The main difference is that a fully variable model subsidizes solar panel owners at the expense of the other clients, which makes solar panels a more attractive investment, whereas here the case for home solar is much weaker, particularly for low energy consumers.
I pay the company that supplies the electricity per kilowatt-hour for the energy and the company that owns the local distribution network for the rental of the cables and a per kilowatt-hour fee for transporting the energy.
In my case it is just one company but the energy supplier could be separate from the infrastructure owner.
Public utilities generally provide a higher caliber of service at a lower price, with less administrative bloat.
This was designed to avoid the 'run it into the ground's privatisation mentality, but it went the other way. Sadly, there was no price component for improving the network with new ideas, so it is still the same design as 100 years ago.
A system designed by accountants has done things accountants love, and nothing for electrical engineering or the citizens. Surprise.
The old SEC wasn't innovative or cheap, and neither is the privatised system. For incentives to be effective they have to be broken down to be smaller components rewarding specific conduct, and tweaked in response to system performance.
The performance of utilities is more a function of regulatory power and willingness to regulate rather than utility ownership.
And when things fail, demand can often be blamed.
And if you lump everything into the variable fee, at least you have more incentive to conserve.
That can be solved by implementing time-of-use pricing and incorporating the "peak demand" infrastructure cost into the price. You would calculate how much infrastructure is needed to provide a "baseline" load (the trough on a demand graph), and divide that among the "fixed" portion. Perhaps you also add some sort of locality adjustment so rural/urban areas pay their "fair share". The rest of the infrastructure cost would be added the variable electricity price.
>And if you lump everything into the variable fee, at least you have more incentive to conserve.
That in itself isn't a bad thing. The problem is that with solar panels/wind power, you're also shifting the cost from people who can afford to install renewables (usually richer people with money to invest) to people who can't (usually poorer).
Really should have a reward for users that can reduce their demand when asked, or use time of day pricing.
Hydro One has a zillion regular folks earning >$100K (see the Sunshine list), working-class retirees earning huge incomes for life after retirement.
A regular line manager in rural Ontario without a college degree and not a huge amount of responsibility can earn $80-100K, which is 3x the national average, in an area where cost of goods and housing is very cheap.
Hydro One exists to support the historical cabal of line managers and pensioners and to maximize their income. They will charge whatever they can force you to pay - since they are a monopoly, that will be a lot.
Electricity will never be cheap because those that have the power to control distribution will 'set prices' and take massive surpluses.
Government/Quasi-Government workers (natural gas distribution is similar to Hydro) have a privilege that few in the private sector have, which is job security, which is an extremely valuable benefit never really put into the calculation. The average person has to change careers or is put out every few years, not only is this structurally costly, but it means from age 45-65 it often means massive pay cuts or worse - no income.
Energy transmission is a big roadblock to the entire energy equation, it'd be amazing if somehow we could get around this. Imagine if we had high-efficiency hydrogen generators, and homes (or neighbourhoods) simply had to maintain them, abnegating the need for complex transmission. It would change market dynamics quite radically.
Here is 2018 different format for all Ontario [2]
Hey, how would you like to be a 'lineman' earning $120K in rural Ontario? Or a 'line maintainer' for $150K?
Their salaries are massively inflated, and this doesn't include benefits.
There were 4,279 people earning >$100K (of which only 664 are managers) - according to Wikipedia, they have 5500 full time, about 2500 part-time - and 7500 pensioners.
This means that the majority of the staff, who are doing mostly work that doesn't require a college education, are earning >$100K. People with technical training and those who work in more difficult conditions should be compensated, but this is ridiculous.
Consider that there are 120% more pensioners than there are actual employees, many receiving gracious, lifetime benefits, and you have your answer to why the 'transmission fee' is considerably greater than the actual cost of the electricity.
If you create a startup, and can just magically allocate everyone a +$100K salary, even if market rates would be less than half that, and can magically force everyone in the country to pay through the teeth no matter what, then you have a good business.
Now imagine if there was efficiency in this system, and considerable numbers of those workers could be out installing windmills ...
Any contemplation of renewable energy that doesn't' factor in the political and operational realities of these systems is almost pointless. These systems are where probably most of the hurdles are.
[1] https://www.sunshineliststats.com/Employer/9/2015/?n=hydroon...
[2] https://www.cbc.ca/news/canada/toronto/ontario-sunshine-list...
But it's also subsidised $500M by the QC government and the rest of Canada.
If Quebec elected to provide direct subsidies to citizens, then that would have to be paid for by QC gov. and nobody else.
But what they do is sneaky - they merely give Hydro Quebec $500M directly every year to 'invest in energy' - which they do, but they also operate magically at a $500M loss. But because 'energy investments' are part of equalisation payments - the other provinces have to help pay for this subsidy.
FYI I'm not perfectly sure of the $500M figure, I think it's more.
Also, it's not 'management' necessarily where the pay problem is at Hydro One. I think the CEO was making $1M a year, and that's not a lot. It's the thousands of linemen making >$100K and the massive pension costs.
