While grid parity is where things are headed there are still many obstacles - starting with dollars and dollars of utility money to fight it. Start in Arizona to see the aggressive tactics used by utilities against grid parity. Grid parity will allow on-site power generation by independent and very small producers (a household) to be part of the discussion of the future of energy production in the United States, instead of beening dismissed as insignificant.
Quality improvements and cost declines in batteries, as the article reports, are a major tipping point to make on-site surplus power generation practical for a growing number of people and businesses. While not mentioned in the article, there are recent significant performance improvements in small scale wind power production systems designed for residential rooftop mounting. With further price drops, a system that combines rooftop solar and wind electric production with battery backup becomes a practical goal for an urban dweller - not just off-the-grid back-to-the-hills people. Adding a solar hot water component further reduces off-site power needs.
As more individual households become energy producers, the two-way potential of the grid begins to be realized. Up until now, the grid is primarily seen as a one-way street to the consumer. Deregulation has divided distribution from production but a lot of the same folks are still around and they would be happy if it stayed a one-way street. The continuing rise in on-site power production pushes the envelope though. I see two basic realities - first, less distributed power means less revenue and taxes and second, if a micro power producer wants to sell their power, they must be connected to the grid. Connection will cost money. Clearly a realignment of the present utilities vs. solar people paradigm is needed - the grid needs re-imagining with an emphasis on who is to receive the benefit - is it a democratic thing because everyone basically needs it or is it prone to corporate bottle-necks or choke points?
The inherent benefit of household power production is people keeping their money - the elimination of the massive wealth transfer from individuals to the corporations that control electricity production and distribution. People do not give up money streams without resistance. Corporations will go to great lengths to protect what they consider to be theirs. Grid parity is change - for forward looking people, it is a key element in a tipping point that can have significant effects on corporate and government revenues. Just as there are currently winners and losers, there are winners and losers to come. Hopefully these issues will soon be more commonly part of the discussion for everyone.
Grid parity: Why electric utilities should struggle to sleep at night
By Matt McFarland,
What’s good news for those
concerned with climate change, and bad news for electric utilities?
That’s grid parity, which is sometimes called socket parity. It exists
when an alternative energy source generates electricity at a cost
matching the price of power from the electric grid.
Meanwhile, energy upstarts are led by forward thinkers with disruptive track records and eyes on society’s big problems, such as climate change and our dependence on fossil fuels for energy. SolarCity chairman Elon Musk co-founded PayPal and leads Tesla, which could transform the auto industry.
NRG’s Crane speaks of having his company mentioned in the same breath as Amazon, Apple, Facebook and Google. It’s radical to imagine anyone feeling passionate about their source of power, but environmental concerns may make it common soon. New devices such as Nest’s popular thermostat are making consumers rethink what to expect from the companies and gadgets that manage their energy.
Crane highlighted the climate change concerns in a recent letter to shareholders: “The day is coming when our children sit us down in our dotage, look us straight in the eye, with an acute sense of betrayal and disappointment in theirs, and whisper to us, ‘You knew… and you didn’t do anything about it. Why?’”
As grid parity becomes increasingly common, renewable
energy could transform our world and slow the effects of climate change.
Advances in solar panels and battery storage will make it more
realistic for consumers to dump their electric utility, and power their
homes through solar energy that is stored in batteries for cloudy days.
“I think the grid gets disrupted,” said NRG Energy chief
executive David Crane. “The only question is do you want to be the
disruptor or do you want to get disrupted.”
Our world is increasingly cordless, and power appears likely to follow. While we’re not there yet, the momentum behind distributed energy is building.
The Rocky Mountain Institute has said
that tens of millions of commercial and residential customers will have
grid parity by 2030 and perhaps 2020. Hawaii is already there as a
result of high energy costs associated with being an island.
Other estimates are more
aggressive. A 2013 Deutsche Bank report said that 10 states are
currently at grid parity: Arizona, California, Connecticut, Hawaii,
Nevada, New Hampshire, New Jersey, New Mexico, New York and Vermont.
According to a 2013 note by Citi Research, Germany, Spain, Portugal and
Australia have reached grid parity.
This shift has benefited from a dramatic drop in the price of solar panels, which dropped 97.2 percent from 1975 to 2012, according to GTM Research.
For electric utilities to truly be challenged, batteries
are just as important as solar panels. With batteries excess energy
could be stored. Tesla announced in February it’s building a gigafactory,
which it envisions producing more lithium ion batteries by 2020 than
were produced worldwide in a 2013. The scale of the operation should
drive down prices further (Tesla estimates over 30 percent). Some of
these batteries will be used by SolarCity, a leader in installing
residential solar panels.
SolarCity has a pilot program in California, in which batteries store solar power. It has complained that electric utilities are slowing its rollout. NRG Energy hopes to have a similar product available by the end of 2014.
If utilities are dragging their feet on SolarCity’s initiative, it’s easy to understand why. As solar energy gets cheaper, traditional electric utilities are doing the opposite. The cost of maintaining the electric grid has gotten more expensive, but reliability hasn’t improved. The investments of electrical utilities appear to be poorly spent.
If customers leave
electric utilities, it starts a downward spiral. Fewer customers will
mean higher rates, which encourages remaining customers to jump ship for
a solar-battery system.
Electric utilities appear poorly
equipped for how technology will transform the energy industry. For
years there hasn’t been an incentive to innovate, in part due to a lack
of competition. Plus, making their product cheaper means less revenue,
so why innovate?Meanwhile, energy upstarts are led by forward thinkers with disruptive track records and eyes on society’s big problems, such as climate change and our dependence on fossil fuels for energy. SolarCity chairman Elon Musk co-founded PayPal and leads Tesla, which could transform the auto industry.
NRG’s Crane speaks of having his company mentioned in the same breath as Amazon, Apple, Facebook and Google. It’s radical to imagine anyone feeling passionate about their source of power, but environmental concerns may make it common soon. New devices such as Nest’s popular thermostat are making consumers rethink what to expect from the companies and gadgets that manage their energy.
Crane highlighted the climate change concerns in a recent letter to shareholders: “The day is coming when our children sit us down in our dotage, look us straight in the eye, with an acute sense of betrayal and disappointment in theirs, and whisper to us, ‘You knew… and you didn’t do anything about it. Why?’”
