The utilities are at an existential crossroads. Let’s hope they pick the road leading to grid-connected systems of solar plus batteries, before they lose thousands of customers and billions of dollars.
Unlike their larger off-grid counterparts, leaner and meaner grid-connected battery systems could check electricity costs and increase savings no matter what peak retail prices may be, according to the Rocky Mountain Institute and HOMER Energy’s new report, The Economics of Load Defection. Better yet, they could supplant the traditional grid by supplying the majority of utility customers with power, rewriting what the general public believes a utility to be in the process. Even if a fraction of customers independently go solar using grid-connected battery systems, the utilities stand to lose millions of kilowatts and billions of dollars in central generation. The utilities now must decide whether they want to part of the energy problem, or part of its solution.
“Today’s electricity system is at a metaphorical fork in the road,” RMI CEO Jules Kortenhorst explained in a press release. “Down one path are pricing structures, business models and regulatory environments that favor eventual grid defection. Down another road, those same factors are appropriately valued as part of a transactive grid with lower system-wide costs and the foundation of a reliable, resilient, affordable and low-carbon grid of the future in which customers are empowered with choice.”
According to RMI, cratering PV costs and rising retail grid electricity prices are making grid-connected solar-plus battery systems economic within the next 10-15 years — if not sooner, given the industry’s dizzying acceleration. By keeping these systems connected to the grid, the utilities can participate in the value being generated by their increasingly green customers, who won’t be encouraged to leave the grid entirely. Pursuing reform across three fronts — “rate structures, utility business models, and regulatory frameworks,” RMI explained — could insure that utilities eventually share in the creation of a vastly more interconnected energy infrastructure, instead of being bankrupted by it. Viewing and treating solar power, on or off the grid, as a threat is going to get them nowhere.
As grid-connected solar systems grow to redefine the role of central generation, the grid as we knew it is significantly relieved of its duty to meet its customers’ electricity needs. Using HOMER’s software, RMI’s report specified where and when these systems could be deployed, and even crunched the numbers on the amount of load and revenue loss the utilities could expect, should they decide against helping their “customers adopt the economically optimal configuration of these systems over time,” RMI explained.
“This is not all risk,” said report coauthor Leia Guccione. “Because these solar-plus-battery systems are grid-connected, they can offer value and services back to the grid. We need not see them only as a threat.”