fees to try and replace this loss of revenues. But that just increases the incentive for customers to pay the utility less by increasing energy efficiency or more self-generation. This is not a contest the utilities can win in the long-run, especially with business customers that have the capital to explore other options.

          That is why we must change the rules to reward the utilities for doing what they are good at – managing the grid, being conservative, maintaining a reliable system, running large scale billing systems, etc. They should be given an opportunity to get paid more if they perform better.

          But they should not be incentivized to build facilities that will not have long-term value to their customers in order to provide enough revenue to please their shareholders. They should be given an important and stable role in operating a central part of our energy system – the grid. If they want to be generation providers they should operate on a level playing field with other providers. They should not be guaranteed to have their investment risks covered by ratepayers when other providers cannot do the same. This limits innovation and exposes ratepayers to stranded costs.

          Obviously, there are a variety of ways of designing such regulatory systems and many thorny issues involved in how to transition to such an arrangement. But it will be better for the utilities and the ratepayers if we can do that.

        2. TMT, we agree about the standby charge or equivalent. Although I think it’s unlikely that the grid will be reduced to standby status for most customers anytime soon, TomH is more optimistic about distributed solar and batteries. But I’m late to this discussion so will say no more till the next relevant excuse.

          1. I am not advocating solar and batteries for grid defection. I see that customers will use these two solutions to reduce their purchases from the utility and lower their costs – demand charge reduction, time of day rates, etc.

  9. LarrytheG Avatar

    re: ” The reason utilities want to discourage solar is not just that it reduces what a customer pays the utility. It affects what a utility gets paid for its generation. ”

    the utilities want the full – expected net present value of their “investment” – even if solar is coming on – and they do not want or see erosion of their ROI.

    so they’re gonna get it from the ratepayers – one way – or the other.

    and they’ll let the ratepayers fight it out as to who can shift their cost share to others… by adopting solar when others won’t or can’t (but not only solar – any/all ways to reduce consumption and cost – especially if costs are headed up.

    unless – as TomH says – we figure out a different paradigm that allows the utilities to recover their expected return – and fairly/equitably allocates costs to ratepayers – but in the end -those who do not adopt cost-saving measures… will end up paying more.

    When I buy LED lights and a new energy-saving appliance – I’m shifting costs to others. When others don’t buy LED and don’t get energy-efficient replacements -they’re taking on costs.

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