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Solar Demand Charges And The Duck’s Head

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Solar energy is disrupting the electricity business. Utility companies say solar customers are not paying their fair share to help maintain the electrical grid and are imposing solar demand charges on customers with residential solar systems. That’s what the Salt River Project (SRP), a small utility in Arizona, did recently when it slapped new solar customers with a $50 a month fee on top of their regular electric bill.

SolarCity, the nation’s largest installer of rooftop solar systems, is fighting back, claiming the solar demand charge is discriminatory, illegal, unconscionable and possibly immoral. Of course, that’s exactly what you would expect them to say, since saving people money on their electric bills is what makes their business successful.

While that suit wends its way through that dark and scary place known as the legal system, some observers see a silver lining in all this and it has to do with what is known in the electric industry as “the duck’s head”. If you make a graph of how people use electricity during the day, it will start off in the morning at a certain level, then drop during the day when people are at work.

But then, right around 5 pm, all those busy people race home, turn up the air conditioning, power up their electric stoves, turn on all the lights in the house  and sit down in front of their computers and television sets until its time for bed. As a result, the demand for electricity from the grid goes through the roof, if you will pardon the expression, and electric companies have to be ready to meet the need.

Graph of electric grid demand shows a "duck's head" spike in the early evening hours, via CaliSOWhen you are done with your graph, it begins to look a little like a duck’s head during the evening hours and a duck’s belly during the middle of the day. The paradox for homeowners with rooftop solar systems is, those systems generate most of their electricity during the day when there is no one home to use it. When people get home at night, that is precisely when production from their home solar system is starting to fall off, so they have to buy the electricity they fed into the grid all day back from the grid when it is most expensive to do so. .

And that, says Ravi Manghani, an energy storage analyst at Green Tech Media Research, is precisely why home battery storage will benefit from solar demand charges like that imposed by SRP. “Salt River Project is only one utility out of the 3,000 in the U.S. but it will not be the last utility to enforce a residential rate structure that benefits solar-plus-storage,” Manghani says. “Any kind of net energy metering reform that reduces the value of solar works in favor of storage.”

Why is that? Because now when folks get home from the office, they can draw electricity stored during the day from their home battery storage unit instead of from the grid. People with home batteries won’t have to pay high peak demand rates, which will boost their savings versus their non-solar powered neighbors. And that will convince more people to install rooftop solar systems in the first place.

What can we learn from all this? Adding batteries to home solar systems is going to fundamentally change how we use power from the electrical grid. And that is going to up-end the traditional model for electricity generation and distribution. The more the utilities fight the spread of solar power, the more they are encouraging people to find alternatives to that model.

The times they are a’changing, as Bob Dylan once said.

Photo: Fotolia

Written By

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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