What does it take to succesfully transition to a green energy economy?

[Willem]

Which countries would that be?

Netherlands, Scandinavia, for example.

 

[EJ3]

As in physically incapable of riding a bike for more than say 5 minutes. My back problems make walking or riding a bike for more than about 1/3 of a kilometer not possible.

Netherlands, Scandinavia, for example.

Thanks.

 

[Willem]

The electricity business in the US is about $500B in revenues annually and invests about $100B in capital annually - which they borrow to do. 80% of the electric utility revenue is for-profit investor-owned utilities. They usually return their profits as dividends to shareholders.

If you look at any utility balance sheet, for-profit or nonprofit, they have debt, and thus interest payments on their income/expense sheet. It is not unusual to have outstanding debt of half revenue or more.

In fact, BPA is a nonprofit. They borrow at preferential rates from the federal government. For-profits issue corporate bonds to borrow, and nonprofits issue municipal bonds or other bonds.

The BPA and other federal power marketing agencies were set up by President Roosevelt to provide a nonprofit benchmark for power prices for people to see in comparison to for-profit electric utilities. I'm all for nonprofit electric, water, and sewer utilities. Others may differ on that. In my experience, nonprofit utilities are well managed, and better managed in many cases that for-profit utilities.

I am a bit puzzled. Here we have competition between private power companies. I can choose from a few dozen, so as per economics textbook, their prices are very similar. They all use and have equal access to the same grid. Some mostly generate their own electricity, others largely buy on the European market. Do people in the US have only one power company in their region?

 

[Willem]

My back problems make walking or riding a bike for more than about 1/3 of a kilometer not possible.

That is really bad news then. My back is not great, but cycling makes it better to be honest, as do sports. Conversely car driving is troubling if for really long distances.

 

[Blumlein 88]

I am a bit puzzled. Here we have competition between private power companies. I can choose from a few dozen, so as per economics textbook, their prices are very similar. They all use and have equal access to the same grid. Some mostly generate their own electricity, others largely buy on the European market. Do people in the US have only one power company in their region?

Yes the norm is one single power company choice in a given place. It isn't only one company nationwide, but one company per city or state or region.

 

[kemmler3D]

I am a bit puzzled. Here we have competition between private power companies. I can choose from a few dozen, so as per economics textbook, their prices are very similar. They all use and have equal access to the same grid. Some mostly generate their own electricity, others largely buy on the European market. Do people in the US have only one power company in their region?

Even better, in my part of California, we have one for-profit private company. No actual market (free or otherwise) but their investors get to keep profits for some reason. Anyway...

Competition between power companies is interesting. In terms of who owns the powerlines, obviously there can only be one, a natural monopoly. There won't be 5 power grids all on top of each other and hooked up to each building. Even Americans aren't that stupid.

It seems like a good idea to have multiple generators hooked up to the grid and competing on price, but the nature of actual power generation vs. billing for it after the fact seems complex to me.

 

[EERecordist]

I am a bit puzzled. Here we have competition between private power companies. I can choose from a few dozen, so as per economics textbook, their prices are very similar. They all use and have equal access to the same grid. Some mostly generate their own electricity, others largely buy on the European market. Do people in the US have only one power company in their region?

Similar, state by state.

In the US there are about 3200 distribution utilities with wires to homes/businesses and meters. About 168 are for-profit, 600 are nonprofit municipal and public utility commissions, and the rest are nonprofit customer-owned coops.

In the late 1800s and a bit of the early 1900s, multiple power companies sometimes ran their own wires and competed. That ended with Samuel Insull's regulatory compact: a monopoly with no competition, subject to regulation. In the US, some deregulation of electricity began in about the 1980's at the federal level. In the US, based on the 10th Amendment to the constitution, electricity regulation is by the states, unless otherwise designated by congress under several federal laws.

Some states allow "retail choice." The retail choice provider generally contracts to buy wholesale power at rates set every 5-15 minutes, gets the meter data from the monopoly distribution utility, bills the customer, and pays the wholesale power generator for the energy, and the distribution utility for use of the substations, wires, transformers, meters, and maintenance.

Some people like retail choice, I think studies have shown no real economic benefit to the customer. It is just another layer of economic rent seeking and risk transfer.

In Texas, they have an almost entirely short term 5 minute wholesale electric energy market. The retail choice companies act like low end mobile phone companies, offering limited time deals and I believe even sometimes fraudulently and illegally switching customers from competitors.

So in Texas, retail choice providers might offer "nights and weekends free" to get customers. As a result, about 10% of customers in Texas change retail choice electricity providers each year seeking what they think is a better deal. With the February 2021 Winter storm in Texas, several retail choice companies went bankrupt and were unable to pay the wholesale generators. The state of Texas paid the generators using long term borrowing and additional fees on all Texas customers, for many years into the future.

As I like to say, the US electric system was not designed, it evolved.

Map of electric distribution utilities owning wires and meters

 

[Somafunk]

^ that’s just fu***ng nuts

 

[Willem]

Interesting. For some in the US who thought Europeans are all communists, this is how at least in the Netherlands the system works. We used to have local public electricity and gas companies, owned by the local authorities. They provided both the local grid and generated the actual electricity. There were high voltage power lines connecting these local grids for stability, but that was about it. When it was decided a few decades ago that this should be privatised, it was also agreed that private monopolies were undesirable. So the generation and supply of electricity were separated from the grid. The new high voltage national grid company is 100% owned and managed by the national state. It is deemed a national priority, so it is of a very stable and high quality. The lower voltage regional and local grid companies are publicly owned by regional and local authorities, one for each region in the country. They only deal with their regional grids, and all the way to your door. You pay a relatively modest connection fee, and that is it. They operate under public rules and supervision, such as a mandatory right to have PV panels. The actual electricity is then sold to you by one of a number of competing private companies, with different plans, and usually a choice between traditional and sustainable/green electricity. Some of these companies generate their own electricity, but others just buy it in the national and international markets (they are strictly supervised for financial viability). This is essentially a textbook full competition market. To be honest, I am a bit surprised that the US with its tradition of anti-monopoly legislation did not enact something like this.
One other difference with the US is, of course, that in the Netherlands we have substantial taxes on energy consumption, but that has nothing to do with this organization of the market in the most free market way possible.

