Sunday, July 09, 2017

Utilities Fighting Against Rooftop Solar Are Only Hastening Their Own Doom - by David Roberts

Batteries are going to make rooftop solar invulnerable.

Rooftop Install (Credit: Shutterstock) Click to enlarge.
Several of the big trends in clean electricity depend, in one way or another, on batteries. How fast batteries get better and cheaper will help determine how fast renewable energy grows, how fast fossil fuel power plants get shut down, and how fast the vehicle fleet electrifies.

The consulting firm McKinsey & Company recently released an analysis noting that batteries, like solar panels before them, are getting cheaper much faster than anyone expected — and the consequences for the power sector are going to be immense.
As they get cheaper, batteries make sense for more commercial applications.  As new markets for storage grow, demand for batteries increases.  As demand increases, economies of scale kick in and batteries get cheaper.  Rinse, repeat.
Across the country, intense battles are being waged as utilities push back against the rapid spread of rooftop solar.  Batteries, McKinsey reveals, are going to scramble those battles, making them effectively unwinnable for utilities.  The existential crisis they hoped to avoid by slowing rooftop solar is going to slam into them twice as hard once batteries enter the picture.
“The utilities’ response,” McKinsey writes, “has been to design rates that reduce the incentive to install solar by moving to time-of-use pricing structures, implementing demand charges, or trying to reduce how much they pay customers for the electricity they produce that is exported to the grid.”

Those battles are ongoing across the country.

Enter batteries.

Cheap batteries neuter utility attacks on rooftop solar

“In a low-cost storage environment,” McKinsey writes, the rate structures utilities are monkeying around with “are unlikely to be effective at mitigating load losses.”  In other words, customers are still going to keep generating more of their own power.
If utilities reduce the amount they pay for rooftop solar-generated power, batteries allow customers to increase their “self-consumption” — that is, to consume more of the solar power they generate, by storing it and spreading it out across the day. McKinsey calls this “partial grid defection, in which customers choose to stay connected to the grid in order to have access to 24/7 reliability, but generate 80 to 90 percent of their own energy and use storage to optimize their solar for their own consumption.”
Utilities can charge fixed grid-connection fees to all customers, but if those get too high, they start to push customers toward full grid defection — ditching the utility entirely.
According to McKinsey’s projections, partial grid defection will become economic — will outperform grid power — around 2020.  That’s not very far away.  Nor, in terms of the time horizons of utility investments, is 2030, when full grid defection will become a live option.

The timing will differ in different markets, but partial grid defection enabled by solar+storage will spread like a virus, starting in sunnier and more expensive areas and spreading from there. And it’s likely to happen within a decade.

Utilities cannot avoid radical reform
What should utilities do about it?  McKinsey’s treatment of that question is fairly cursory.  See this post for a more in-depth discussion and links to other reports.  The debate over “grid 2.0” and power utilities of the future — playing out on the ground in New York, California, Massachusetts, and elsewhere — is the most important thing going on in the energy world right now.  It will only heat up in years to come.

Read more at Utilities Fighting Against Rooftop Solar Are Only Hastening Their Own Doom

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