Energy bill charges explained
Credit to Jenna Careri of saveonenergy.com for sharing
Understanding your electricity bill is part of being an informed consumer – but it’s also tempting to skim over all the numbers and sections without looking at them in depth. However, examining your bill can show you how you’re using energy and how to be more efficient. You’ll also be able to check for extra fees and charges that don’t look quite right.
Let’s break down what those numbers really mean using a sample bill. Our partner Constellation Energy provided us with an example. Your bill may look slightly different depending on your retail electric provider (REP) but should include similar information. Read more here.
Last week, the country’s largest utility company cut power for nearly a million people living in Northern California. PG&E stated that the purpose of the intentional outage was to prevent the risk of sparking a wildfire in Northern California, during a period of extremely high fire risk. This preventative measure left 800,000 people without power for days, and without any clear timetable about when power would return. This situation highlights several challenges associated with the existing grid infrastructure, and as a result, people across the country are nervous about their own utility’s shortcomings.
PG&E’s fears about sparking a wildfire are not unfounded. The utility was found to be responsible for the 2017 California Camp Fire, for which PG&E agreed to pay $11 billion in damages. Tragically, 79 people lost their lives in the fire. The blaze was created by a fault in a damaged transmission line, and the fire proved to be one of the most devastating wildfires in national history. The massive financial penalty ultimately resulted in a bankruptcy filing for the massive electric company. Now, the utility is saying that high winds in the Northern California area are leading to extremely high fire risk, and so they’ve determined that de-energizing parts of the grid in 22 counties is the safest bet to prevent another wildfire.
This move by PG&E has surprised many. It’s understandable that the company would want to avoid another tragic fire, not to mention the enormous $11 billion penalties. However, to cut off the power for 800,000 people is an extreme measure. Not only were so many people inconvenienced by not having power, but the affected area has lost billions of dollars in revenue due to the shutoff. At least one person has been reported dead after critical medical equipment was left without a power supply.
As one local business owner put it: “I understand why they did this, to a point, but to inconvenience 800,000 residents, I think it’s a little excessive. It’s costing this state billions in lost revenue and people are losing food, people are losing revenue for not being able to work. It’s devastating, it’s third world country-ish.”
The outage highlights several vulnerabilities in our existing electricity system. First and foremost, the reliability of the grid comes to mind. It’s a scary prospect to not have a steady supply of power when we need it. Not only does electricity allow for conveniences like TV and lighting, but it also supports more crucial applications, like food storage. Think of all the food that was wasted after 800,000 people were left without power for days. That alone can constitute a big loss for a household. Unless a house has a backup power option like a generator or a solar-powered battery, the occupants will be vulnerable to numerous negative effects caused by power outages.
Another concerning aspect of this ordeal is that it demonstrates the fragility of our existing grid. Much of the equipment and transmission lines are aging and in need of replacement. That need is highlighted by events like the Camp Fire. When utilities need to make massive investments to upgrade their infrastructure, they have no other place to turn besides their ratepayers. As a result, grid maintenance and repair costs ultimately fall to utility customers. This contributes to rising electricity bills, in addition to other factors such as fuel prices and availability.
These outages are a scary idea, whether you live in California or not. In this case, the blackouts were a planned tactic from the utility to prevent a wildfire. However, similar outages could be caused by a wide variety of other factors. Severe storms, earthquakes, or even terrorist attacks could produce similar situations anywhere across the country. It’s quite scary to think that while we enjoy a steady supply of power right now, it’s entirely possible that something outside of our control could interrupt that supply.
One bright spot in this particular story is the presence of energy storage in California. The state has the 2nd highest penetration of residential solar + battery systems, behind Hawaii. Thanks to their residential energy storage systems, many of those affected by the blackouts still could rely on their backup power supply within their own homes. These systems are typically only designed to provide backup power for a few selected circuits, such as refrigerators, freezers, and medical equipment. In situations like this extended outage, that backup power can be the difference between losing hundreds of dollars in spoiled food, and in some cases, it could even be the difference between life and death. With stakes as high as these, it’s no surprise that we’re seeing a nationwide surge in the installations of home energy storage systems.
As the climate changes these extreme events seem to become more and more common. However, with the adoption of cutting edge technologies like these, we can at least insulate ourselves from some of the risks of blackouts.
Everything we buy for our homes has a limited lifespan. Refrigerators, for instance, have an average working life of 15 to 25 years. Air conditioning units tend to last between 12 to 15 years before needing to be replaced. Avocados, on the other hand, seem to be specifically engineered to expire one day before I’m ready to eat one. Just like everything else, a solar energy system has a finite life span in which it will function efficiently. In this article, we’ll look at the individual components of a photovoltaic system, how long those components last, and how solar equipment differs from other types of electricity generation.
