Future of Energy Production

For many years now, the future of energy production has been quite steadily moving toward distributed generation.  Solar power, with increasingly more efficient panels for decreasing cost per watt, is at the forefront of this revolution.  Traditionally, most states have adopted what is called net metering, which simply means that your electric meter runs backwards when a customer generates more power than they are using.  In effect, they are providing power back into the electric grid and powering nearby homes.  This saves the utilities from spending millions to build expensive 'peak load' natural gas power plants that are spun up only when the demand is at it's highest and beyond the capacity of it's more traditional plants such as coal or nuclear, which often corresponds to the sunniest times when cooling demand is at it's peak.  It also saves utilities in that they don't have to spend millions more to upgrade the expensive distribution system to get that peak power to local neighborhoods.  Instead, if you have solar and net metering, you've just installed a peak-power generating station for the utility.  In the evening, once the sun goes down, you simply use power from the grid as you normally did, with your meter running forward again.  In essence, you used the grid as a 100% efficient 'battery' to store your excess energy, and you're using that same energy back in the evening.  It's a win/win/win.  Or, at least it should be...

Over time, solar has become so affordable that today, in many markets (such as Evansville, IN), you can generate solar power for less than a quarter the cost per killoWatt hour (kWh) that you pay your utility.  The decision to install solar becomes a no-brainer.  Of course, utilities that have become used to ruthlessly destroying any potential threat to their government sanctioned monopoly cannot let that situation stand.  After heavy lobbying by utilities, the Indiana legislature passed and the governor signed a bill that will effectively end net metering for new customers. Future Indiana net metering customers will now only be paid a 'wholesale' price per kWh when the meter spins backwards, which is roughly a third of the retail price that will be billed when buying the same power in the evening from the utility, that the homeowner had just generated during the day.  Obviously, that makes no sense for the consumer.  

What that means is that Indiana utilities have taken the ability to use the grid as a 100% efficient battery, and replaced it with a ~ 33% efficient battery.  Since actual batteries, including Tesla's Powerwall, are now available with Lithium ion technology, a discharge rate of 100%, and over 90% efficiency, with all due respect, utility: people don't need you any longer.  People can install solar panels (or an entire solar roof), and store their excess energy produced during the day in a system that is better than 90% efficient.  I have no doubt that the result of this change in Indiana will mean that in a matter of years- probably only 10-20 years, the majority of homes built in Indiana will generate and store their own power, primarily via solar, and will not be connected to the grid.  Personally, I had to pay $12,000 just to connect to the utility grid.  It will simply not make economic sense any longer for people to connect to the grid, since generating your own power will be done for a tenth or less the cost of connecting to the grid and paying for power as technology progresses and the cost of solar and batteries continues to fall.  

This is very similar to the shift that has occurred over the past 20 years with telephones.  It is quite rare now to find a traditional telephone in a home, as opposed to a cell phone.  Even my parents who are in their 70s abandoned their 'land line' telephone years ago.  There is no reason to support and subsidize the outdated power grid when you can operate independent of the grid for a fraction of the cost.  Utility generated power and distribution is an outdated business model; one that would have lasted well into the future had the utilities not just collectively shot themselves in the foot by lobbying for a bill essentially saying that they no longer want to do business with what will soon be the majority of new home owners.

The inevitable result of this bill is that as less people choose to connect to the grid (and more people leave the grid), utility rates will be driven up further because less customers will be left to support the aging grid, resulting in more customers leaving the grid, resulting in higher utility rates.  It's a death spiral, not unlike what is happening with Obamacare brought to you - again - by collusion between corrupt government and business interests.  Had Indiana utilities been forced to compete in a free and open market, we would not be in this situation, because utility rates would be half what they are now and utilities would be far more competitive with solar, but the greed and lobbying power of a government sponsored monopoly knows no limits and are blind to their own demise.


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