Thoughts on Inflation

Like others, I have been reading and experiencing about inflation. It seems like everything but GPU graphics cards are going up. Everything from prices at the pump, grocery shopping, and eating out are all going up. In short, these are the commodities that are needed to sustain life.

Normal people do not stock up on extra food and gasoline, not in huge supplies any ways. Most of us typically buy and use them as we need them. Therefore, price increases in these categories of goods are most likely caused by supply constraints and not by excess demand.

When central banks around the world sees high inflation rates, their immediate monetary policy change is to increase interest rates. This increases the cost of borrowing and impacts on cash flow. For example, you tend to use your credit card less and therefore you end up buying less. There will also be less investments and ventures. People will tend to save more.

If the current inflation is a result of supply constraints of key commodities necessary to sustain our current way of life, then a forced demand reduction means a pare back to our quality of life. The increased interest rate will have a dampening effect on items other than food and energy, at least not immediately.

It will eventually reduce demand on the essentials when people are indirectly impacted through layoffs due to lower business activities in other areas. This means people will have to buy less food and consume less energy. A lower quality of life.

Okay. Why raise interest rates then if it is going to do more damage than good? Unfortunately interest rate is the only main lever that central banks have. Interest rates will have to increase to the point where demand of the essentials are align back to their corresponding supply levels. This means to fight this type of inflation, we will necessarily see a recession in the economy and our livelihood.

The alternative is to allow for inflation rate to go uncheck and await for supply to naturally fix itself. I do not think this will work as high inflation effectively act as a brake to economic growth for everyone. The central banks now face a difficult decision. Let inflation create hardship for all or raise interest rates to cause pain for some (less than all), and reduce demand on the essentials. I fear they will have no choice but to choose the latter. As a result of this choice there will be a further widening of our social class gap. The rich will be more prepared to weather through the increase in borrowing costs. They may even seek opportunities to increase their social status. The poor will have to deal with making ends meet with less necessities.

In short, things will get much worst before they get better. When inflation is tamed, and I think this will be some time considering the current Ukrainian war, sanctions, and logistical issues, the poor will be less well off than the rich in the next cycle.

Let me know your thoughts on my thoughts.

Frequency Shift Power Control

If you follow my posts in the Solar category, I mentioned Frequency Shift Power Control. What is this? I will try to answer it in this post and explain why this is important in the context of full house backup and grid connectivity is lost during a power outage.

There are two types of inverters in my house. The Schneider inverters are the hybrid inverters that charge and discharge the battery and manage the battery power in conjunction with grid power. During normal operations when the grid is connected, the Schneider inverter can consume or send electricity to the grid.

The other type of inverter is the SolarEdge inverter, which is a solar inverter. Its job is to convert DC power from the solar panels into AC power which your house needs.

Having both hybrid and solar inverters connected on a common AC bus is known as AC coupling.

First, let me explain how it works when the grid is happy and we have connection. The solar power from the solar inverters will do the following in priority:

  • Power the house; and send excess to
  • Charge the batteries; and send excess to
  • Send back to the grid

If there is not enough power from solar, then power is supplemented by the batteries or the grid depending how you configure the Schneider inverters. I will not get into how Schneider inverters are configured here.

Now when the grid is out (power outage) and the batteries are fully charged, the solar power has no where to go. To regulate solar power production, the hybrid inverters will communicate to the solar inverters via Frequency Shift Power Control. The hybrid inverters will intentionally shift the output power frequency from its normal 60Hz to something like 61Hz. This is done slowly. The solar inverters detects this anomaly and either throttles its power output or stop producing power completely. Once power regulation is completed, the hybrid inverters will shift back to 60Hz.

The solar inverters will come back online after an arbitrary down time. For SolarEdge, I have observed this to be around 5 to 10 minutes. The idea of having this down time is so that batteries can be discharged while powering the house and create more head room for new solar energy. Unfortunately the SolarEdge down time is not long enough, at least not for my house and my battery storage system. Once solar power is restored, you can end up in a cycle if the batteries are still topped up. The hybrid inverters will again shift its frequency to force the solar inverters to reduce or stop producing power. The cycle repeats until the grid comes back on.

Instead of a repeating the cycle every 5 to 10 minutes, it is better to manually turn off the solar inverters and wait for the batteries to draw down until you have enough head room for the batteries to absorb the solar energy again. For example, you may want to draw down the batteries from 100% to 80%, and then turn back on the solar inverters. In this scenario, excessive solar power can then be used to charge the batteries.

Another matter to pay attention to is UPS (Uninterruptible Power Supply) units. Certain models are very finicky to frequency shift and will actually shutdown instead of continuing to supply power. This is very frustrating as it cuts power to the very items that you are trying to protect from outages.

I had UPS units spread through out the house prior to our solar installation. Now I am simply going to replace these with surge protection power bars.

First Hand Supply Chain Impact

Our last power outage on May 21st, caused one of my two SolarEdge inverters to stop generating power. This effectively caused 50% of solar panels to be ineffective. Considering that the system was recently commissioned fully on May 4th, it was a bit frustrating to go through this. At least the other SolarEdge inverter is still generating power from the remaining 50% of my panels.

Upon a remote assessment of the inverter by SolarEdge, they determined on the 25th that the inverter requires replacement. As of this writing, I have not been given a formal response by SolarEdge that explains why the inverter cease generating power. I assume it is a quality issue on their end, and something from the grid outage during the storm fried something in the inverter. For an inverter that was less than 2 months old, this was slightly concerning.

It took SolarEdge from May 25th to June 10th to ship a replacement. Today is June 15th, and the UPS tracking number still shows “Label Created”.

Apparently recent supply chain issues has caused much shortages resulting in the delay.

Kudos to New Dawn who was able to source another inverter and they promptly installed the inverter today. All is good now.

In summary, we had 50% of our solar panels not producing power for 24 days (from May 21st to June 15). SolarEdge to this day still has not met its warranty commitments because its replacement unit is still in “transit”. If it was not for New Dawn being creative, I would still be out 50% of my solar capacity.

If you are using SolarEdge for off grid applications, perhaps it is wise to store an additional unit if you think solar generation is critical to your livelihood.