Originally published at: The Biggest Barrier To Solar Expansion Is That You Can't Price Gouge, According To New Study | Boing Boing
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If one looks at ONLY the installation, no price gouging isn’t possible…
HOWEVER, that’s NOT where solar costs stop. Net metering is where the rip-off starts and goes on and on and on and on.
The story often told is if you put in solar “you” get to sell excess energy to the grid/utility.
The way the game is rigged, those entities don’t buy from individual home owners. They DO buy from an entity called an energy aggregator.
The sales/installation entity is just an arm of a larger entity and that larger entity is the aggregator that sells to the grid/utility… And to you, the home owner.
Wait?! What? Yes… you pay (at a profit to the installer) for the installation labor (including permits etc), you pay for the equipment, it’s your rooftop holding the solar equipment.
You also pay the aggregator to sell you energy at a low rate and handle the accounting for selling to the grid/utility at a high rate. They get to keep what they charge you and what they charge the grid/utility.
At the end of the year, they MAY (yeah, right may… usually IS) be a charge from the utility as a reconcile those time you drew from the grid.
They can’t gouge on the installation… But there are other ways to gouge.
I’d say follow the money from that report from MIT.
It’s a lovely scam often sold with “Don’t you WANT to be a responsible consumer?”
Wanna hear about batteries and utility demand leveling?
The aggregator makes money on the very expensive batteries you bought and paid for by feeding energy you stored back into the grid too.
Feeling the pain yet?
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I think it’s worth digging in to the MIT article more, which at the end has a few big qualifiers.
One is that energy storage modifies the theoretical economic factor described here a lot. Large storage allows generators to smooth out production a lot and avoid gluts.
A second is that widespread transmission of electricity has a similar effect – in effect, Arizona may have a major surplus but if the transmission system can go national and share with Minnesota, that also smooths out gluts.
A third is that government subsidies and regulation can help encourage creation of solar facilities and limit risks.
Factors 2 and 3 in particular are things that freak out ALEC and pseudo libertarian types. Treating electricity as a nationwide public good with the government stepping in to smooth out inequities is a nightmare that will lead to people looking at other things like education and health care and ask why they shouldn’t work the same way.
Imagine if we actually had a national health plan. What hell are we headed toward?
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Well that hasn’t kept companies from coming around trying to pitch those shitty lease deals to us. You know, that ones that make them money but make it impossible to sell your house while giving you vague nebulous benefit.
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capitalism 
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Oh, don’t worry, price gouging during installation is very much a part of the process.
I got an estimate for a full roof solar install, and the price I was quoted (with financing) worked out to have a payoff of about 21 years. I priced the components (including mounting hardware and inverters) separately, and they worked out to be a third of the price I was quoted. So either they paid their installers about $2000/hour, or there’s more than a little skimming off the top.
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Simple solution exposes simplicity of problem.
Nationalize energy infrastructure.
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And here in California, the utility companies are trying to force a change through on how much solar owners would pay just to access the grid. What they want is to charge people almost half the average electricity bill just for access. If the balance of your electricity usage was zero, you’d still end up with a bill half of what you would have paid if you didn’t have solar at all. My electricity usage is already half the average, which means solar would benefit me in the slightest - I’d pay many thousands of dollars for a system that provided for all my needs but my bill wouldn’t change at all - in fact it might go up.
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So, state (community) owned power generation is the solution? Kick out the greedy companies and nationalize? Public Power!!
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There are a few sides to the connection fee debate, with some very greedy bastards on one side.
They do have a legitimate point, buried in the avarice, and it’s this: one day soon the grid will be primarily for backup and for distribution of surplus power. Not at all the “primary supply” it is today. They’re going to have to find a way to make this work. Of course, their first negotiating offer is like all first offers: “You’re dreaming!” is a perfectly sensible reply. But a connection fee makes sense (again - the greed and posturing makes it look hideous, I’m well aware).
The energy companies stand a chance of cutting their own throats if they get this wrong - too high, and the customers who can afford it will go off-grid. This could kick off a death spiral for the grid: with fewer customers and the same-sized infrastructure to maintain, prices would go up again. So more people would leave. Eventually, the only people left who use the grid would be the ones who couldn’t afford to go off-grid. But the actual size of the network - number of poles, wires, etc - would stay much the same. You’d have all the same costs they have today, with a customer base that’s smaller and poorer.
