I fear that Noah Smith is being a little unkind to the Koch brothers here. No, not because I have any contact with them, nor because I’m just generally a neoliberal running dog lickspittle. But because they have in fact identified a real problem with solar (and certain other home generation renewables) and it’s a problem that does need to be solved. Even if not quite in the manner that is being suggested. Further, there’s a solution that has been tried and has been shown to work, notably in my native UK (until it was “improved” by the politicians of course). That is to simply entirely divorce the generation of electrical power from its transport. Something which, arguably, should be done anyway, this problem notwithstanding.
There is a lot of buzz about the effort by the Koch brothers and assorted conservative groups to end “net metering” for solar power. Kevin Drum and Paul Krugman think that it’s mainly about conservative tribalism – conservatives have identified solar as something liberal, so they fight it on ideological grounds. Personally, I suspect that the current fight against net metering is mainly economic – utility companies stand to lose their government-protected monopolies if rooftop solar takes over, and of course the Kochs make their billions from the fossil fuel industry.
And the specific problem that is being pointed at is here:
Net metering forms the linchpin of the solar-energy business model. Without it, firms say, solar power would be prohibitively expensive.
The power industry argues that net metering provides an unfair advantage to solar consumers, who don’t pay to maintain the power grid although they draw money from it and rely on it for backup on cloudy days. The more people produce their own electricity through solar, the fewer are left being billed for the transmission lines, substations and computer systems that make up the grid, industry officials say.
This is a real economic problem: it’s a real economic problem whichever side the Kochs, or any other interest group, are on of it too.
There is a certain fixed cost to the existence of the grid. When all electricity is delivered over the grid then that’s fine, because some portion of each amount charged for electricity delivered can be used to cover that fixed cost. However, when there are, as those “conservative groups” are claiming those whose connection to the grid is not supplying all of their electricity then we can argue that they’re not paying their fair share of that fixed cost. And possibly even more so when we realise that they’re not being charged for the costs of taking their newly generated solar power away from their houses either. They’re only contributing to that overhead when they’re sucking power off the grid, which isn’t often.
This sort of problem isn’t all that unusual. Bundled goods cross subsidising each other: and the solution when a technological change comes along isn’t all that unusual either. Simply remove that cross subsidy from the bundled goods. In this case that means divorcing the delivery of electricity from its generation. Which is very much what my native UK did during the privatisation of the electricity system.
The grid, the series of wires that carry the power around, is a natural monopoly. It is thus in one separate company and is tightly regulated. It must agree to carry the power of all comers, at non-discriminatory rates too. And it can charge a fee sufficient to cover the overhead of running said grid.
Then you’ve two other parts of the system: those who own the power stations that feed electricity into the grid and those who run marketing organisations to bill for what consumers pull from the grid. And within such a system it’s simple enough to make sure that everyone who has a grid connection is charged for the use (even if that use is only insurance against cloudy days) of the grid in the appropriate manner and amount. Without having to worry about how much electricity they’re actually using.
This really is a real problem with solar power: and that really is the solution. Unbundle the utilities into a pure grid charging all for the use of it and keep that very separate from who is generating power by what means.