Home electricity cost versus wind penetration

In a parallel thread the cost of electricity from different sources is explored. Here is the correlation between the percent of wind penetration for electricity production and average household electricity rates. The 20 largest GDP (PPP) countries are taken from Wiki.

           % Wind      Household price
         Penetration       $/kWh
China         9             .079
USA          10             .180
India         4             .074
Japan         1             .250
Germany      22             .546
Russia        1             .062
Indonesia     0             0.97
Brazil       12             .170
France        8             .214
UK           25             .410
Turkey       11             .081
Italy         7             .568
Mexico        6             .102
South Korea   1             .101
Canada        6             .119
Spain        22             .364
Saudi Arabia  0             .048
Egypt         2             .027
Australia    12             .232
Taiwan        1             .096

Some countries may subsidize the price of electricity, others add fees and taxes, but here is the overall linear correlation:

Cost = (.014 x %Penetration) + 0.077
p-value = 0.0011
Is the slope significantly different from zero? Yes.

DB2

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It would be interesting to see if the same relationship exists for places with high solar power penetration. If a country is going “green”, it makes sense they probably also provide incentives to build a lot of solar power, along with the wind farms.

Solar power could actually drive the retail price of electricity higher than wind. Not many private customers have their own wind turbine supplying electricity to their property. But an increasing number of people have solar panels on their roofs. Every region will have its own rules and policies, but if a person generates their own power, that is electricity the utility can’t sell them. Solar power users are still connected to the grid, but they don’t pay as much as those people who don’t have solar panels. Therefore, the lower-income people without solar panels pay a larger amount for the upkeep of the grid than those people producing at least a portion of their own power. Lower income people are often renters, and renters generally don’t have the budget, or even the ability, to put up solar panels.

This results in a system where the costs of keeping the grid operational are paid for by a smaller customer base. Price per kilowatt-hour goes up, in order to keep the cash flow going to the utility, so it can maintain the grid.

Add in the extra costs of building and maintaining new transmission lines out to remote wind farms and utility-scale solar farms, and the lower income people end up paying, while the upper income folks who can afford their solar roofs don’t pay as much.

I don’t know if I explained this properly, but below is a link that also addresses the issue. California has gone big into both wind and solar power, so now Californian’s electric rates are skyrocketing.

From the link:
However, because lower-income residents use only moderately less electricity than higher income households, they end up with a disproportionate share of the burden, according to the study. And while the bills of older, wealthier Californians continue to decrease as they adopt cost-efficient alternatives like the state’s Net Energy Metering solar program, costs will keep rising for a shrinking customer base composed mostly of low- and middle-income renters who still use electricity as their main energy source.

“When households adopt solar, they’re not paying their fair share,” Fowlie said. While solar users generate power that decreases their bills, they still rely on the state’s electric grid for much of their power consumption — without paying for its fixed costs like others do.

  • Pete
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Germany, UK, Italy and Spain have higher “household rates”. Imagine if EU countries did not have as much wind penetration how much higher there household rates would be?

Sorry that question voids your approach.

This is true for toothpaste and for just about every commodity. The rich can afford the cheaper economy pack while the poor have to buy the more expensive (per unit) smaller pack.

How do you make that fair? Produce only smaller packs? Ban volume discounts?

The Captain

BTW, in socialist Venezuela the rate for nationalized electricity (the only kind) varies depending on the area’s economic status.

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For the same 20 largest GDP countries the slope of cost versus solar penetration is twice as steep.

Cost = (.028 x %Penetration) + 0.046

DB2

1 Like

In reality central Europe demands more energy than many other places and pays more per household.

Alternative energies may well be bring down the average household costs in Europe of energy.

You must be replying to some other poster…

The Captain

Dont worry your opinions wont change.

:rofl: :rofl: :rofl:

Denny,

The household costs in the EU are the highest.

Poorer nations have lower household costs.

In many places, there are monthly fees to homes and businesses with solar panels to charge for that connection to the grid. These charges offset some of the burden shifting you mention. Probably not all, but as more solar is installed I’d expect those charges to increase and become more wide spread.