A solar system is made up of several components. When compared with other types of electricity generation technologies, PV systems are fairly simple in their configuration. One thing that distinguishes solar from other types of generators is that there are no moving parts. Every variation of fossil fuel technology that produces electricity uses combustion to heat water and create steam to drive a spinning turbine. In this way, heat energy is converted to kinetic energy, which is then converted to electricity. Renewable energy sources like biomass and geothermal operate in a similar manner, minus the combustion of fossil fuels. Wind and hydro don’t rely on any heat energy, just the natural movement of wind and water to drive the turbines.
Photovoltaic solar cells are completely unique from other types of electricity generators because they rely on the Photovoltaic Effect. The PV effect describes a natural phenomenon in which electrons are harvested directly from the sun’s energy, using specialized layers of minerals and semiconductors. We’re not going to delve into the physics here, but if you’d like to read more about the photovoltaic effect you can learn more by following this link. We tend to think of solar panels as being a modern technology, but in reality, the PV effect was first discovered way back in 1839 by a French physicist named Alexander Edmond Baecquerel. One of the many advantages of solar panels is that they don’t have any moving parts (unless the panels are mounted on a tracking system), and so there’s less room for equipment failure compared with other technologies.
Although there are no moving parts, that doesn’t mean that solar panels will last forever. The panels degrade over time, which leads to a slight decrease in production over the life of the system. The National Renewable Energy Laboratory has conducted one of the world’s most comprehensive studies on this subject, titled the Photovoltaic Lifetime Project. Their findings indicate that modern solar cells degrade at a rate of less than 1% per year. Most module manufacturers provide warranties on their equipment ranging from 20 to 30 years, ensuring that the modules will continue to perform at or above the level of degradation for that time period. Unfortunately, there is no data that shows the maximum lifespan of modern solar equipment, since manufacturing processes have aimed to improve the durability of modules made within the last 10 years. Despite the lack of concrete evidence, it’s widely suspected that modern solar cells could continue to produce power for years after the manufacturer warranties expire.
Another crucial component of PV systems are the inverters. The photovoltaic effect produces DC (direct current) electricity, but our electricity grid operates with AC (alternating current) power. The function of the inverter is to convert the solar electricity from DC to AC so that it’s suitable to be used in the home or exported to the grid. The typical expected lifespan of a PV inverter ranges from 8–12 years. There have been isolated cases of solar inverters lasting for up to 20 years, but typically the equipment is expected to fail around the 10-year mark.
The timelines outlined above are based on national averages, but there are several other factors that will play a role in determining the life of your PV system. These factors include weather, average temperature, and frequency of system maintenance. In order to extend the life of your solar system, there are a few things homeowners can do to keep their equipment functioning as well as possible. The first important thing a homeowner must do is to partner with a reputable solar installer, who will be sure to closely follow all manufacturer instructions when installing a system. A loose wire or improper connection can create irregularities in the system, which can greatly impact the overall lifespan. The second piece of advice for homeowners is to keep their systems clean and free of any debris that might damage the equipment. Finally, it’s important to have your system monitored and inspected regularly to ensure that the equipment is performing as expected. Barring any unforeseen circumstances, these simple steps will help ensure that your system is producing the maximum amount of power during the life of your equipment.
If you have your fingers on the pulse of the solar industry, you’re probably hearing a lot about energy storage. It’s considered by many to be the link between existing renewable technologies, and the 100% renewable energy grid of tomorrow. An energy storage system (ESS) can refer to chemical batteries or the storage of kinetic energy. They can be massive in scale, such as a pumped hydro station, where excess electricity runs a pump that pushes water up a hill to a reservoir. This converts the electricity into kinetic energy. When we need to convert that stored energy back into electricity, the water is released from the high reservoir, passing through turbines as it flows downhill. Energy storage can also be small in scale, like the battery attached to your cell phone that’s probably in your pocket right now. For this post, we’re going to focus on residential energy storage: batteries in your house that can supply energy to the loads in the home.
No matter the scale of energy storage, the driving purpose is the same: we want access to power right when we need to use it. With our cell phone batteries, we draw energy each night from the power grid and sequester it into our futuristic glass rectangles, where the power sits politely so we can use it throughout the day whenever we need it. However, the grid works in a different way. The electricity in the grid does not just sit in the power lines above our homes, waiting until we flip our light switches. In fact, electricity is in a constant state of movement around the grid. The utility company must run complex equations to balance the amount of power they produce, with the amount that’s demanded by consumers. This system usually works reasonably well, but sometimes it can be quite expensive and difficult for utilities to make sure that balance is maintained. That’s why energy storage can be so useful: it can make it much easier to ensure that we’ll have power where we need it and when we need it.
