Ready to make electricity at home? Going off the grid will be easier by 2025
A new report indicates that it will be easier for homeowners to defect from the electric grid by 2025.
The Rocky Mountain Institute (RMI), HOMER Energy and CohnReznick Think Energy (CRTE) released a report detailing the potential for appreciable customer defection from the electric grid in major markets by 2025, without incurring higher costs or lower reliability.
The report shows that, as the hybrid combination of solar photovoltaic and battery storage become cost competitive with retail grid electricity rates, migration of customers away from the grid could happen well within the 30-year planned economic life of typical utility investments such as central thermal generation plants and transmission infrastructure.
In the first installment of two reports, RMI, HOMER and CRTE outline the possible scenarios in five different U.S. regions—Hawaii, California, Kentucky, Texas and New York—and identify when solar PV and storage combinations could disrupt existing utility business models. The continuing decline of solar PV and battery storage costs, coupled with increasing retail electricity prices, has resulted in grid parity today for commercial customers in Hawaii. The most optimistic projections, based on certain solar and efficiency targets being met, depict grid parity for millions of residential and commercial customers in New York and California within this decade.
Key takeaways from the report include:
- A considerable number of utility customers will likely see favorable defection economics within 10 years
- Utilities will likely experience significant revenue decay before defection
- The likelihood of favorable long-term customer defection signals the eventual demise of traditional utility regulatory models
"Solar-plus-storage represents a fundamentally new paradigm," said RMI Managing Director Jon Creyts, PhD. "While other distributed generation options still require some degree of grid dependence, solar-plus-storage provides an opportunity for customers to cut the cord to their utility entirely. To remain competitive, utilities need to understand how to leverage hybrid systems within the electricity system."
Even before total grid defection becomes a reality, utilities will see further revenue decline since solar-plus-battery systems sized to meet most of a customer's load will become cost effective sooner. In addition, other motivating factors such as customer desire for increased power reliability and low-carbon electricity generation are driving early adopters ahead of grid parity.
"To best compete, property owners and developers will need to understand how distributed generation and storage is rapidly changing energy economics," said CRTE Founder and President Mark Crowdis. "By assessing the impact of these new technologies and the innovative contracting approaches that support them, property owners can be at the leading edge of this new market, ensuring long term financial savings for their properties."
The second installment of the report will offer solutions for how utilities might rethink the "threat" of such hybrid resources and unlock opportunities through new business models—within existing regulatory frameworks or under an evolved regulatory landscape—to better capture the value of distributed resources.
"As storage and control technologies improve, we have the opportunity to incorporate more and more renewable energy sources into the grid in a way that balances and optimizes those power sources," said HOMER Energy CEO Peter Lilienthal, PhD. "Properly regulated, these hybrid technologies can be a benefit to the larger grid, rather than a threat as they are sometimes depicted."
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