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Who Subsidizes Whom

Paul Kando

Those opposed to solar power in Maine routinely claim that roofs with PV panels are in effect subsidized by rate payers who do not have solar systems. According to new Boston University research the exact opposite is true.

Skyranch Commmunity Solar Farm, Wayne ME
photo credit: Revision Energy

Utility companies purchase power on the spot market from various sources. When demand gets high enough, they must buy from ”peaking” plants, which seldom run because their fuel costs are high. The result: higher prices. Solar systems generate most of their free power during the hot summer months when demand for electricity is highest. So if a utility draws on solar electricity instead of those more expensive power plants, the price of electricity is lowered, saving as much as a full cent per kilowatt hour for all ratepayers.

The price of electricity fluctuates with demand throughout the day. So, to more accurately quantify the impact of PV systems on the price of electricity, the Boston.University study was based on hourly rather than daily average prices for electricity. It shows that the average solar MegaWatt-hour (MWh) reduces electricity prices by $0.26–$1.86 per MWh, depending on the season. In fact, between 2010 and 2012 Massachusetts rate-payers saved $184 million -- more than the cost of solar renewable energy credits (SRECs), the commonwealth’s main solar incentive. Customer savings are even higher for larger-scale community and utility-scale solar plants, which produce electricity at as little as half the cost of identical rooftop systems -- not to mention reduced CO2 and CH4 emissions.

What about natural gas–powered generating plants? These are complex machines that drive a turbine using the flow of compressed hot air and exhaust gases. The flow of gases rushing from the hot fire toward the colder outside spins the turbine blades. The greater the temperature difference, the faster the turbine spins. When summer temperatures rise, the flow weakens, slowing the rotation of the turbine blades. It now takes more fuel to generate each unit of electricity and results in greater greenhouse gas emissions.

Therefore these peaking plants operate most efficiently during the cold winter months when the temperature difference between the natural gas fire in the plant furnace and the outside air is greatest. However this is also the time when winter heating needs take precedence and gas to power plants is often in short supply. Luckily, solar PV systems generate the greatest amount of electricity precisely when natural gas power plants are least efficient and summer power demand peaks, so utility companies can use free solar power instead of costly natural gas.

This research has focused on Massachusetts, which ranks sixth among states for solar power generation, with 1,020 installed megawatts, enough to power 163,000 homes. The state goal, set by Republican governor Charlie Baker, is 1,600 installed solar MW by 2020. In terms of energy priorities, Maine trails far behind and has much to learn from the Bay State. Treating solar power as a commonsense choice, rather than a partisan, ideological issue, would be a good start.