 

[Petrushka]

Utilities have to generate the electricity, build and maintain connection to the grid build, maintain connection to users, trim trees along power lines, maintain a staff capable of restoring power to millions of customers within days.

Generation is just one cost. The other costs vary from location to location.

 

[Willem]

As I just wrote, we have separated these things. Our local grid is all undergound, so we have no issues with storms, trees etc, nor do we normally have any interruptions.

 

[Petrushka]

Interesting. For some in the US who thought Europeans are all communists, this is how at least in the Netherlands the system works. We used to have local public electricity and gas companies, owned by the local authorities. They provided both the local grid and generated the actual electricity. There were high voltage power lines connecting these local grids for stability, but that was about it. When it was decided a few decades ago that this should be privatised, it was also agreed that private monopolies were undesirable. So the generation and supply of electricity were separated from the grid. The new high voltage national grid company is 100% owned and managed by the national state. It is deemed a national priority, so it is of a very stable and high quality. The lower voltage regional and local grid companies are publicly owned by regional and local authorities, one for each region in the country. They only deal with their regional grids, and all the way to your door. You pay a relatively modest connection fee, and that is it. They operate under public rules and supervision, such as a mandatory right to have PV panels. The actual electricity is then sold to you by one of a number of competing private companies, with different plans, and usually a choice between traditional and sustainable/green electricity. Some of these companies generate their own electricity, but others just buy it in the national and international markets (they are strictly supervised for financial viability). This is essentially a textbook full competition market. To be honest, I am a bit surprised that the US with its tradition of anti-monopoly legislation did not enact something like this.
One other difference with the US is, of course, that in the Netherlands we have substantial taxes on energy consumption, but that has nothing to do with this organization of the market in the most free market way possible.

The US has long had a love/hate relationship with the commons. We have government mail, roads, hospitals, electricity, sometimes natural gas. Some of these compete with private entities, in some places.

 

[Timcognito]

Interesting. For some in the US who thought Europeans are all communists

We here in the US prefer government sanctioned Fiefdoms so we can avoid upgrading, standardizing and unifying the grid but also gouge consumers with monopolistic pricing. We call it free market economics. Some say the consumer always benefits.

 

[Willem]

I have no objection against public monopolies, but they should be properly supervised and not be abused for private gain, which is what some here seem to suggest is happening in some US jurisdictions. I have no way of knowing, of course, but I feel that the split that we made between the publicly owned grid and the competitively provided electricity makes some sense.
We now have a similar but weaker arrangement for fiber optics to your home. A private company can get a licence to rip up the street and lay the cables, but must provide access to other service providers. Fair access is now a contentious issue that has to see some more jurisprudence. In this case there were already cable companies and the national telephone company who owned copper cables in the ground, so it was much harder to implement the complete separation that we created for electricity (and gas).

 

[Timcognito]

I have no objection against public monopolies, but they should be properly supervised and not be abused for private gain, which is what some here seem to suggest is happening in some US jurisdictions. I have no way of knowing, of course, but I feel that the split that we made between the publicly owned grid and the competitively provided electricity makes some sense.

Except there is no competitively provided electricity in California, where I live, for the vast majority, with the exception of rooftop solar.

 

[Willem]

the exception of rooftop solar.

But does the sun not almost always shine in California? Or does your electricity company have restrictions on solar panels?

 

[Timcognito]

But does the sun not almost always shine in California?

I live on Pillar Point one of the foggiest places on earth but my panels still work even on cloudiest of days keeping my battery charged for nights.

Or does your electricity company have restrictions on solar panels?

Not so much in the past but recently some changes. They now pay much lower rates for excess home grown electricity and limit the number of panels to not exceed the use of the customer by much. If you add an electric car and need more, you can add panels and they will still pay for some excess.

 

[Petrushka]

As I just wrote, we have separated these things. Our local grid is all undergound, so we have no issues with storms, trees etc, nor do we normally have any interruptions.

I live on Pillar Point one of the foggiest places on earth but my panels still work even on cloudiest of days keeping my battery charged for nights.

Not so much in the past but recently some changes. They now pay much lower rates for excess home grown electricity and limit the number of panels to not exceed the use of the customer by much. If you add an electric car and need more, you can add panels and they will still pay for some excess.

I have measured the output of solar panels, and clouds cut the output by 95 percent. You can verify this with a photographic light meter. There are phone apps that will do this.

 

[Blumlein 88]

From an article on output during cloud cover.

Overcast Days​

Solar panels can produce electricity on cloudy days, but not always on overcast days. If an overcast day occurs, you can determine whether your system is producing energy by checking for shadows outside. Your system is most likely generating power to some extent if you can see objects casting shadows. The absence of shadows indicates the cloud coverage is too thick for sunlight to reach your solar panels.

 

[Timcognito]

Here is a snapshot it is overcast and 60 deg F the wife is using the the microwave as take this. It shows I am receiving 1.1 kw solar and using 1.1 kw. San Jose' 40 miles SE is 73 and sunny.