Fixed Costs of the Grid … 55%?


“Distributed generation” (DG) is what the electric utility industry calls solar panels, wind turbines, etc.

The article points out what is well-known: even with aggressive use of solar, any DG customer still needs the grid ….. at least this is true until a reasonable cost methodology for storing electricity at the point of generation comes on-line (at which time perhaps a true “off-grid” location is possible.

So …. for a DG customer …. the grid becomes a back-up, a source of power when the sun does not shine, the wind does not blow, etc.

So the fairness question is: should a DG customer pay for their fair share of the grid? Asked this way, the answer is obvious: yes. Just like people pay for insurance, in that same way should people be asked to pay for the cost of the grid.

Unfortunately, these costs are astronomical. This paper claims that they are 55% of total costs!

“In this example, the typical residential customer consumes, on average, about 1000 kWh per month and pays an average monthly bill of about $110 (based on EIA data). About half of that bill (i.e., $60 per month) covers charges related to the non-energy services provided by the grid….”