It’s fast becoming the consumer energy story of our time. The traditional utility industry is increasingly being threatened by a growing trend toward rooftop solar installations and “net metering,” which allows owners of solar panels to pay less for electricity by getting credit for extra power that they feed to the grid.
Net metering is pretty disruptive — witness the political fights erupting across the country over it — but still more radical would be a trend in which solar-powered homeowners, potentially further empowered by batteries that would allow them to store energy generated by their panels, went off grid entirely. Instead of merely sipping power from our traditional electricity infrastructure when they need it (and paying smaller bills), they would fully disconnect from that infrastructure.
According to a new study just out in the influential journal Energy Policy, however, ditching the grid is likely to be more an individualistic dream than an economically viable solution for most people. The paper, by Rajab Khalilpour and Anthony Vassallo of the University of Sydney, finds that in the future, going off the grid is unlikely to make much economic sense — even as the cost of solar panels and battery storage continue to decline.
Dreams of disconnecting, note the authors, are driven by cheaper and cheaper solar panel prices and now, the beginnings of a cost decline for batteries as well. Because solar energy is inherently intermittent — you can’t get it at night, or in a storm — the ability to store energy for these times when panels aren’t collecting it is critical to going off grid. Thus, it is the combined solar and battery two-punch that is generally theorized as being crucial to off-grid moves – and a potentially serious economic blow to the utility industry.
The Edison Electric Institute, the utility industry trade group, found in a 2013 report on “disruptive threats” that customers leaving the grid had to be taken seriously as a real possibility, noting:
…one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent. To put this into perspective, who would have believed 10 years ago that traditional wire line telephone customers could economically “cut the cord?”
However, there’s not necessarily consensus on the viability of this option. A report from the influential Electric Power Research Institute (EPRI) argued last year, for instance, that “DER [distributed energy resources] and the grid are not competitors but complements.”
So which one is it? The new study falls pretty clearly in EPRI’s camp. The authors use a model to assess when it makes sense for a consumer to go off grid. The model considered scenarios for different system sizes and costs, homes with different amounts of energy use, different policy arrangements allowing homes to return excess power to the grid — and much more.
The surprising upshot is that leaving the grid rarely seems to make sense — for two reasons. First, with a relatively small and thus cheaper solar and/or battery system, you just can’t generate enough power to be independent, so you have to stay connected. Thus, “100 % grid independence is only possible with a very large PV-battery system which is subject to significant capital costs,” the authors wrote.
Someone willing to dish out enough cash would, therefore, seem able to get off the grid. But here’s the trick — why would they want to? With a large enough system to actually have the potential to be independent, the study finds, you could also make a significant amount of money selling excess power back to the grid, meaning that…it remains economically rational to stay connected!
“The benefit of grid connection in terms of revenue from…the unused energy is notably high when a large PV system is installed,” the paper observed.
And thus, all the talk of going off the grid notwithstanding, it may remain a rare option. “Leaving the grid in a widespread scale might not be a realistic projection of the future, if economics is assumed as the main driver of customer behavior,” the authors concluded. “Rather, a significant reduction of energy demand per connection point is a possible option when the PV-battery prices decline.”
It’s clear that our electricity system is changing, as some consumers are ceasing to be mere passive payers of electricity bills and starting to be power generators themselves. And it seems apparent that the trend has utilities worried and perhaps even rethinking their businesses.
But even if electricity in the future looks very different than it did in the past, that doesn’t mean that we’ll end up with a Wild West of fully independent citizen power generators. Rather than a world full of energy revolutionaries, we may, instead, wind up with one full of energy sippers.