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Musk Envisions An End To Net Metering

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During the Q2 earnings call for SolarCity, Elon Musk and Peter Rive laid out their vision for the future as Tesla and SolarCity combine forces. In his remarks, Musk told the analysts and investors on hand that demand for electrical power will double or triple, as the world transitions away from fossil fuels to renewables.

“Electricity usage is going to increase dramatically as we transition away from burning old dinosaurs to electric cars, and then to electric transport. We would see roughly a doubling of electricity consumption as all transport moves to electric. And then, there is a tripling of electricity usage if you take all heating and make that electric as well, because obviously most heating is from oil and natural gas particularly.”

Battery storage will allow end of net metering

Musk was asked by Colin Rusch of Oppenheimer, “How long is it going to be before the combined entity [Tesla Motors + SolarCity] introduces a home energy management system or some sort of robust energy efficiency offering?” Musk had a ready answer.

“Solar and battery go together like peanut butter and jelly,” he said. “You obviously need the battery, particularly as you get to scale and you want to have solar be a bigger and bigger percentage of the grid. If you don’t have the batteries there to balance the grid and buffer the power, you really can’t go beyond a certain percentage of solar in a particular neighborhood.

“Maybe you can go up to about 20% solar, but more than that, it starts to unbalance the grid and you need to buffer it, because the energy generation is low at dawn and dusk, it’s high in middle of the day, and it’s at zero during night. So you got to smooth that out.”

Rooftop solar and utilities are on a collision course in many states over the issue of net metering, which requires utility companies to pay customers for any excess electricity they feed back into the grid. Utility companies are in the business of selling electricity. It’s what they do. They are none to anxious to buy it back, especially from private individuals.

Imagine you could manufacture gasoline at home and wanted to sell some of it back to Exxon. The industry might have a problem with that.

SolarCity actually packed up and left the Nevada market after that state’s public utilities commission voted to allow NV Energy to impose retroactive fees on its customers with rooftop solar. The central issue is, how will the electrical grids of the future be managed and who will manage them?

Musk sent a signal that he is not at war with the utility industry. He just wants them to shift their focus a bit. “I do want to emphasize there is still a very important role for utilities here. Sometimes people think that this is an either/or thing, it’s like either rooftops are going to win or centralized generation is going to win and actually both are going to win.”

The win he is talking about is the dramatic increase in demand for electricity to power the green revolution. What he is saying, in effect, is the pie is big enough for everyone (in renewables) and it is only going to get bigger.

Peter Rive spoke further on this theme. Referring to recent events in the state of New York, he said, “This is a collaboration of the local utilities and the solar industry. And the collaboration is net metering for the next three years and then a phasing to more of a grid services model, where you combine solar, storage, smart inverters and provide all these additional grid services.”

Rive added, “You phase that in and then essentially you phase out net metering into that grid services model. We see that probably happening as a standard policy and we’re going to promote that across all the different states.”

One key is battery storage. That is how you use abundant solar energy collected during the day when it is needed at night. Musk intends to make millions of batteries in coming years. Some will be used in cars, others in large trucks and buses. Some will be in our homes, and some will be used for large-scale grid storage.

But all will help the world use fewer fossil fuels while bringing the benefits of electric power to the multitudes.

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James Ayre Photo

James Ayre

James has a background which is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide.

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