How would you like to never have another electric bill? Advances in technology have made it possible for some consumers to disconnect from the power grid — a move that was once only available to the ultra-wealthy who could afford the associated costs, or survivalists willing to trade convenience for freedom. This is no longer the case.
A recent study I coauthored with energy researcher Seyyed Ali Sadat reveals that the balance of economics has shifted and now many families may be better off financially by cutting ties to the grid. However, this might not be a good thing for everyone.
How did we get here?
Back in the 2000s, solar was costly. The solar industry’s goal was to push the cost of solar panels below $3 per watt because that would produce solar electricity at a low enough cost to be economically competitive without subsidies. Over the year, the cost of solar plummeted.
By 2011, we showed for the first time in both the United States and Canada that the levelized cost of solar electricity had reached grid parity. This means people could have a net-metered, grid-connected solar system and pay the same for electricity as the grid costs.
Your utility meter would spin backward during the day as you amassed solar electric credits, then spin forward at night when you used grid electricity. If you sized your solar correctly, you would never pay an electric bill.
When I moved to Michigan in 2011, I installed solar, earning a return on investment of more than 10 per cent. Many other faculty members at Michigan Tech did the same, and our area was the first to hit Michigan’s arbitrarily mandated one per cent distributed generation limit.
Solar costs kept dropping, and ten years later, I collaborated with an engineer from Sweden — where nearly every house has a heat pump — to show that solar costs were so low they could effectively subsidize heat pumps into profitability in both northern Michigan and Ontario. Although the return on investment was modest — only a few per cent — it was enough to make solar-powered heating more viable than natural gas.
Concern among electric utilities
Today, more heat pumps are sold that normal furnaces in the U.S., but Canada is still warming up to them. The price of solar modules has since dropped well below $1 per watt.
This shift caused concern among some electric companies; under their traditional business models, every new solar customer reduces their profit. Forward-thinking companies embraced solar and funded it for their customers. Some even rented their customers’ roofs for solar panel use.
Many electric companies, however, took a different path by trying to weaken net metering. Some manipulated the rate structure by increasing unavoidable charges for customers while decreasing the electric rate, making net-metered solar systems less appealing for customers. As off-grid systems are now more affordable, this strategy could push customers away.
Solar costs continued to drop and are now the lowest cost power in history. The costs of electric batteries also plummeted by over 50 per cent just last year.
Grid defection is a real option
Grid-tied residential solar systems currently dominate the market, primarily due to historical net metering. As utility rate structures shift away from real net metering, increase unavoidable fees or restrict grid access, solar consumers are finding that going off-grid is becoming more economically viable.
Our recent study shows that grid defection is economically advantageous for many families because of these rate structure changes.
Consider a typical family in San Diego, for example. After an initial investment of $20,000 on the off-grid system (solar, diesel generator and batteries), they could pay 45 per cent less for electricity than if they remained connected to the grid.
Source: https://studyfinds.org/off-grid-living-wealthy-burden/?nab=0