Why Residential Energy is Mightier Than Its Industrial and Commercial Counterparts

By Matthew Wheeland - April 17, 2013

One question a homeowner considering solar might ask is, “how much of an impact will putting panels on my roof really have when I’m just one person?” The average home installation generates about 6 kilowatts of energy, whereas the average power plant generates about 667,000 kilowatts. It’s pretty easy to think that the power plant dwarfs the average house, right? But think about this: as more systems are installed, their cumulative effect creates a number of benefits for both the individual homeowner and society as a whole.

To get a better understanding of the big picture, let’s take a few steps back.

Created by PURE. Source: EIA

First, some facts. In 2011, energy generated in the U.S. was distributed fairly evenly among residential, industrial, and commercial categories, at roughly one-third each with residential having a slight edge over both commercial and industrial. So, although power plants generate a whole lot more power, when put in the perspective of consumption, the playing field evens out quite a bit.

But then we have that slight edge that residential has over commercial and industrial categories, and here’s where it gets really interesting. Since residential is the largest consumer of electric power, its size allows solar to make more of an impact than if we focused solely on the other sectors which makes it a natural target for reductions. However, the size of the consumption is not the only reason to focus there.

If we take a look at the three categories in another way, this time looking more granularly at their demand in monthly increments, in the “Historical peakiness” graphic below you can see that residential power consumption is also the “peakiest” on both a daily and monthly scale. Peakiness basically means the points at which demand is highest. Residential power dominates this, which means that it rules the demand sector for power as well, especially in the winter and summer months when there is a direct need for heating and cooling in the home. Why does this matter? Because “peaky” power is the most expensive power.

http://f.cl.ly/items/1R3v2d2O0p2f192X0z3b/Peakiness.jpg

Source: EIA

“Peaky” is expensive because grid operators and utilities dispatch power starting from the cheapest and moving to progressively more expensive power. The cheapest power comes from nuclear and hydro dams, then coal and wind, when available, are dispatched. Finally, natural gas turbines match the exact demand, spinning up and down as necessary. This ability to move up and down with the grid is what keeps the lights on and prevents brownouts or surges, but it is very expensive to do this. On the hottest summer days, when all of the cheapest power is already in use, demand dictates the most expensive power be purchased.

However, it does not need to be that way. As it turns out, solar generates power right at the same time it is needed the most – at the peak. For all intents and purposes, solar generation has the effect of shaving the peaks off. Take a moment to really digest that: solar works best when energy is most needed, so a solar home essentially bypasses the entire nuclear-hydro-coal-wind daisy chain. (Incidentally, this has utilities companies freaking out.)

We can actually see this in action in Australia, where solar is being added at a furious rate. For each year that solar is added, the peak summer demand has been shaved progressively downward. Since 2008, that demand has fallen by 15 percent. Furthermore, overall demand fell by 3 percent, whereas it was previously predicted to rise 10 percent! If the trend continues, it will translate into lower demand for new power plants and the transmission lines needed to distribute that power.

The implication of this trend is that residential solar is perfectly suited for reducing society’s most expensive power. That is all well and good for the altruists out there, but there is also a very pragmatic element as well: Whether you want to save the planet or not, as a utility ratepayer you are ultimately footing the bill for that expensive, peaky power in the form of higher costs in the summer and winter. Adopting solar means shaving down your demand, which in turn means that you will see some significant savings on your utility bills, and that always feels good whether it’s for the planet or your wallet – or both.

 

Since 2008, Tim Haines has pursued his dream of working for a cleantech company through thick and thin, and is pleased to have finally made it. He currently works for PURE as a Solar Consultant. For other musings, check his twitter feed @timothyhaines.  

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