This would also be a minor disaster for renewable energy - without a sane, healthy grid pumping surplus renewable energy, it’s going to take a lot longer to close the last coal-fired power station.
The details, of course, are worth arguing hard about.
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And I reached the same conclusion as others: stop letting the electrical grid be run by private corporate entities engaged in extracting maximum profit. Simple solution, the problem is not nearly as difficult as Alec wants us to believe. It just doesn’t allow them to shill for their corporate overlords and the wealthy.
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I’m just waiting for a Republican mega-donor to say sunlight isn’t a human right.
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Yup. That’s what I discovered when I started shopping around for solar. I found I didn’t pay high enough electric bills to justify solar (!), and if I installed solar, I’d be paying MORE in energy costs plus the cost of installation, even with the government subsidy. So much for being a conscientious consumer.
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I can shed some light on that. I will leave you to decide whether some or all of it is “gouging.”
First, the US (I’m assuming you’re in the US) is notorious in the solar industry for having very high “soft costs” – permitting fees, grid interconnection fees, and the like. They are WAY higher than any other OECD country, where all of these have been streamlined and standardized. It is tough to streamline and standardize them in the US because they are imposed by a hodge-podge of governments, utilities, regulators, etc. The set of organizations you need to get permits and other paperwork from might differ significantly from the set somebody in the next town needs, and this lack of uniformity adds quite a bit of costly administrative overhead. NREL and Lawrence Livermore both have reports that go more deeply into this, if you are so inclined.
Second, you said your quote came with financing. If you had gotten a cash quote without financing, the quote would have been significantly smaller. The reason for that is that the company providing the financing doesn’t get much in the way of tangible collateral – if you default on the loan, they can claim your solar panels, but they’re on the hook for removing them from your home and reselling them, which just isn’t going to be worth their while. Plus, the solar market and the business model are new enough that they don’t have very much data on what the real financial risks are. So they cautiously (for them) charge a pretty hefty up-front fee for the financing. It gets rolled into the final quote the way that it does so you can include in your federal investment tax credit claim. This is why many installers quote prices with and without financing – if you have the cash or can pay for it with a lower-fee loan like a mortgage, that is almost always the better route to go.
All of that said, a 21-year payoff is really long for much of the US. Did you try more than one installer? The price differences between them can be shockingly huge, even for similar hardware. It can be for a lot of reasons, including the occasional purposely price-gouging quote from an installer who doesn’t really want your business for whatever reason, but in that case they aren’t really expecting you to buy from them.
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Thanks for the details. I know I’d be looking for quotes from other installers, so I wouldn’t walk into this blind.
But there are other reasons I stopped pursuing it aggressively. Maximizing the energy produced would require us to cut down the two large mature trees that frame our home, and I have no place else on my tiny lot to mount them. And living as far north as we do, there is very little energy in the sunlight we get in the winter months. Coupled with the inefficient fixed pitch of rooftop panels that don’t face south, the poor return on investment means it’s just not a great situation for us to build our own solar installation.
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I remember when utilities were owned by the local government.
I’d be very happy if we went back to that model.
To hell with skimming profits to the fat cats. Natural monopolies and capitalism are naturally incompatible.
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I think you are conflating two “cheaps”: 1) the falling cost of solar generation installation, and 2) the falling price that solar power can command on the retail market. As a result, you state:
the lower profit potentials of solar energy mean that it could get harder to incentivize the people with capital to build enough solar arrays and battery storage to handle all of that cheap renewable energy
This is true for solar arrays: if the falling retail price of electricity, in the hours that solar is “on”, drops low enough, there is no economic return and thus you will need something other that “normal” market profits to encourage the private second to build.
However, this is not true for battery storage, because battery storage (in an energy-only competitive electricity market) makes money through temporal arbitrage: buy the power when it’s cheap and sell it when it’s not. If enough solar is installed to drop those “solar hours” near zero, batteries can buy in these solar hours and sell it in the non-solar hours, and thus could make economic sense. And they make more economic sense the cheaper the retails price of the “solar hours” become.
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