No matter how expensive retail electricity gets, customers that invest in these grid-connected systems can contain their electricity costs and see significant savings on their monthly utility bill. -James Mandel, RMI
Snowmass, Colorado (PRWEB) April 07, 2015
Today, Rocky Mountain Institute (RMI) and HOMER Energy released a report, The Economics of Load Defection, detailing where and when grid-connected solar-plus-battery systems could supply the majority of customers’ electricity needs that traditionally the grid would have supplied.
As retail prices for grid electricity climb and costs for solar PV and batteries continue their decline, grid-connected solar-plus-battery systems present an increasingly cost-effective option for customers in the next 10–15 years in many geographies. The report, which was completed using HOMER’s software system, explains just how much electricity load and revenue loss utilities could face, including implications for utilities and regulators and possible paths forward.
Compared to the off-grid solar-plus-battery systems modeled in RMI’s 2014 report The Economics of Grid Defection, the grid-connected systems modeled in this report are smaller and thus cost less, making them economic sooner for more customers in more places. As customers adopt the economically optimal configuration of these systems over time, the grid’s contribution to meeting customers’ electricity needs shrinks significantly, while solar PV rises to supply the majority for far lower costs.
“These findings should be compelling for customers and technology providers,” said RMI Principal and report author James Mandel. “No matter how expensive retail electricity gets in the future, customers that invest in these grid-connected systems can contain their electricity costs at or below a ‘peak price,’ yielding significant savings on their monthly utility bill.”
But for many utilities, this customer opportunity could have major implications. Even if only a fraction of customers adopt such systems, utilities could face lost kWh sales from central generation, potentially undermining revenue needed for ongoing grid investment and maintenance. For example, in the Northeast United States, by 2030 maximum residential and commercial load defection could total 140 million MWh and $35 billion per year.
“This is not all risk,” explained RMI manager and 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.”
Solar-plus-battery systems will likely play a central role in the grid of the future. But exactly what role they’ll play has yet to be determined. The evolution of retail pricing structures, utility business models, and regulatory frameworks will largely guide that evolution and set the grid on one of two major possible trajectories.
“Today’s electricity system is at a metaphorical fork in the road. Down one path are pricing structures, business models and regulatory environments that favor eventual grid defection,” said Jules Kortenhorst, CEO of Rocky Mountain Institute and Carbon War Room. “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. That’s why RMI is focused on new utility business models, regulatory reform in places like New York, and accelerated adoption of rooftop solar and other DERs—so that the grid of the future can provide customers reliable, clean, affordable power for decades to come.”
About Rocky Mountain Institute
Since 1982, Rocky Mountain Institute has advanced market-based solutions that transform global energy use to create a clean, prosperous, and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities, and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables. For more information, please contact media(at)rmi(dot)org
About HOMER Energy HOMER Energy LLC is the global leader in the design and analysis of remote microgrids. The HOMER (Hybrid Optimization of Multiple Energy Resources) software has over 110,000 users worldwide. HOMER Energy provides the HOMER software, training, analytical services, and community market access tools to professionals in the energy industry who desire to analyze and optimize distributed power systems and systems that incorporate high penetrations of renewable energy sources. Visit http://homerenergy.com for more information.