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Summer Solar Power

(Photo: Living Off Grid)

The City of Austin has given us a windfall:  As of October 1, it will pay 12.8 cents per kilowatt-hour for power generated by our new solar system instead of the previous 3 cents/kwh.  Of course, this seems fairer to me—but it also reflects more closely the value of the power we generate for the grid.  Demand varies over the day and season, and the city prices higher when more power is used (in summers, mostly for air conditioning)—it engages in peak-load pricing, a form of price discrimination.  Supply is limited by capacity, and in some cases in summer the capacity constraint is reached.  The power we produce is storable, presumably for release during the peak times when its opportunity cost is highest.  Thus the increased price paid to us reflects the value of what we generate.  Regrettably, my joy at this windfall is tempered by the simultaneous substantially increased price when we must purchase power because our system fails to generate enough for our needs!