To Defect or not to Defect? Going Off the Grid with Solar + Storage

Why consider defecting from the grid? Is there room for utility and solar + storage compromise?

The combination of solar plus storage is on everyone’s mind these days. There is a huge buzz in the solar industry about the prospect of adding storage to their PV systems.

But why? What is the buzz about?

The cost of PV keeps coming down. Now, it can arguably compete with any other form of electrical production. The California city of Palo Alto is considering bids for $37 per MWH for a solar project. That is 3.7 cents/ kwh. Right there with wholesale avoided cost for coal. Unbelievable!

The promise of grid parity (solar competing with other energy sources on the grid) upheld the idea that as it was achieved on a cost basis, we would all install enough solar to run the entire grid. In the early 1990’s, Doug Pratt from Real Goods Catalogue postulated just 9,400 square miles of PV, a square under 100 miles on a side, in the desert southwest would produce enough energy to power the US.

So, why don’t we just convert to a PV based energy grid?

Well, the sun doesn’t always shine. Between nightfall, clouds, storms and seasonal variability in number of daylight hours, it’s clear that harnessing solar power is only possible intermittently– therefore, solar PV is an intermittent source of power. Although, futurist Buckminster Fuller proposed linking the globe into a world electricity grid. If we did that, then the sun is indeed shining on a solar power plant somewhere on the planet at all times. But, the existing utility structure is made up of thousands of fossil fuel and nuclear plants (and some hydro) producing energy 24/7. The electricity that powers your lightbulb when you turn the switch is being produced, delivered through a complex network of wires, and flowing to that bulb. It is the ultimate “just in time” inventory scheme. The grid is literally always on.

The intermittency of solar makes for some interesting challenges for the grid operator. On a typical sunny day, PV produces power in a bell curve. Low production in morning and afternoon, peak production around noon, and zero at night. A typical home wants a good amount of power in the morning, very little during the day, and peak demand runs from about 4 p m to maybe 9 pm.

This leads to a fundamental mismatch between PV production and the needs of the grid. To the grid operator this creates a problem. During the day when the PV is producing strongly, there is simply very little demand for power. This leads to an oversupply; drives pricing down, (sometimes negative) and forces baseload producers (coal and nuclear) to be run less efficiently. Then as the solar electricity is declining in the afternoon and evening, you have a huge swing of supply dropping away and demand driving towards its daily peak. This is not a stable situation.

At this point in the development of PV on the grid, this is not a huge problem, as the percentage of PV is still very low, single digit percentage of what is called “penetration”. But as the ratio of PV to baseload on the grid increases, as penetration increases, the problems of the mismatch between supply and demand mount. So, you need to store that power when produced and make it available when needed… hence the buzz around storage.

There are many methods of storing power for use when needed. In some sense, fossil fuels are energy storage devices: old sunlight stored as biomass, compressed into complex hydrocarbons. Hydropower from dams is energy storage, too. However, of all the modern competing methods of energy storage and chemical batteries are really coming to the fore. It’s interesting to note that many of the reasons that PV continues to win in the energy production realm (modularity, ease and speed of deployment, few moving parts, etc.) are shared by electrochemical batteries. All of these ‘chemistries’ share the ability to charge and discharge power when needed.

Batteries can be deployed either stand alone, serving to stabilize fluctuations on the grid between supply and demand, or in conjunction with PV, easing (or even eliminating) intermittency. Thus, the addition of batteries open us up to a 100% renewable energy possible future… a world of 24 hour sunlight.

All of these technological advancements and economies of scale towards affordability of storage has made utility companies very nervous. In a few places around the country the cost of solar plus storage can compete with buying power from the utility. Sure, one has to capitalize the purchase, but it is now becoming conceivable to go “off the grid” in the middle of town. This poses a threat to the utilities because every time a customer goes off grid, utility revenues shrink, forcing them to raise rates on the existing rate base. This makes the cost of plug power go up and makes solar plus storage even more affordable, for more people. This potential is known as the “Utility Death Spiral.”

