Even RMI agrees that grid defection doesn't make sense
Quick Take: Fresh off its report about the economics of grid defection, the Rocky Mountain Institute is back with a new blog post that suggests defection would be a bad thing, even in those regions where it becomes economically viable. Given the "death to utilities" rhetoric from rabid solar supporters, I think you will want to review RMI's thinking for counter-arguments. â€“ Jesse Berst
The pairing of solar PV and batteries could soon reach economic parity with the electric grid in certain parts of the country. Grid parity may come sooner than expected, and well within the 30-year economic life of typical utility investments. There are other disruptive challenges to the grid, including grid-tied solar PV, microturbines and microgrids.
But cost parity doesn't necessarily equate to widespread customer defection. In fact, defection would create a suboptimal system. Distributed energy resources such as solar have better economics for both customers and society if they are connected to the grid. The challenge: traditional utility business models don't incentivize the rapid evolutions of those solutions.
Large numbers of customers going it alone introduces great economic inefficiency. For one thing, each customer faces the risk of over- or under-investing in capacity. By contrast, a grid-connected market allows customers and suppliers to balance supply and demand.
Grid defection also raises concerns about social equity. With widespread defection, utilities would have to raise rates to their remaining customers, including low-income families and apartment dwellers.
There is a middle ground, one in which central and distributed resources are complementary.
Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.
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