Could rooftop solar kill utility companies?
Rapidly-falling prices for rooftop solar and home batteries have many homeowners wondering if they could disconnect from the grid entirely. But what could be a dream-come-true for homeowners could be a nightmare scenario for utility companies. There are concerns within the utility industry that rooftop solar and batteries could cause “grid defection”. Some in the utility company industry believe that this may ultimately kill utility companies.
The infamous utility death spiral
Grid parity is a condition where consumers with rooftop solar and home batteries could break even or even save money by going entirely off-grid. According to a report by the Rocky Mountain Institute, grid parity is already here for some consumers, mostly those in Hawaii. But even for consumers in California, grid parity may not be that far off. The report estimates that California consumers could reach grid parity by 2031.
Grid parity in California could cause a utility death spiral by cutting utility company revenues drastically. As consumers leave left the grid, the cost of maintaining and powering the grid would be spread among fewer and fewer consumers. That would cause grid-supplied power costs to rise dramatically. That dramatic rise would then make rooftop solar and batteries the desirable option for more and more consumers.
Utilities in California may be are particularly vulnerable to the utility death spiral because of California’s planned blackouts. The blackouts are a significant pain-point to consumers, and many have responded by installing home batteries. Utilities are facing the strong likelihood fact that securing powerlines will take around about 10 years. Thus, they expect to have the lines secured in about the same time that the price of rooftop solar and batteries is predicted to reach grid parity. If that happens, utilities may face a risk of making a huge investment into the grid just in time for the grid to start becoming obsolete.
Does rooftop solar and home batteries make sense today?
Yes. Rooftop solar with batteries makes financial sense for some homeowners in California right now. Instead of building a system large enough to go off-grid, a smaller battery system designed to power the home during peak rate hours makes sense. All three of California’s major utilities charge their peak rates during the hours of 4 PM to 9 PM. Meanwhile, those same utilities pay a much lower off-peak rate to homeowners for power produced by the homeowner’s solar systems during the day. The ideal battery system powers your home from 4 PM to 9 PM so you can avoid peak rates.
A rooftop solar system with batteries charges the batteries during the day. The batteries then power the home during peak rate hours. That allows a homeowner to reduce or eliminate their electrical usage from the grid during the hours when grid-supplied electricity is most expensive. Plus the system can provide some power to the home during a blackout.
The State of California offers an incentive of up to $400 per kilowatt-hour of installed battery capacity. The incentive is called the Self Generation Incentive Plan (SGIP). The amount of the incentive is expected to decline as more and more battery capacity is installed in California. Therefore it may be in one’s best interest to act soon if you are considering batteries.
Disconnecting from the grid may be hard and possibly not allowed
One last thing needs to be said about going off-grid. The process of cutting ties to your electric company is likely to be complex. It may also be illegal in some areas. If you are considering purchasing a rooftop solar system with batteries specifically for going off-grid, you should do your homework first to find out if you even can go off-grid in your area.
Freedom Forever installs rooftop solar and home batteries
If you are considering a solar system with batteries, Freedom Forever can help. We have built solar and battery systems to meet the needs of many satisfied homeowners, enabling them to have power during blackouts and avoid high evening peak rates. We have the expertise to work with you, and design and build a system that may fit your needs. Our rooftop solar systems are covered by our 25-year production guarantee, while our home battery systems are covered by their manufacturers’ warranty. You can install with confidence with Freedom Forever, make the change to solar with confidence, and be ready the next time the lights go out.