Will the Grid Become Optional – And How Soon?

March 3, 2014


American Council for an Energy Efficient Society:

U.S. electricity sales peaked in 2007 and have been declining modestly since then. Sales in 2012 were 1.9% lower than 2007 sales, and sales in the first ten months of 2013 are below the same period in 2012. While the economic recession is an obvious explanation for the decline in sales in 2008 and 2009, it is much less clear why sales have continued to decline since then, even as the economy began to recover. While some observers have attributed this stalled growth to the ongoing effects of the “Great Recession,” other observers suggest other factors may have played a role, such as erosion of manufacturing, more efficient buildings, lighting and appliances and increased use of on-site generation.

ACEEE has just completed an analysis on electricity-use trends since 1993 and we looked at changes in sales over the 2007-2012 period in particular. We found that no single factor can explain the change in electricity use over the 1993-2012 period. The factors that appear most significant were energy efficiency programs and policies, warmer weather, changes in gross domestic product (GDP), changes in electricity prices, and long-term trends.

Over the more recent period of 2007-2012, savings resulting from energy efficiency programs and policies, and from warmer winter weather, appear to be the most important contributors to declining electricity use in the residential and commercial sectors. This finding is consistent with the ramp-up of energy efficiency savings achieved from utility-sector energy efficiency programs, and from appliance and equipment efficiency standards that have taken effect since 2007. The other possible factors that we considered, such as GDP and electricity prices, did not change very much over the last six years and therefore do not appear to have had a significant effect on the recent decline in electricity use. The factors contributing to the decline in electricity use in the industrial sector are less clear but may include energy efficiency programs and policies as well.

Rocky Mountain Institute:

For years, low-cost solar-plus-battery systems were seen as a distant possibility at best, a fringe technology not likely to be a threat to mainstream electricity delivery any time soon. By far, the limiting factor has been battery costs. But thanks to a confluence of factors playing out across the energy industry, the reality is that affordable battery storage is coming much sooner than most people realize. That approaching day of cheaper battery storage, when combined with solar PV, has the potential to fundamentally alter the electricity landscape.

While grid-tied solar has seen dramatic recent cost declines, until recently, solar-plus-battery systems have not been considered economically viable. However, concurrent declining costs of batteries, growing maturity of solar-plus-battery systems, and increasing adoption rates for these technologies are changing that. Recent media coverage, market analysis, and industry discussions—including the Edison Electric Institute’s January 2013 Disruptive Challenges—have gone so far as to suggest that low-cost solar-plus-battery systems could one day enable customers to cut the cord with their utility and go from grid connected to grid defected.

  • Solar-plus-battery grid parity is here already or coming soon for a rapidly growing minority of utility customers. Grid parity exists today in Hawaii for commercial customers, and will rapidly expand to reach residential customers as early as 2022. Grid parity will reach millions of additional residential and commercial customers in places like New York and California within a decade
  • Even before total grid defection becomes widely economic, utilities will see solar-plus-battery systems eat into their revenues. Factors such as customer desires for increased power reliability and low-carbon electricity generation are driving early adopters ahead of grid parity, including those installing smaller grid-dependent solar-plus-battery systems to help reduce demand charges, provide backup power, and yield other benefits. These early activities will likely accelerate the infamous utility death spiral—self-reinforcing upward price pressures, which make further self-generation or total defection economic faster.
  • Because grid parity arrives within the 30-year economic life of typical utility power assets, the days are numbered for traditional utility business models. The “old” cost recovery model, based on kWh sales, by which utilities recover costs and an allowed market return on infrastructure investments will become obsolete. Utilities must re-think their current business model in order to retain customers and to capture the additional value that such distributed investments will bring.

GreenTech Media:

The next six years will mark the beginning of a long-term, viable growth opportunity for commercial energy storage, according to GTM Research’s newest report, Distributed Energy Storage 2014: Applications and Opportunities for Commercial Energy. Driven in part by the growth of solar photovoltaics, over 720 megawatts of distributed energy storage will be deployed in the U.S. between 2014 and 2020. This represents a 34 percent cumulative annual growth rate.

GTM Research likens the current commercial energy storage market to the U.S. solar market of 2005. The technology is sophisticated enough to allow for widespread adoption (though still expensive), and the business models are just beginning to emerge. A few geographies, driven by policy and incentive, will dominate distributed generation storage in the coming years.

11 Responses to “Will the Grid Become Optional – And How Soon?”

  1. andrewfez Says:

    If you could get builders and architects more into passive design, then a/c/heating wouldn’t need to be as big, and thusly solar and battery storage wouldn’t need to be as big (i.e. it could come online quicker). I look at passive designs here and there, and so far this guy makes the most sense to me, though he’s a bit eccentric (secondary to his creativity no doubt) :


    He makes sense to me because his designs don’t rely on cutting edge technology, they’re just normal building materials, used smartly/creatively. His design encompasses two parts: a ‘thermal buffer zone’ (TBZ) and the inner living space that sits like an inner filling inside this TBZ. The TBZ allows air to circulate around the living space so that the summer cooling mechanism is also solar driven (solar heat energy causes a temperature difference in the TBZ which drives airflow, pulling up cold air from under the house; more temp difference = more air flow and more cool air – so it’s passively regulated as well):


    So many passive solar designs i see out there get the idea of roof overhang placement and thermal storage in the ‘sun room’ or ‘sunny room’, but then they totally miss this natural regulation part that this guy has come up with. I’ve even seen one passive solar lecture, where they try to cool the house using the placement of landscaping around the house to encourage/funnel cool wind to enter open windows. One of these was wind blowing over a pond then coming in a open window.

