Energy Storage + Solar = A Game Changer
March 10, 2014
Key factor seems to be that we expect “grid parity”, the point where solar+storage costs undercut the cost of utility power, – to come within the 30 year lifetime of conventional power plants being built today.
That means potential huge stranded assets for utilities and their shareholders, unless plans are made for a smooth transition to new technology. Based on the record of technological innovation in recent decades, I’d bet that grid-parity will come sooner, rather than later, than projections.
The rapid development of rooftop solar and battery storage technology could be as transformative to the economy and modern life as the U.S. oil and gas boom, Energy Secretary Ernest Moniz said.
“It’s pretty dramatic,” Moniz said yesterday in an interview with Bloomberg News at the IHS CERAWeek conference in Houston. “They are growing very, very fast.”
Batteries allow customers with solar panels to store energy during the day and then tap the excess overnight when the sun goes down. The widespread use of electric vehicles could reshape the development of cities, and applying the same battery storage technology to transform the U.S. energy system has “huge potential,” Moniz said.
Battery storage advances could threaten the 100-year-old monopoly utility business model that books about $360 billion in annual power sales. An increasing number of customers are reducing their dependence on the grid, turning to solar panels and battery storage as a way to reduce their bills.
“Storage is a huge deal,” Moniz said.
In the future, we may all be a utility of one.
The demise of the traditional business model of power companies could happen sooner than expected, as solar power plus power storage will combine to make the electrical grid optional for many customers — especially for commercial operations and people in states where electricity costs are high, according to a recent study led by the Rocky Mountain Institute.
“Equipped with a solar-plus-battery system, customers can take or leave traditional utility service with what amounts to a ‘utility in a box,’” the study said. And that would be achieved without decreased reliability or higher prices, a “real, near, and present” threat for utilities.
So far, most alternatives to the good ol’ grid still involve some degree of utility dependance. With improved battery storage in the mix, however, customers could cut the cord entirely.
In some areas, such as New York and California, commercial customers would reach grid parity sooner. Grid parity would also arrive sooner than predicted depending on further technology improvements, demand-side improvements, and other factors, the study said.
Utilities are, of course, aware of the threat. Some believe that is part of the reason they’ve pushed for fees and other charges to solar customers, as it has happened in Arizona. (The companies contend that all customers, including solar customers, should pitch in to keep grid infrastructure in good shape as a matter of fairness.)
Even before a “mass defection” point, the growing number of early adopters would hurt electricity sales and, in turn, trigger higher electricity prices for those who remain connected to the grid, which would, of course, make cutting the cord even more attractive.