2021 In Review

January 1st last year I wrote myself a letter anticipating 2021.

It struck a hopeful tone on the year, which was largely born out.

  • Vaccination has gone quickly in first world countries; distribution has gone well in wealthy nations. However, distribution is still terrible in the rest of the world. I find myself disappointed at the amount, though small, of anti-vaccine sentiment in Canada.
  • Sure enough, we were vaccinated fully by July, which was gently surprising. Sadly my daughter is still too young to be vaccinated, which is frustrating. Here's hoping she will be be vaccinated early this year.
  • We were able to visit friends in person, share food and drink, and visited a small number of restaurants. We did some domestic travel, and some light vacationing. It was nice.
  • There were multiple dangerous variants: Delta and Omicron in particular. Yet, despite that none has really achieved total vaccination escape. I am so thankful for that.

The piece of my letter that stands out the worst:

Let there be no surprise of equal magnitude to SARS-CoV-2 in 2021.

Five days after I posted my letter was the January 6th attack on the US Capitol.

That was definitely a huge surprise. Swimming pools of ink have been spilled on what it means, and what it portends. I will only say... it doesn't fill me with hope. None of this year's American politics has.

Now to write something about 2022.

Plutarch: The Rise and Fall of Athens

I just finished reading ‘The Rise and Fall of Athens’, a collection of writings by Plutarch, extracted from his Parallel Lives, a project where he compared and contrasted notable Greek and Roman figures.

The Rise and Fall of Athens is a selection which uses the Greek biographies to chronicle Athens from its founding by Theseus to its figurative fall led by Lysander.

This was a very pleasant read. As praise, I have to say, the translation by Ian Scott-Kilvert was smooth to the point of feeling as if it may not accurately reflect the source; of course, because I don’t read Ancient Greek, I can’t know that.

In the early biographies, in particular Theseus, it’s really fascinating to see Plutarch trying to navigate the murky waters of legendary figures. Clearly he needs to rely on myth for his biography, but he tries to be as careful as he can in his recounting of said myth, and tries to nail down, to the extent he can, a real person underlying the legend.

Later biographies are interesting to see figures I’d seen in other contexts get their own focus. For example, Cimon and Lysander.

I didn’t take much in the way of notes this time around, but I did grab two extended quotes.

Contrasting Cleon and Nicias:

Cleon commanded a large following because of his practice of ‘pampering the people and finding jobs for all’, but even those whom he went out of his way to win over, when they saw the greed and effrontery of the man, turned to Nicias as their leader. Nicias, by contrast, wore an air of gravity which was by no means harsh or vexatious but was blended with earnestness and caution, and this won him the confidence of the people by giving the impression that he was positively afraid of them.

On the banning of currency in Sparta, and resulting philosophy:

Finally, it was decided that currency could be imported for public use, but that any private person found in possession of it should be put to death. This was as if to say that Lycurgus had been afraid of money itself, and not of the greed that it engenders; and indeed, as events turned out, so far from eliminating this vice by forbidding private individuals to own money, the law tended to encourage them by permitting such ownership to the state, so that in this way its use acquired a certain dignity and honour.

It was hardly possible for men who saw money valued in public to despise it in private, or to regard what was evidently prized and cherished by the community as something worthless or useless to the individual. On the contrary, public practices tend to impress themselves far more swiftly upon the habits of private life than individual faults or failings ever do upon the community. When the whole deteriorates, it is only natural that the parts should become corrupt with it, but those diseases which travel from the part to the whole encounter plenty of correctives and antidotes in the parts which remain sound. Thus the Spartans set terror and the law to guard their citizens’ houses and prevent money from finding a way in, but they did nothing to make their spirits impervious or superior to its power: instead they implanted in their people a lively ambition to acquire wealth by setting it up as an exalted and noble object.

Our Solar System and Financial Modelling

We now have a 6.8kW solar system, installed by the lovely folks at Kite Electric. That’s 16 425W panels (from Q Cells), hooked up via power optimizers to a 6kW SolarEdge inverter. We are 13% DC oversized, which means that during peak production periods we will clip production, but we end up using more of the inverter’s capacity at non-peak times.