–Peter

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California seems to be following that model, but more individually targeted.

In California, how much you pay for electricity will soon be tied to how much you earn: A state law passed last summer requires the California Public Utilities Commission, or CPUC, to approve a pricing structure that incorporates a flat fee with a sliding scale based on income.

Currently, Californians pay for the energy they use and the cost of upgrading the grid, settling lawsuits related to wildfires and providing assistance to low-income customers is built into the per-kilowatt-hour price.

Under the new system, however, funds for these programs would come from “income-graduated fixed charges.”

^ ^ ^ ^ ^ ^ ^

My own thought is every customer should pay a flat fee for maintenance of the grid, then separately pay for electric generation based on how many kilowatt-hours they get from the utility each month. That way, solar power users would still be able to reduce their bills by generating their own electricity, but as long as they are still hooked up to the grid, they pay a flat fee for the privilege of using the grid when they need it.

  • Pete
2 Likes

So a 200 amps residential customer should pay the same flat fee as an office building with, maybe, 10K amps service?

Mike

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I was only thinking of residential customers, but commercial businesses would need their own fee system, based on the expected demand. But again, this is only for the grid upkeep. A large office building is going to have a much larger transformer feeding it, with probably a higher voltage than the 120 VAC fed to residential houses. Utilities often charge commercial entities differently than residential customers.

As I wrote earlier, there would also be a separate charge based on how many kilowatt-hours are delivered from the utility each month. That charge might be significantly higher than the grid maintenance fee, depending on the business. Also, if the business wants to put solar panels on the roof, then they can offset their usage and lower the overall utility bill. But as long as they are still connected to the grid, since solar panels can’t supply everything at all times, then the business needs to pay the grid maintenance fee.

  • Pete
3 Likes

A business with a modest amount of electrical use and a large flat roof could install solar and batteries and be nearly off the grid with very little draw from the grid. How do you determine their grid connect fee compared to a residential customer?
Just saying it isn’t a simple calculation.
If you price it too high and batteries get cheap enough some business customer could disconnect.

Mike

I don’t have any simple answers to complicated questions. I do know that utilities have many pencil pushers with sharp pencils who figure those things out.

This goes more towards the price paid per unit of energy used, but the EIA reports the average prices paid by the residential, commercial, industrial and transportation sectors for each state. Commercial is generally lower than residential, and industrial is less than commercial. See link below…

Similar prices, though not necessarily based on kwh used each month, can be determined for grid upkeep.

I’m just trying to figure out a solution to the problem that utilities are facing. Those utilities see increased costs, through inflation and upgrades to the transmission system, but lower revenue because an increasing number of solar power users aren’t paying as much. Some people say those wealthy solar users aren’t paying their fair share. Isn’t this a kind of regressive fee structure? Aren’t the costs associated with keeping the grid operational being paid by the lower and middle income folks who either can’t afford or aren’t allowed to install solar panels?

  • Pete
2 Likes

Every installation/customer has meters.

The Captain

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This is one of those “correlation is not causation” examples. Natural gas is the typical driver of electricity prices, even in areas with high renewable penetration. This is because of the way wholesale electricity prices are determined. Energy producers offer electricity at different prices to suppliers. The suppliers add the cheapest energy first and keep going higher until demand is met, with the highest price reached set as the overall market price that is paid to all producers. This last highest cost producer is typically natural gas because of its usefulness in peaker generators that cover gaps between supply and demand.

Take Germany for example. Here is Germany’s electric costs per year since 2018. Big spike between 2021 and 2023.

Compare the above to the EU natural gas prices over the same period.

This is Germany’s wind power generation per month:

Based on these graphs, what do you think is most responsible for Germany’s electricity cost spike from 2021-2023?

Same is pretty much true in the USA.

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That’s the exact issue. The grid connect fee is the amount the customer pays for “having” a meter (for their connection to the grid). The usage fee is the amount the customer pays for their use of electricity. It varies with kWh used, sometimes linearly, sometimes with step functions, sometimes with time-of-day variations, etc.

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That the solution! The meter is the source of all the data you need to figure it out.

What am I missing?

The Captain

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The meter maid < G >?