Self-generation Leads To Load Defection

Recently a new building at the University of Waterloo in Ontario, Canada was certified as zero-carbon by the Canadian Green Building Council (photo). The building which has 768 kW of solar panels on the roof and in the parking lot is expected to generate 105% of the facility’s energy use over a 3-year period while saving $360,000 in energy costs. Buildings like this were rare until recently, and net zero carbon ratings were considered challenging especially in colder northern climates – but not anymore.

Waterloo building generates 105% of its energy needs

On a sunny Saturday afternoon in Oct 2024 in South Australia, rooftop solar PV generation reached a stunning new record of 112.9% of state demand (visual). As impressive as it was, the real challenge is not just to reach such figures for a few minutes or hours on a sunny weekend when system loads are at minimum but meet the bulk of the demand for extended hours.

In an article posted on 18 Oct on Energy Changemakers, Elisa Wood reported on a study from Western University, which suggested that 5 states in the US are ripe for grid defection where customers may be better off financially to get electricity from distributed  solar/battery/diesel hybrid systems. The term grid defection is inaccurate – since nearly all such customers will continue to remain connected to the grid while drastically reducing their net purchases. A more accurate description is load defection.

There is nothing new in the paper since customers in many sunny places with high retail tariffs have already installed such systems but the authors claim that this could be the beginning of a trend. Ironically, recently revised net metering rules that were intended to reduce the payment for the exported excess solar generation to the grid have instead incentivized more customers to store the excess energy for use after the sun goes down. According to the paper’s authors, Seyyed Ali Sadat and Joshua Pearce,

“As utility rate structures shift away from net metering, increase unavoidable costs or restrict grid access, solar prosumers have an increasingly economic path to grid defection.”

This poses new pressure on the regulators to consider the impact of wide-scale load defection by designing rates that encourage prosumers to remain on the grid to prevent utility death spiral.

As the article points out, if regulators rise fixed fees too much – as was recently proposed in California – that would simply incentivize some customers towards total grid defection.

Another option for many prosumers could be to acquire a bi-directional EV and use its large battery to supply the household’s essential needs. These EVs can potentially be recharged at public fast chargers and/or with the rooftop solar panels depending on the relative economics. During a local power outage, EV owners can, for example, charge up their batteries and drive home to supply the essential needs of the household. The term “batteries on wheels” takes on new meaning with bi-directional EVs.

According to a blog post by Jim Lazar on the Electricity Brain Trust (EBT), in Hawaii prior to 2015 when the regulators changed the net energy metering (NEM) rules, two-thirds of new rooftop solar capacity was installed by residential customers. Since then, commercial customers account for two-thirds of new solar capacity while nearly all new residential solar installations come with batteries.  Retail sales for Hawaiian Electric Company (HECO) for 2009-23 shows declines for all classes of customers (Table).

The largest declines in usage have been among the largest customers – the big hotels, shopping centers, and office buildings – among HECO’s most lucrative customers.

Lazar noted that “When the daytime power rate is 20 cents/kWh, and the cost of solar is 10, there is an economic opportunity for daytime load defection, even if the facility remains dependent on the grid for evening power at 60 cents and overnight power at 40 cents – these are approximate rates for San Diego, CA and Honolulu, HI.”

Those who follow these trends caution that for high-cost utilities in sunny places where a large percentage of customers live in detached homes in suburbs as well as many commercial customers, load defection is real and will grow. The temptation for grid defection may follow if utilities raise rates even higher and/or impose high monthly fixed charges.

https://energychangemakers.com/grid-defection-going-off-grid/

This article originally appeared in the December 2024 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at [email protected]"