RMI Report Predicts Demise of Existing Utility Business

by | Feb 25, 2014

RMI Energy Manage

Solar-plus-storage represents a fundamentally new paradigm, according to a new report “The Economics of Grid Defection.” While other distributed generation options still require some degree of grid dependence, solar-plus-storage provides an opportunity for customers to cut the cord to their utility entirely.

The report, coming from Rocky Mountain Institute, HOMER Energy and CohnReznick Think Energy, details the potential for appreciable customer defection from the electric grid in major markets by 2025, without incurring higher costs or lower reliability.

As the hybrid combination of solar photovoltaic and battery storage become cost competitive with retail grid electricity rates, migration of customers away from the grid could happen well within the 30-year planned economic life of typical utility investments such as central thermal generation plants and transmission infrastructure, say the researchers.

The continuing decline of solar PV and battery storage costs, coupled with increasing retail electricity prices, has resulted in grid parity today for commercial customers in Hawaii. The most optimistic projections, based on certain solar and efficiency targets being met, depict grid parity for millions of residential and commercial customers in New York and California within this decade.

Even before total grid defection become a reality, utilities will see further revenue decline since solar-plus-battery systems sized to meet most of a customer’s load will become cost effective sooner. In addition, other motivating factors such as customer desire for increased power reliability and low-carbon electricity generation are driving early adopters ahead of grid parity.

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