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Analysis of impact of new 2 tier Pg&E system on solar
Hi All,
NOTE that I have attached the proposed new PG&E rates to this comment for your viewing pleasure.
In a nutshell, at present time, heavy electricity users (ie, East Bay with A/C) are subsidizing Peninsula and SF city folk that have a cooler climate and lower kWh usage. PG&E is proposing these changes so that lower level electricity consumers pay more and higher level consumers pay less. Ostensibly, this is for fairness sake and is supposed to be revenue neutral. The current high tiers prices are higher than the marginal cost of producing those last kWhs and the current lower tier prices aren't high enough to cover the marginal production costs. The normative argument can go either way, depending on your outlook.
That being said, I found out about this new tier structure the evening after I signed my 5.3kW solar contract in Pleasanton. Of course NO solar companies told me anything about it. When I called back some of the companies (that had quoted me) if they knew about it, some did and some did not. None at that time (3 1/2 weeks ago) knew the impact on the solar investment decision.
I had 3 days to cancel my contract so I dove in deep and did my own calculations. I read through the PUC docs as well as PG&E's proposed transition to a two tier system (a 4-5 year transition) which included dates and prices.
I did a detailed analysis of my kWh consumption under the proposed new tiers based on my previous year of data. While the final PG&E prices were not set when I did my analysis, I concluded that at my electricity usage level (about 9000kWh/hr), my annual electricity bill would drop by 8% give or take (in graded steps) over the next 5 years. This increased my simple solar payback from 7.1 to 7.8 years. My analysis is not perfect but it is probably not to far off each. Adding an extra half a year or year to my payback was insignificant enough that I didn't back out of the contract and my solar is getting installed this Wednesday!
I consider solar to be green (a little less C02 for next generations to suffer with), a good investment (if I plow back all of my utility savings into an S&P index fund), in 20 years I will have 2.3X the money that I would have had if I had left my original CAPEX (capital expenditure) in the same index fund, and a nice form of portfolio diversification.
Of course, if PG&E decides to radically lower its prices, then I made a bad decision but I think that is about as likely as time starting to flow backwards.
Hi All,
NOTE that I have attached the proposed new PG&E rates to this comment for your viewing pleasure.
In a nutshell, at present time, heavy electricity users (ie, East Bay with A/C) are subsidizing Peninsula and SF city folk that have a cooler climate and lower kWh usage. PG&E is proposing these changes so that lower level electricity consumers pay more and higher level consumers pay less. Ostensibly, this is for fairness sake and is supposed to be revenue neutral. The current high tiers prices are higher than the marginal cost of producing those last kWhs and the current lower tier prices aren't high enough to cover the marginal production costs. The normative argument can go either way, depending on your outlook.
That being said, I found out about this new tier structure the evening after I signed my 5.3kW solar contract in Pleasanton. Of course NO solar companies told me anything about it. When I called back some of the companies (that had quoted me) if they knew about it, some did and some did not. None at that time (3 1/2 weeks ago) knew the impact on the solar investment decision.
I had 3 days to cancel my contract so I dove in deep and did my own calculations. I read through the PUC docs as well as PG&E's proposed transition to a two tier system (a 4-5 year transition) which included dates and prices.
I did a detailed analysis of my kWh consumption under the proposed new tiers based on my previous year of data. While the final PG&E prices were not set when I did my analysis, I concluded that at my electricity usage level (about 9000kWh/hr), my annual electricity bill would drop by 8% give or take (in graded steps) over the next 5 years. This increased my simple solar payback from 7.1 to 7.8 years. My analysis is not perfect but it is probably not to far off each. Adding an extra half a year or year to my payback was insignificant enough that I didn't back out of the contract and my solar is getting installed this Wednesday!
I consider solar to be green (a little less C02 for next generations to suffer with), a good investment (if I plow back all of my utility savings into an S&P index fund), in 20 years I will have 2.3X the money that I would have had if I had left my original CAPEX (capital expenditure) in the same index fund, and a nice form of portfolio diversification.
Of course, if PG&E decides to radically lower its prices, then I made a bad decision but I think that is about as likely as time starting to flow backwards.
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