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Emerging economic viability of grid defection in a northern climate using solar hybrid systems

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  • Kantamneni, Abhilash
  • Winkler, Richelle
  • Gauchia, Lucia
  • Pearce, Joshua M.

Abstract

High demand for photovoltaic (PV), battery, and small-scale combined heat and power (CHP) technologies are driving a virtuous cycle of technological improvements and cost reductions in off-grid electric systems that increasingly compete with the grid market. Using a case study in the Upper Peninsula of Michigan, this paper quantifies the economic viability of off-grid PV+battery+CHP adoption and evaluates potential implications for grid-based utility models. The analysis shows that already some households could save money by switching to a solar hybrid off-grid system in comparison to the effective electric rates they are currently paying. Across the region by 2020, 92% of seasonal households and ~75% of year-round households are projected to meet electricity demands with lower costs. Furthermore, ~65% of all Upper Peninsula single-family owner-occupied households will both meet grid parity and be able to afford the systems by 2020. The results imply that economic circumstances could spur a positive feedback loop whereby grid electricity prices continue to rise and increasing numbers of customers choose alternatives (sometimes referred to as a “utility death spiral”), particularly in areas with relatively high electric utility rates. Utility companies and policy makers must take the potential for grid defection seriously when evaluating energy supply strategies.

Suggested Citation

  • Kantamneni, Abhilash & Winkler, Richelle & Gauchia, Lucia & Pearce, Joshua M., 2016. "Emerging economic viability of grid defection in a northern climate using solar hybrid systems," Energy Policy, Elsevier, vol. 95(C), pages 378-389.
    • Handle: RePEc:eee:enepol:v:95:y:2016:i:c:p:378-389
    DOI: 10.1016/j.enpol.2016.05.013
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    6. Peffley, Trevor B. & Pearce, Joshua M., 2020. "The potential for grid defection of small and medium sized enterprises using solar photovoltaic, battery and generator hybrid systems," Renewable Energy, Elsevier, vol. 148(C), pages 193-204.
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    11. Emily Prehoda & Joshua M. Pearce & Chelsea Schelly, 2019. "Policies to Overcome Barriers for Renewable Energy Distributed Generation: A Case Study of Utility Structure and Regulatory Regimes in Michigan," Energies, MDPI, vol. 12(4), pages 1-23, February.
    12. von Appen, J. & Braun, M., 2018. "Strategic decision making of distribution network operators and investors in residential photovoltaic battery storage systems," Applied Energy, Elsevier, vol. 230(C), pages 540-550.
    13. Prehoda, Emily W. & Pearce, Joshua M., 2017. "Potential lives saved by replacing coal with solar photovoltaic electricity production in the U.S," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 710-715.
    14. Lyu, Yuan & He, Yongxiu & Li, Shanzi & Zhou, Jinghan & Tian, BingYing, 2024. "Channeling approach of prosumer connection costs considering regional differences in China — Evolutionary game among distributed photovoltaic entities," Energy, Elsevier, vol. 289(C).
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    17. Marczinkowski, Hannah Mareike & Østergaard, Poul Alberg, 2018. "Residential versus communal combination of photovoltaic and battery in smart energy systems," Energy, Elsevier, vol. 152(C), pages 466-475.

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