If sales and buyback rates were based on time of day , noontime power would be priced low going both directions. Agreed, that alleviates a lot of the problem I described. By more accurately representing actual costs, it also makes solar much less attractive- you'd no longer be able to sell the company 1Kwh of cheap noon power and use that money to buy 1Kwh of more expensive evening power. You'd need 15Kw of noon solar to pay for 1Kw of evening power, because that's the actual production cost. That could work, we'd just need solar systems 80% less expensive in order for it to do a lot of good.
I don't actually assume that the peak solar is greater than the demand at that time, though I am talking about a scenario where solar produces significant power. "Enough to meet 100% of noon demand " is just the simplest, most obvious point on the graph. The problem exists for any amount of net metering. It's at the point if zero net cost to consumers that it becomes OBVIOUS that the power company would definitely go out of business immediately.
The power company spends quite a bit of it's revenue on customer service and on infrastructure. Someone has to handle the billing, collect late payments, hook up new connections, etc. They have to maintain lines, transformers, generators, etc. IT staff buils and maintain all of the big systems for billing, dispatch, etc as well as desktops. People are paid to handle payroll, HR, legal and regulatory, etc. So let's guess that 50% of the cost is actually generating the electricity itself and 50% is running the organization. That number might be wrong, but we're just talking about the concept. At the generating station, you have a set of $XX million generators that need to be paid for and maintained, whether they are in use that hour or not. Even if the generator is turned off for an hour, the people who loaned the $XX million still want the power company to make their payments on time. The staff at the power station still needs to be paid, inspections still need to be done and certifications renewed. So figure at least 30% of the costs at the power station itself continue even if no power is sold from one of the generators for a couple of hours. In total, we can say that maybe 40% of the cost is fuel, and 60% is everything else. The exact numbers don't matter.
So let's say solar covers 50% of the power needs at noon. That reduces the company's FUEL cost by 50%, but most of their costs are unaffected- they still have to pay their IT guy the same amount. Actually, they have to hire another IT gal to build and manage the net metering system. Their total costs for the hour drop by 20% due to reduced fuel usage, while their revenue drops by half.
That bears repeating - if solar provides 50% of the power, their revenue drops by 50% while their costs drop by only 20%. Where do you think that 30% is going to be made up? They could fire all of the customer service staff (and go,outbof business when the phones go unanswered) or increase rates by 30%. Something major would have to change.