Why utilities will soon be obsolete in HI and CA (and then in your state)

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Quick Take:  I often consult to investment firms looking for insights into the smart grid space. I recently spent time with a hedge fund trying to decide whether and when to put money into the solar industry. I told them that solar + storage would soon enable certain customers in certain areas to divorce their utilities and become self-sufficient.

 

A day later, a report appeared that adds some precision to that prediction. Called "The Economics of Grid Defection," it predicts when solar + storage will reach grid parity in five different parts of the U.S.

 

As is so often the case, this new development is a result of several converging trends:

·         Plummeting solar costs

·         Declining battery costs

·         Increasingly efficient buildings that require less power in the first place

 

I agree with most of the report, but I think two factors could defer this "death spiral." First, I think regulators will wake up and end net metering subsidies. They don't want a world where C+I customers and wealthy residential customers self-power themselves and the grid is financed exclusively by apartment dwellers and low-income families. That would delay the day that solar reaches grid parity by a few years.

 

Second, I think regulators may allow utilities to start competing to finance, install and manage solar rooftops. In that case, the advent of solar will not cause a death spiral, but an upward spiral of increased utility revenues. Indeed, the report authors seem to recommend this option as well.

 

Every utility needs to review this report. Even if you don't operate in one of those five regions, you can easily extrapolate to your own situation. My quick summary is below, but jump to the Rocky Mountain Institute site for their overview or to download the full report. - By Jesse Berst