Solar power is an excellent way to generate clean, renewable electricity. The problem is that the sun doesn’t shine 24 hours a day. The solar system can only produce energy in daylight hours. From the perspective of a solar customer, this fact actually doesn’t matter much. Thanks to net metering, solar customers can generate excess power during the day to feedback into the grid. They get credits for the power they feed back into the grid, and they can trade those credits in at night to receive power from the utility. In this way, a solar customer can still offset 100% of their usage, even though not all of their usage occurs in the day time.
So, solar is great during the day… but what about evenings and nights? In order to provide the power needed during peak usage times like the evenings, utilities have to fire up “peaker plants” which are power plants designed to ramp up production quickly and provide extra electricity during a key window. It’s typically much more expensive for utilities to use peaker plants compared with their more stable baseload generators. Some utilities actually charge more for power delivered during peak usage times, so homes with batteries can, therefore, insulate themselves from those peak charges by using stored power instead of drawing from the grid. We also need some energy at night, and solar panels can’t help us with that. Wind energy can be a good solution for night-time power, as the wind often blows more strongly at night than during the day. However, there’s still an important need to keep electricity readily available around the clock, and without energy storage, it’s unlikely that renewables would ever be able to provide that.
This fact is sometimes used as a knock against solar power, and renewables in general. Some people say that the grid could never be supplied entirely from renewables like wind and solar, because there would always need to be traditional power sources for night-time power, and peaker plants that can be switched on and off quickly depending on demand. This is where energy storage can be the key to creating a gird powered entirely by renewables. If we can produce enough extra electricity with renewable sources, and store that electricity for use in peak times or at night…. Then there would be no need for traditional fossil fuel-burning power plants.
Of course, we would need a high penetration of energy storage to achieve this goal. Residential energy storage is a very important piece of this puzzle because it would allow for a distributed network of energy storage systems. Together, these systems could have a major impact on the electricity sector. A new study from the University of Michigan found that by pairing energy storage with renewable energy sources like wind and solar, we could theoretically reduce greenhouse gas emissions by up to 90%.
Another reason that residential energy storage systems have increased in popularity is because of the energy security they offer. Take for example a grid blackout. With a standard solar system, the equipment is designed to shut off in the event of a grid outage. This is a strategy to protect any utility line-men from unexpected surges when they’re working on downed power lines. Therefore, if you have a standard grid-connected PV system, your panels will not operate in the event of a grid outage. With ESS’s, however, loads can be wire directly to the storage system so that they remain electrified during the blackout. In order to remain economically efficient, most ESS customers choose only to back up their most crucial loads like lighting, medical equipment, and refrigeration. As disastrous weather events seem to be increasing in frequency in the US, more and more homeowners are turning to energy storage so they don’t get left in the dark.
Residential energy storage is still a relatively new market, and each utility sets its own rules about how customers can use their storage systems. If you’re considering adding a storage system to your home, be sure to consult with an energy professional to make sure you get the maximum benefit from your system. Just like a residential solar system, a storage system needs to be designed specifically for each home. When designed properly, storage systems provide an option for savings and security that’s unmatched by any other technology.
So you’ve gone solar. Congratulations! You’re standing on the sidewalk, arms folded, surveying the new solar panels on your home with quiet approval. You think proudly about the meaningful step you’re taking to fight climate change (not to mention the money you’ll save on your utility bill). Feels pretty good, right? But what happens when you’re ready to move on to your next home? In this article, we’ll discuss your options.
In the US, the average family owns a home for 13.3 years. Some families may own the same homes for generations, while others move around every 2–3 years. Moving is simply a part of life, and that’s why Poly Energy helps make it easy to sell your home with solar. Depending on the ownership agreement on your system, there are a few options you’ll want to consider.
Purchase: You bought the system outright, or got a solar loan to buy the system.
Option 1: Most homeowners simply roll any remaining costs for the system into the sale price of the home. This is attractive to buyers because their new home will include a solar system with no monthly payments. Depending on the system size and the home’s usage, this can often mean no electricity payments at all.
Option 2: Depending on your finance lender when you financed your system, there may be an option that you can transfer your solar loan directly to the new home buyers. They’ll assume the monthly loan payments and benefit from a fixed payment structure for their electricity. Some buyers may prefer this option because it keeps the sale price of the home down, and still allows them to budget their electricity costs over a longer period of time.