Early Results

Since we’ve had the system installed, we’ve mostly had semi-cloudy days. August 13th was a nearly cloud free day, and also our peak production day: 45.6 kWh produced. So far, most partly-cloudy days have been above 20kWh.

Financial Modelling

One thing I discovered during the planning for this project is that financially modelling a solar system is hard.

The problems faced when trying to do solar financial modelling are plentiful. First you have problems of trying to model the production of the system itself.

  • How much sun do you get? I found that different installers had estimates that varied by 20%! This alone drives a huge chunk of variance in financial modelling. The American NREL has a calculator called PVWatts, but there’s still a huge amount of judgement calls you’d need to try use it (Quick: What % do you use for snow computing system losses?)

Then there’s financial questions:

  • How do you model net billing? As hinted at in a previous blog post, the economic benefit of self-consumed kWh is higher than the economic benefit of a kWh exported to the grid, since you're not paying for distribution; but modelling self-consumption is really hard, and would require data (hourly consumption estimates and weather estimates) that I don’t have (though, I am getting an energy monitor installed that should help with that).
  • What exactly is your goal in modelling? Are you trying to figure out when the system has produced enough electricity to have paid for its installation? Or when you’re better of having installed the system vs. not.

My Modelling

In the end, I had to accept a ‘good-enough’ solution, because I didn’t have the energy to continue tweaking the model more. This model is wrong, as most models are, but useful. I was interested in one major question:

What was the Relative payoff point: How long after installation would we be better of financially having installed it vs not?

To model this, I projected our electricity consumption forward, and accumulated the amount spent on electricity. The idea being that I would accumulate the amount of money spent on electricity both with and without panels. In the case where I bought panels, I’d treat that as a large first year expenditure, but every kWh generated is treated as negative power spend.

In the end, my model had the following assumptions,

  • On energy consumption, assume flat growth, except for an increase half-way through next year related to the expected purchase of an electric vehicle.
  • Assume 2% inflation on electricity costs.
  • Assume the economic benefits of 100% self-consumption of electricity (so price self-consumption higher).
  • No attempts to account for clipping in the modelling; assume DC power output.
  • Assume 5 year amortization of financed part of the system.
  • Totally ballpark the amount of sun for a year, and how much generation the panels make.

This model has more than a few flaws:

  1. It doesn’t account for the existence of micro-generator rates.
  2. 100% self consumption isn’t really accurate
  3. Inaccurate solar generation estimation.

The result of this modelling was a graph showing two curves: One is the uncompensated electricity spend without panels: This curve slowly bends downward (at a slightly increasing pace as inflation compounds). The other curve starts low, but climbs as the solar system generates electricity. Under this model, the point at where the two curves cross is the Relative payoff point. The point at which the solar curve crosses zero on the y-axis is the point at which the panels paid themselves off (absolute) payoff.

By this model, the relative payoff point for our solar system is roughly 7 years in the future, and the absolute payoff point is about 12 years.

Screen Shot 2021-08-22 at 2.17.13 PM.png

Financing

When I originally started pricing out solar, I was very excited by my discovery of the proposed Edmonton PACE financing vehicle, the CEIP. Especially since at the time it seemed like it was only a month or so away from being passed. We told solar companies we were working with outright that we were going to wait for CEIP to be online before moving.

However, as the timing of the CEIP process dragged out, and the quote for solar came in quite a bit lower than I had expected, we started to talk about CEIP. The clincher for me was the realization that the CEIP program was a pilot, that was only going to fund about 80 projects. Since we have the financial capacity to do solar without CEIP funding, it makes the CEIP more impactful if we don’t use it, allowing some one else to take funding for whom CEIP funding out be make-or-break to their project (this comes back to the values-based reasoning for installing solar).

Ultimately we decided to finance half the system, and spend savings on the other half of the system. We may end up financing quite a bit less though, as we hope this project will qualify for the Greener Homes Grant.

Residential Solar in Alberta

My previous posts have covered fairly universal stuff about solar. This post however focuses in on Alberta.

