On February 25, 2014, the Rocky Mountain Institute (RMI) and partners released a new report outlining the potential for appreciable customer defection from the electric grid in major markets by 2025. The report concludes the combination of solar PV and battery storage becomes cost competitive with retail electricity rates within the 30-year economic life of typical utility investments. Key drivers include the declining cost of distributed electricity generation and storage. Underlying these price declines is the growth of solar PV and the mass production of batteries for electrics vehicles.

Key Details

• The report examined four scenarios in five different U.S. regions: Hawaii, California, Kentucky, Texas, and New York
• Key conclusions from the report include:
  • Solar-plus-battery grid parity is here already (i.e., Hawaii) or coming soon for a rapidly growing minority of utility customers, raising the prospect of widespread grid defection
  • Even before total grid defection becomes widely economic, utilities will see further kWh revenue decay from solar-plus-battery systems
  • Because grid parity arrives within the 30-year economic life of typical utility power assets, the authors suggest that this foretells the eventual demise of traditional utility models
• The report found grid parity arrives sooner for commercial customers compared to residential customers, driven by the economies of scale associated with larger projects

Implications

The pairing of solar PV and batteries provides the opportunity for customers to disconnect from the electric grid. If costs come down as suggested in this report, the changes would upend the current net-metering debate as attention shifted to “customer defections.” We expect this report to spur increased interest and discussion around the possible impact of distributed solar and battery pairing within the electricity industry

More information

RMI: http://www.rmi.org/electricity_grid_defection

This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.