Option 3: It’s your system. If you want to, you can keep it! Of course, there are charges to remove and reinstall the system, along with any roof repairs that might be needed. However, if you bought the system outright or you’re close to paying it off, this might be an economically sound choice.
Lease/PPA: You pay a monthly bill for the power the equipment produces.
For these contract types, the agreement is fully transferable to the new homeowner. They’ll get all the benefits of solar energy without having to pay any additional money towards the house. At the end of the agreement, they’ll have the option to renew, purchase the system for fair market value, or have the solar company remove the system at no cost.
When it comes to home value, it’s been shown that a solar system increases the sale price of a home by an average of $15,000. The study, from Berkeley Lawrence National Laboratory, looked at 22,000 home sales across 8 states, making this the most comprehensive study of its kind. In addition to the increased sale value, a solar system can also impact homes desirability. A solar system reduces or eliminates electricity costs for the building, and that’s something no other home feature can do.
The Solar industry is booming in America. Within the last ten years, renewable energy technologies have made enormous strides towards becoming cost-competitive with fossil fuel energy sources. In many cases, the cost of adding new renewable generation capacity is already more cost-effective than building new coal or natural gas plant, despite the fact that fossil fuel still receives an estimated $4.6 billion in annual subsidies. This paradigm shift has been caused by numerous factors, including the plummeting cost of renewables and a significant increase in the efficiency with which they’re deployed.
Another important factor in the growth of the solar industry in the US has been the federal tax credit program, through which the government incentivizes renewable energy development. These subsidies, which have invigorated the renewables space, are now set to begin diminishing in value in 2020. In this article, we will break down renewable energy tax credits and discuss what the reductions mean for the future of renewables.
Before we get too deep down any particular rabbit hole, what exactly is a subsidy? A subsidy is a monetary injection or relief from a governmental body aimed at bolstering production, innovation, or consumption. Subsidies can come in many forms and can cover a wide variety of industries. In the case of renewable energy, these subsidies usually come in the form of tax credits. Essentially what this means is that the government wishes to reward anyone who owns or operates a renewable energy system. To understand these subsidies better, let’s take a moment to zoom in on solar.
The federal solar tax credit is known as the ITC (Investment Tax Credit). The policy was first implemented in 2006 under the administration of former President George W. Bush. The ITC gives solar customers a tax credit equal to 30% of the cost of the system. The ITC is available for both residential and commercial projects. The original idea was to provide a little boost to the solar industry for a few years, before tapering off support when the industry had become more robust. Since the ITC was first introduced, the solar industry has grown by a staggering 10,000%. The value of the tax credit was originally slated to be reduced in 2015, but Congress passed a multi-year extension to continue providing the 30% tax credit through the end of 2019.
That brings us to today. The full 30% ITC will be available through the end of 2019, at which point it will begin to ramp down. In 2020, new solar systems will only be eligible for a 26% tax credit. In 2021, the ITC drops another 4% down to 22%. At the end of 2021, the ITC will be eliminated for residential projects, while commercial projects will still be eligible for a 10% tax credit. In light of this information, one thing becomes clear: The best time to go solar is RIGHT NOW, while the maximum ITC value is still on the table.
So what does all this mean for the future of the solar industry? It’s true that the ITC has been a major factor in the success of solar over the past 13 years. However, many of the leaders in the renewable space think that the industry is now robust enough to withstand the curtailment of the ITC program without seeing a significant drop in growth.
Much of the progress made during this period is totally independent of the ITC program, and therefore these gains will not be negated. The cost of solar has plummeted, due in part to the economies of scale that the ITC has helped facilitate. As the market grows, it becomes more attractive for companies to invest in innovation. These innovations have manifested themselves in the form of more efficient equipment and installations. A higher volume of implementation means that each unit of a given category is less expensive than ever before.
This is true for solar panels, inverters, and the racking equipment needed to mount the panels. In the same way, installation companies have been able to increase their efficiency thanks to a healthy amount of practice, as well as more innovative electrical configurations and interconnection options.
All of these factors combined show that the solar industry is in a much better place than it was before the ITC. Solar has gained a foothold as one of the fastest-growing businesses in America, and more innovation is sure to come. Although the ITC has been crucial in terms of achieving this level of progress, the benefits of solar will continue to far outweigh the costs, even as the tax credit program tapers down.
Savvy consumers will certainly be aiming to take full advantage of the ITC while they still can, but even those who choose to wait will still see the financial benefits of stable electricity costs and protection from volatile utility rate structures. As we move forward through 2020 and beyond, solar energy will continue to play a vital role in our transition towards a clean energy economy.