But HQ is a pillar of working class socialism, much like the auto industry or national airlines used to be in the age of tariffs and extreme regulation, but it has the benefit of monopoly power based on geography and infrastructure sunk costs.
HQ does a lot right, and they are starting to innovate with demand pricing, digitalnload control etc. Might be the comfort factor of no retail competition will allow them to do things others can't. A number of ultra remote communities where there are micro grids, and trying to move off diesel.
1. When upper middle class people go off grid, it drives up electricity prices for poor people (fewer people paying for the infrasturcture), making them poorer. Adelaide, Australia is a good anecdote for this.
2. People are addicted to near 100% reliable electricity supply. It is far cheaper to achieve this on a regional scale than on a household scale millions of times.
3. The power grid still needs to service all industry and commercial end-users.
4. Individual self-sufficiency is not necessary if we are already sufficient on a regional scale. It only makes sense to do so if your grid electricity is too expensive or unreliable. Self-sufficiency in and of itself is selfish (I got mine!)
Which is perfectly fine, because you're using less.
It's a fantastic feedback loop until you're not using any at all!
The bits that folks have actual control over are small and are often taking up less and less electricity: For example, light bulbs. New bulbs mean it doesn't always make a noticable difference when you turn lights off. You can probably use the television and computers less, but this isn't likely. You can possibly turn down the heat,but only to an extent and even less so if you have an infant in the house or if someone is elderly or otherwise sick. You can't use less refrigeration.
Even for folks that can afford it, there are actual limits to how much you can save on electricity. If you go low enough, you wind up paying a minimum monthly fee and few will stop using it altogether.
This is why all NREL and OECD studies into deep decarbonization with intermittent resources show grid integration costs skyrocketing above 50-80% variable penetration in electricity markets.
E.g.: https://www.oecd-nea.org/ndd/pubs/2019/7299-system-costs.pdf
Look at their Table 2 of cost assumptions. They show overnight costs for onshore wind farms at $2000/kW, 30% capacity factor and nuclear at $4700/kW overnight, 100% capacity factor. If those numbers were valid for the US, we'd already have a nuclear renaissance here and wind would have remained a small niche source. Texas and Oklahoma didn't build all those wind farms because of pressure from Greenpeace.
New wind gets a Federal production tax credit, of course. Nuclear also qualifies for a smaller production tax credit. I think that the nuclear PTC and wind PTC should have been equal all along, but I don't actually think that would have changed much about the growth curves in the US. The main problem with new nuclear projects is that they are badly estimated and take a very long time to build, so they don't even reach the part where they can collect those tax credits.
Nuclear needs more frequent builds if it's ever going to get costs and project estimation uncertainty back down to reasonable levels. The US doesn't have a political system that can really commit to a plan longer than 8 years. We couldn't commit to an American Messmer Plan even if a really pro-nuclear President and Congress were in office this year. It looks to me like small modular reactors, executed well, are the last good path forward for nuclear reactors. I'd like to see some built soon. I've been reading proposals for them my whole adult life.
The grid needs to be able to adapt to being needed much more sporadically. The only places where this is a problem is where the grid is a for profit monopoly relying on the ability to dictate prices. Most of the US used to be like that which is why they are running so many costly and out of date coal and nuclear plants. Lots of these are going bankrupt lately because of decades of just sitting on their hands while increasing prices and lobbying to prevent people from even being allowed to install solar on their roofs (e.g. Arizona until not so long ago) or refusing to buy excess capacity has failed to prevent the inevitable. Operating a coal plant in Arizona is like selling ice cream on the North Pole. I.e. not a great business plan. 2 out of the 5 remaining ones have scheduled closing dates in the very near future. I doubt the remaining 3 will survive the decade and it's in any case only a few percent of the total grid capacity.
Now that the proverbial shit has hit the fan in terms of people figuring out they can spend 5-10K dollars on upgrading their house and still get a return on investment in grid savings, grid providers are getting a reality check. All this means is that they are forced to adapt and compete on price. In most places that means investing in wind and other clean solutions with a very low variable cost. Anything that requires you to spend money on tons of fuel even when there is no demand just because spinning up and down capacity takes time is a problem because it means you are burning money for energy that you can't sell.
The key technical challenge here is to find a way to monetize the vast overcapacity we will inevitably end up with. If the grid is the only place you can sell excess energy and demand for grid is going down and you are investing in solutions that generate more energy than you need most/all of the time, finding a way to soak up that energy in a way that can generate revenue is the key thing to do.
Here's some cool stuff you can do guilt free with cheap clean energy:
- desalinate water (again, California: the pacific has plenty of H2O) or condense it from air (by chilling it) - generate hydrogen or other fuels from air, water, etc. - turn biomass into coal (yep, that's a thing). - charge batteries, pump up water, power industry, transport, etc. Whatever amount of twh. capacity we need. - exporting it to places that still have a shortage. - run the AC 24x7 at ridiculously low temperatures or heat your place at a ridiculously high temperature.
We are about to enter an era of vast of excess energy production capacity. That's not a problem but an opportunity. People are talking about covering 100% of our current needs when they need to be thinking in terms of 1000% our current needs. The market for clean energy is magnitudes our current consumption. There is no upper limit.