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September 21, 2007

Rent vs. Buy – Photovoltaic Electricity and Common Infrastructure

In Vermont as in most other places in the US, net metering is available to those who install “alternative” power sources including solar photovoltaic. The sound bite for net metering is that your energy source “runs your electric meter backwards”.

We have no intention of disconnecting from the power grid. If we did, we’d have to buy a huge bank of batteries and still probably wouldn’t have enough electricity for our very electric life style during gloomy winter days. With net metering the grid takes the economic place of the batteries. When the sun shines, we pump power into the grid and build up a (financial) credit. When we consume power, we run up a bill like anyone else but we can use our credit to pay it. In Vermont, the credits last twelve months: if you generate more power than you use over a rolling twelve month period, that power is a “contribution” to the grid. You don’t get paid for it.

Technical note: You don’t really use your own electrons with net metering (just in case you can tell one electron from another). You sell all the power you produce to the grid; you buy all the power you use from the grid. In fact, if the grid goes down, you have no way to use the power you’re generating because you have nothing to buffer between fluctuating supply and fluctuating demand. The grid’s your battery. We have a propane generator installed for grid outages.

As in the other examples in this series of posts, we’re buying capital equipment – photovoltaic cells and all that goes with them – to reduce or eliminate the rent we pay for other people’s generating facilities. But this buy rather than rent decision would be even more impractical than it already is if the common infrastructure of the electric grid and the other power sources tied to it were not in place just as personal cars would be impractical if there weren’t a common infrastructure of roads.

The economics of this project aren’t good even with relatively high electric prices where we live (over $.20/kwh and rising), a rebate from the State of Vermont, a small federal tax credit, and the right to sell power back to the utility at the same retail rate we buy it (not a good deal for the utility). We justify it the same way we do our garden or our sailboat – it’s something we want to do. And we’d rather buy than rent. We do look forward to helping (in a tiny, tiny way) to reduce the amount of oil that the US imports from unfriendly and unstable places and, if global warming does turn out to accelerated by CO2 production, then we’ll have helped environmentally in a token way.

To be accurate, in our case the fossil-fuel savings is pretty indirect and reduction in imported oil even more of a stretch. The majority of Vermont’s power comes from a combination of the Vermont Yankee nuclear power plant and HydroQuebec. During peak period, some of our power comes from natural gas generators and some from wherever the big grid gets it. But, in theory at least, the power we’re generating makes more of Vermont’s clean power available somewhere else which is not so clean and green.

Another social benefit is that small power sources help reduce the need for building more big ones – the kind no one likes to live next to. Moreover more decentralized generating capability means less dependence on long distance transmission lines and a somewhat more catastrophe and terror proof infrastructure.

Back to the main point: our ability to buy our power generation rather than rent it is dependant on existing common infrastructure. We couldn’t do it on our own without either hugely greater expense or a big change in life style. Coming up is how this all ties to telecommunications.

This series of posts on rent vs. buy starts here.

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