An Epic Battle Between Solar Firms and Power Utilities Could Leave One Side Unplugged

[kristopher]

5. That's a horrible analogy

All wholesale power isn't priced the same. Solar services a high-value segment of the wholesale market where the normal WHOLESALE price is usually well ABOVE the averaged price of all sources that constitutes the retail price.

Every day as the world begins to go about its business, the demand for power rises from its nighttime lows. The generators that service that demand cost about the same as other generators, but they are used much less than the "baseload" generators that are kept running at night. This means they have to spread all of their costs over a much smaller amount of electricity sales. That, in turn, means that the price per kilowatt hour of electricity from these part-time generators is higher than those that run all the time - usually several multiples at the very least.

The utilities are getting a bargain buying rooftop solar at the cost of retail because it avoids the cost of buying electricity from those part time generators.