Report Release: The Economics of Load Defection

Report Release: The Economics of Load Defection

Postby Oscar » Thu Apr 16, 2015 11:48 am

Report Release: The Economics of Load Defection

[ http://blog.rmi.org/blog_2015_04_07_rep ... _defection ]

How grid-connected solar-plus-battery systems will compete with traditional electric service, and why it matters

Apr 7, 2015

Authors: James Mandel, Ph.D., Principal and Leia Guccione, Manager

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Download The Economics of Load Defection

[ http://www.rmi.org/electricity_load_defection ]

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Today Rocky Mountain Institute released The Economics of Load Defection, [ http://www.rmi.org/electricity_grid_defection ] a new report that analyzes how grid-connected solar-plus-battery systems will become cost competitive with traditional retail electric service; why it matters to financiers, regulators, utilities, and other electricity system stakeholders; and possible paths forward for the evolution of the electricity grid.

A little over a year ago (February 2014), RMI published The Economics of Grid Defection detailing when and where off-grid solar-plus-battery systems would compete with traditional electric service. It was the first comprehensive and publicly available analysis on the subject, and in the months that followed, a number of financial institutions—including Barclays, Citigroup, Morgan Stanley, and Goldman Sachs, among others—came to similar conclusions. In the face of declining costs for solar PV and batteries, current utility business models will face serious challenges. By early this year, Greentech Media identified “grid defection” as one of the top industry buzzwords of the year 2014. [ http://www.greentechmedia.com/articles/ ... -from-2014 ] In fact, the topic surfaced yet again just last week in a widely circulated Washington Post article.
[ http://www.washingtonpost.com/news/ener ... good-idea/ ]

But we said then and we’ll say again now: just because grid defection may become an economic option doesn’t mean customers will actually choose to cut the cord with their utility, and there are plenty of reasons why doing so would be a suboptimal outcome. [ http://blog.rmi.org/blog_2014_03_11_why ... on_matters ] So in The Economics of Load Defection we focused our analysis on a much more likely scenario that could represent an even greater challenge: customer economics for grid-connected solar-plus-battery systems. Since such systems would benefit from grid resources, they could be more optimally sized, thus making them smaller, less expensive, economic for more customers sooner in more places, and adopted faster.

Inside the Analysis

One of the key questions the report addresses is how system configurations and economics would evolve over time when grid-connected customers have the option to source their entire load either from a) the grid, b) a solar-plus-battery system, or c) some combination of the grid, solar PV, and batteries. The report evaluates the economics through 2050 for a median commercial and residential customer in five representative U.S. locations.

We found that:

•Solar-plus-battery systems rapidly become cost effective. The economically optimal system configuration from the customer’s perspective evolves over time, from grid only in the near term, to grid-plus-solar, to grid-plus-solar-plus-batteries in the longer term. New customers will find solar-plus-battery systems most economic in three of our five geographies within the next 10–15 years.

MORE:

[ http://blog.rmi.org/blog_2015_04_07_rep ... _defection ]
Oscar
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