System Sizing

Residential solar is classified in Alberta as Micro-generation, which applies to electrical generators sized below 5MW. Small micro-generators, which I have to imagine covers every single residential customer, are those smaller than 150KW.

In Alberta, the Micro-generation Regulation says that a micro-generation unit “is intended to meet all or a portion of the customer’s total annual energy consumption at the customer’s site”. This has the interesting result that the utilities limit the size of a system they’re willing to connect to the grid, such that no house is generating hugely more energy than it has historically consumed.

Some of the reasoning for this makes sense; utilities need to upgrade equipment to manage distributed generation if too much is occurring, but self-consumption helps limit the need here. However, I do find it’s a curious choice if micro-generation is intended to play a part in the decarbonization strategy of the province. You end up limiting the amount of capital a single homeowner can provide to the project of decarbonization, and in general make residential solar a bit more expensive (as cost per watt tends to drop as systems get bigger, as fixed costs are amortized across more generation).

My experience with solar provider quotes suggests that various regions within the province, and various contractors and providers have differing interpretations of this rule. We got proposals for systems that covered anywhere from 90-200% of our annual consumption. We ended up choosing the second largest system we were quoted.

Net Billing

Micro-generators in Alberta are compensated via a Net Billing model. Under Alberta’s Net Billing model, micro-generating consumers are credited the retail rate of electricity for their exports. This is a less financially lucrative model than Net Metering. The main reason being distribution and transmission fees.

In Alberta, in addition to paying your retail rate for electricity, you also pay for distribution and transmission of the electricity. These fees are often an appreciable fraction of your electricity cost (39% of the variable, per kWh, cost on my most recent bill when I wrote this post). As a result of this, if you export 1kWh to the grid, and then consume 1kWh later, you still pay the distribution and transmission costs. This is in contrast to Net Metering systems, where 1kWh produced earlier in the day cancels out 1kWh consumed later in the day, making it more lucrative to be a micro-generator under a net-metering system.

It’s worth noting the phrasing of the net billing: you are reimbursed your retail rate. This has lead to some electricity providers to create interesting incentive programs for micro-generators, like the Solar Club. These programs allow micro-generating customers to switch between two rates with little effort: A winter, or ‘import’ rate, which is relatively low, and a summer ‘export’ rate, which is often 3-4x as high as the import rate. The idea being that during the summer, you accumulate a lot more bill credit, which you then consume during the winter.

This kind of program is made possible through the various ways electricity companies are able compensated for carbon-free generation; they’re passing on the profit they can make from renewable energy certificates and the like.

PACE Financing

One of the interesting ways in which climate change is altering the world is finance. Saul Griffith has argued before that financial innovations will be key to meeting our climate change ambitions. An interesting up and coming development is PACE financing, where PACE is “Property Assessed Clean Energy”. Basically, PACE financing associates a loan with your property, not you. As a result, when you sell the property, the obligation on the loan goes to the new owners, not you. These loans are paid through the already existing property tax system.

PACE, or PACE-like financing is a valuable innovation because it encourages spending money on retrofits to houses that will last long past a single owner. For example, a solar array’s expected lifespan is ~25 years. The ability to amortize the cost of said array across 25 years without worrying about what happens when you sell your house is really valuable to encourage investment in energy efficiency and micro-generation.

Provincially, Alberta has legislation to support the creation of PACE like financing programs in 2019, however as far as I know, no municipality yet has a program up and running. The City of Edmonton is in the late stages with the Clean Energy Improvement Program (CEIP), but at this time the program isn’t yet up and running.

Since I used to live in Toronto, I will note that Toronto has a PACE-like financing system through their Home Energy Loan Program – City of Toronto, which through cursory inspection looks awesome.

The Raven Tower

I finished The Raven Tower by Ann Leckie a few days ago. Though it had a bit of a slow start for me, when it grabbed me I really enjoyed the ride.

I’m hesitant to write too much about it. When I recommend her previous work, Ancillary Justice, I tell people to go in as cold as possible… ideally don’t even read the book summary. Half the joy of Ancillary Justice for me was the experience of figuring out just who your main character was. In The Raven Tower, I feel similarly… there’s a real joy in experiencing the story unfold around you with as few markers to guide the way as possible.