Emerging Economic Viability of Grid Defection in a Northern Climate Using Solar Hybrid Systems

Abhilash Kantamneni, Richelle Winkler, Lucia Gauchia, Joshua M. Pearce, Emerging economic viability of grid defection in a northern climate using solar hybrid systems. Energy Policy 95, 378–389 (2016). doi: 10.1016/j.enpol.2016.05.013

28 Pages Posted: 24 Feb 2019

See all articles by Abhilash Kantamneni

Abhilash Kantamneni

Michigan Technological University

Richelle Winkler

Michigan Technological University

Lucia Gauchia

Michigan Technological University

Joshua M. Pearce

Western University ; Michigan Technological University; Aalto University

Date Written: 2016

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.

Keywords: energy policy, electric utility, photovoltaic, distributed generation, off-grid, solar energy

Suggested Citation

Kantamneni, Abhilash and Winkler, Richelle and Gauchia, Lucia and Pearce, Joshua M., Emerging Economic Viability of Grid Defection in a Northern Climate Using Solar Hybrid Systems (2016). Abhilash Kantamneni, Richelle Winkler, Lucia Gauchia, Joshua M. Pearce, Emerging economic viability of grid defection in a northern climate using solar hybrid systems. Energy Policy 95, 378–389 (2016). doi: 10.1016/j.enpol.2016.05.013, Available at SSRN: https://ssrn.com/abstract=3331118 or http://dx.doi.org/10.2139/ssrn.3331118

Abhilash Kantamneni

Michigan Technological University ( email )

Houghton, MI 49931
United States

Richelle Winkler

Michigan Technological University ( email )

Houghton, MI 49931
United States

Lucia Gauchia

Michigan Technological University ( email )

Houghton, MI 49931
United States

Michigan Technological University ( email )

Houghton, MI 49931
United States

HOME PAGE: http://www.mse.mtu.edu/~pearce/Index.html

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

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