    I think this guy is a bit more clever than some of these designers: he used to work for IBM: ‘I used to be IBM’s top executive-suite international consultant on large-scale advanced-technology real-time system integration. I have a background in leading-edge post-graduate Artificial Intelligence from Stanford University. I was a primary creator of the world’s most-successful IBM mainframe software system CICS, and I’ve concentrated on state-of-the-art zero-defect enterprise system scalability.’


    • Andrew – nice post. This guy is a kick. The beauty of passive is that it can be low tech. An integrated, planned energy approach is the best. Reductions in residential energy use can happen in all areas, not just electricity. New homes should be passive solar for heat and use PV for electricity. As we transition from a grid centric to more distributed energy, capital will move from traditional FF to solar and other developments. It looks like solar plus battery grid parity is happening faster as fuel costs rise in the future. Interestingly, a survey of utilities shows that their thinking is beginning to come around to accepting changes.

      • andrewfez Says:

        Good – the quicker they get on board, the quicker First Solar gets contracts and returns a profit for me. I think I’m still sitting at ~11% gain as of present.

        Here’s a video series of an off-grid solar system salesman showing off his personal set up. Looks like he’s got some old school batteries happening, but i guess he could upgrade as the price falls on the newer stuff.

        • Andrew – there were many that went off grid long ago. If you are far from the grid, it costs a fortune to get a line put in, so it was more economical to be off grid if you are far away. How does solar work for you? Its confusing because every state and every provider is different.

          • andrewfez Says:

            Oh, I meant ‘they’ as in the utility insiders in the clean technica reporting.

            First Solar started out as just a manufacture of thin film PV cells, but have long since morphed into a large scale provider of electricity to grids (solar farms). They were kind of a risky investment a few years ago until they purchased intellectual property from General Electric, concerning their niche in the industry: thin film CdTe cells that can handle harsh desert conditions (perfect for Arizona if the state utility gets in the game; and perfect for the middle east too). So they bought out the only real competition in this niche and GE in turn received lots of First Solar stock. Then hedge funds and big banks got interested. They were the only big solar company that was posting a profit for the last several years. I’ve been watching the stock since it was in the low $20’s, but i didn’t invest until it hit $50. I’m watching TAN also and can’t seem to get a good entry point – they stock keeps shooting up and hasn’t had a good pull back lately.

            First Solar doesn’t have the most efficient product (the silicone stuff is more efficient), but they have good management that know how to keep the profit and contracts pipeline going and are branching out around the world. I think its a good play on solar growth at the utility scale.

  2. Cutting the grid connection is going to be tough, because the round-trip ticket is going to be priced at multiples of one-way.  The grid operators are going to charge one hell of a lot of money for a re-connect when there’s an extended lull in RE and the batteries go flat.  The non-grid backup power is going to come from propane, natural gas or even liquid petroleum… and that’s going to escalate steeply in the near future as well.

    It makes far more sense to stay connected to the grid, and use batteries to match the demand curve to the supply.  Well, second; first priority is to replace petroleum with cheaper and lower-carbon gas-fired CCGT power.  Power from gasoline costs on the order of 30¢/kWh at the crankshaft.  Few in the USA would buy grid electricity at an average price of even 20¢/kWh, and really making things cheaper requires delivered costs less than 10¢/kWh.  If costly backup is ever required, the typical RE fraction needs to be far cheaper than that.

    It’s not simple.  People who claim it’s simple are overlooking something.

  3. Grid does not just go away. It changes. For one, less residential customers rely on it and may disconnect altogether. Its likely that large industrial loads will still be served by grid in some cases, but the mix may shift. Centralized renewables will have a bigger role in the future grid and a more organized, centrally planned grid appears likely.The trend is moving away from large base load power.

  4. climatebob Says:

    I have just installed solar panels and now pay $10 a month when I used to pay $170 but I still need the grid. I import electricity in the morning and evening and I export it during the day. I export and sell electricity for $0.10. and my neighbour buys it for $0.20 plus $0.17 for line charges. Its a good deal all round but completely different dynamics and the eclectic generators are having problems with the new world.

    • Just as you say, solar PV users are generating when demand is high and consuming when demand is low. They reduce peak summer demand and reduce everyone else’s bill, not increase it. Their connection adds value and they do not get fully compensated for it. In California, installations can only be equal to demand. That means there is nothing paid to the consumer, its either a wash, or a small bill to the utility. That is similar to a user that increases efficiency or gets rid of loads. If efficiency or solar cuts demand, why should the users that cut demand be penalized? California has a tiered rate structure with double rates at high consumption. Now they want penalties if you cut demand. So if you use too much, penalized. If you use too little, penalized. What next? A fee for the audacity of grid disconnection? And a guaranteed rate of return for the private investors that gambled on increased demand? Its almost as if they are autocratically demanding the customer to consume and pay bills as if they have no choice in the matter, no matter what the utility does. They are not making friends with customers. Some customers may defect for that reason alone, just because they do not want to be over a barrel. In California, this is on top of the insult of the phony Enron power manipulation scheme that nearly bankrupted the state and stole the money. People are fed up with monopoly gouging and want choice.

  5. There is a dinosaur effect going on. 🙂 Here is what Buckminster Fuller had to say on the subject, “You never change things by fighting the existing reality,” the famed visionary R. Buckminster Fuller reminded us from his office at Southern Illinois University. “To change something, build a new model that makes the existing model obsolete.”

  6. […] 2014/03/03: PSinclair: Will the Grid Become Optional — And How Soon? […]

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