Preposterous, you say? Well, right now, in the state of Hawaii, the defacto laboratory of high penetration solar PV, the nations largest PV integrator is persuading people to defect from the grid, pull the plug, and cut the cord. This revolution can be financed.

Here lies the central issue: should we defect? Defection is defined as conscious abandonment of allegiance or duty, and (as we’ve stated) there has been a lot of talk about grid defection as of late. It’s a powerful use of a word, and in some sense more prescient than imagined. Abandonment of duty. Even if economics work out, is grid defection, the removal of a home or facility from the utility grid the right thing to do?

There is another form of defection that offers a middle path, as it moves away from a false binary and turns an ‘either/or’ into a ‘both/and’. This is the idea of load defection. Rather than fully defecting from the grid, load defection involves a percentage of a facility load being met with onsite generation, including storage. I define load defection as easing ones impact on the grid and carrying some of the weight without disconnecting altogether. In Europe the term commonly used for this concept is Self Consumption.

What this means from a practical perspective is this: to add solar and storage to the greatest extent practicable. The grid offers many services… the biggest of which is as a safety net for electrical power. If the weather doesn’t cooperate, if guests come in from out of town, or any number of unforeseen circumstances arise, the grid is there to have your back. It is much cleaner than on site generation with a fossil fuel generator. Small stand-alone compounds with generators chugging away, making noise and spreading carbon isn’t the path to a green, sustainable electrical grid. If you end up oversizing your “off grid, in-town system” to ride through the bad times of the year, you are going to be overproducing and wasting production for hundreds of hours per year. Essentially, oversizing for security is actually wasting a huge amount of energy and potential revenue. Sunny skies means full batteries and potential PV electricity curtailed. The grid is a good neighbor, and allows other systems to support each other.

The utilities can influence these behaviors with policy…

They can place barriers to grid participation, such as high fixed fees, eliminating net metering, restricting interconnections, or simply stopping new interconnections altogether. Hawaii is heading down a dangerous path with a new tariff structure that allows either grid connection (for a very low avoided cost return) or a zero sell back scheme. There is ability to push energy back to the grid, but also (and as importantly) no ability to provide grid support services, no VARS, no ride through, and no frequency support.

Utilities can put regulations in place that benefit both the customers and the grid operator. Introducing time of use (TOU) tariffs or peak demand billing is actually good for both parties. These tariffs accurately convey the pain points of the utility to the customer. Power is expensive at certain times because it is scarce, and transparent rate structures allow customers to respond in a way that aligns with the need of the utility. So, if there is a high TOU rate from 4-8 PM, customers can charge batteries with the peak solar production around noon and discharge during times of high demand. Customers save money on the bill, the utility has less of a capacity constraint, and more PV electricity makes it onto the grid. Win/Win/Win!

Grid defection is lose/lose: both parties cutting off noses to spite faces. Load defection is win/win. Stay connected, be available as a resource (load or source) and get compensated for it. From the utility perspective, you’ll become part of a growing fleet of distributed generation (DG) and be part of an aggregated resource. Optimizing load defection (percentage of PV plus storage ratio to total facility load) will be a moving target based on many variables. Some include the cost of the equipment and installation, available physical area (sunny for the pv, utility space for the storage system), the solar resource and degree days of heating and cooling, and the cost of plug power.

However, as the cost of utility power continues to rise in the relatively near future, just about everyone in the USA will justify at least some level of defection. But to quote Rodney King: Can’t we all just get along? My advice is this: stay connected to the grid, be part of the networked resource.

Grid defection is a fight. Load defection is a dance. Shall we dance?

For more information on the issue of grid and load defection, check out studies completed by the Rocky Mountain Institute.

Enroll in Advanced Solar + Storage with Wes Kennedy today and spend 9-weeks gaining an advanced technical understanding of residential, commercial and utility-scale solar-plus-storage systems, as well as expert insight on policy, financial models, and emerging markets and opportunities.

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