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Commentary on The Capital Markets- Category [Energy]

One good decision, but only one...

The nation’s second-largest rooftop solar company will suspend its expansion into Nevada because of the ongoing turmoil over the state’s solar cap, according to the company’s latest filings with the Securities Exchange Commission.

The problem is that Nevada "caps" the number of net metering connections, and that has been exhausted.

The underlying issue is that "net metering" is an outrageous scam and cost-shift to non-solar customers.

The reason is this: When you have "net metering" you pay the same price to buy electricity as to sell it back to the utility, thus the name "net metering."  That is, if you pay 10c/Kwh to buy power, if you produce a Kwh of power and it flows the other way you get paid the 10 cents, up until you reach zero net use.

This sounds "fair" but it in fact is not because the power company is required to provide you with electricity all the time, but you are not required to do anything.

As a result the power you displace when you generate electricity avoids, for the power company, only the cost of the fuel it would otherwise consume.  But the power to your home or business includes in the price much more than fuel; in fact, in some cases (e.g. hydro) there is no fuel cost at all!

Also embedded in the price to deliver the power is the capital equipment needed to generate it and the staff to maintain and operate same.  Further, whatever fuel is necessary to be consumed to keep it in a state of constant readiness to produce power on demand is also used (except, once again, for sources such as hydro that have no fuel cost) because you have no obligation to do anything at all.

As such allowing you to "net meter" means that you throw off your share of that sunk cost on your neighbors who do not have solar panels.  Effectively, you steal that money from them through the arm of the government that forces the power company to buy power at a price that is uneconomic because all you allow them to avoid is the variable cost of the fuel they would otherwise consume, if any, yet you receive credit for everything that would otherwise be associated with generating that energy even though they still need to have and operate it.

I have no quarrel with a buyback program that pays you only for the avoided fuel cost when you sell your energy back to the utility company.  The problem with such a program is that it would make rooftop solar panels impossible to economically justify and all the financing schemes that the players in the industry are running would immediately collapse.

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Let's talk about this letter that Bernie Sanders apparently paid to have Daily Kos send out.

Sign my petition if you agree that we cannot move forward with Keystone XL if we’re serious about fighting climate change.

Dear ****, climate change is an unprecedented planetary emergency. If we don’t act aggressively now to combat it, there will be major and painful consequences in store later: rising oceans that inundate coastal areas, bigger superstorms like Hurricane Sandy, worsening droughts, out-of-control wildfires, historic floods that come year after year, rising food prices, and millions of people displaced by climate disasters. It’s not a future any of us wants to imagine.

But despite how difficult the problem is, the basics of how we should respond to it are actually not that complicated: we need to keep fossil fuels in the ground, and move to 100 percent renewable energy — and we need to act immediately.

That’s why I cannot understand why some Democratic presidential candidates have refused to take a stand against the Keystone XL pipeline. Keystone XL would transport millions of gallons of some of the dirtiest oil on the planet — oil that scientists tell us we simply cannot burn if we want to stop the worst impacts of climate change. As former NASA scientist James Hansen has said, building Keystone XL would mean “game over” for the climate.

This is an utterly ridiculous and fraudulent premise.

Here's why, in a nutshell: You expect that when you flip the light switch, your lights will come on.  The above position, if implemented, will invalidate that assumption.

Let's assume we move to "100% renewables."  Those energy sources are wind, solar and hydroelectric in the United States.  (While there is a smattering of geothermal available here and there it is not a material source of energy in the United States.)

Hydro is pretty-much all "in use"; that is, we've dammed the rivers that can be dammed productively, and there are active attempts to reduce that type of energy because of its environmental impact (particularly on migratory species of fish.)

That leaves wind and solar.

But neither wind or solar is reliable.  That is, the wind does not blow all the time and neither does the sun shine all the time; both cloud cover and night interfere with the latter.

You therefore have two options when it comes to these energy sources: You either have available, in a "hot" state, enough reliable energy source to replace the unavailable wind and solar if they are not available when you want to use them or your lights do not come on when you flip the switch -- that is, you suffer brownouts and blackouts when the energy cannot be delivered as you demand.

The impact of this cannot be overstated and it comes in multiple forms, none of which is being put on the table honestly -- and that is not an accident.

First, having backup energy sources online and hot, ready to go when you flip that switch means that you must pay for those methods of generation to be built, manned, available and ready on demand to consume fossil fuels -- but idling.  In other words you must pay for your power twice -- once for what you consume and then a second time to have backup available in a "hot standby" state if the primary source is not.

Since about half of the cost of providing power to you is found in the capital, staffing and similar expenses (the rest is in the fuel consumed if you're talking about fossil fuels) such a change will mean an immediate and permanent 50% increase in your power bill when the sun is shining or the wind blowing.

When the sun is not shining or the wind not blowing your cost will double because now you must burn the fossil fuel in addition to the sunk cost of having the "hot" secondary source and the now-unproductive "green" source.

Bernie Sanders and the rest of the Liberal Left constantly tell us how much they care about the "poor" -- and middle class.  How true is this when they intend to immediately crank your electric bill up by 50%, force conversion off natural gas water heaters and furnaces (sources that are at least 50% cheaper than the alternatives to operate) to other sources and similar?  How is the average or lower-income family going to pay for that?

The alternative is to accept an unreliable electrical grid where power is available when the sun shines or wind blows, but not when it doesn't.  This means that our modern view of refrigeration for food, the ability to go to a restaurant to eat when we wish, to go to the movies and similar all goes away.

In short we must either provide the required backup and eat the 50-100% increase in our power bills on a permanent and immediate basis or lose our first-world expectations for energy-on-demand.

Which is it?

By the way, if you're a young person and support Bernie, get out your power bill at your apartment or home.  Would you be ok with it going up 50%, and then grab the heat bill (if not electric already) and double that.

That's what you're supporting.

PS: You can't resort to the claim of "nuclear" either in this world, as it now takes upward of 10 years to construct a new nuclear plant -- and that's before the liberal left sues everyone in sight to stop it, doubling the time and expense of construction -- which they do routinely.  While LFTRs would largely obviate the safety concerns and resolve this we cannot deploy those today either, and in any event the construction time precludes any attempt to resort of nuclear power in the immediate term.  Yes, we should develop and deploy LFTRs, but until we do so and can produce them in a cookie-cutter fashion including a permanent and immediate cessation of interference via lawsuits and other obstructions from the far left on nuclear energy it is a fantasy to claim that we can or will rely on such a source.

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