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Is going off-grid really better for the environment?

off-gridIf rising global temperatures worry you, you’re not alone. Frustrated that fossil fuels still account for around 80% of the world’s energy consumption, thousands of homes have invested in combined solar-battery storage systems. And that figure is expected to grow to 1 million in Australia alone by 2020. But is going off-grid really the most sustainable choice a consumer can make?

As renewables become affordable, more and more people are cutting their wires and adopting a minimalist lifestyle – particularly in rural areas where the cost to connect to the grid is high. For city dwellers, however, powering our lives in this manner isn’t cost-effective given the home-ground (i.e. ‘sunk cost’) advantage the existing grid has over emerging technology. Living off the grid and expecting the same reliability (99.999%) requires a huge amount of equipment, even for one household. A reliance on the sun and limited battery storage makes it difficult to meet typical evening peak energy needs unless you’re happy to go without a television, a fridge and washing machine. Today’s batteries last 10 years before needing to be replaced… and then discarded. With the carbon impact of manufacturing, supplying and disposing of these batteries – how environmentally friendly is this, really?

All the while, the rest of us who are still connected to the grid are reducing our energy consumption by changing wasteful behaviour and using energy-efficient appliances. For energy utilities, this means an oversupply of capacity and lower revenues. Big spending on distribution system upgrades in the last decade has compounded their woes.

It’s time to accept the fact that the energy industry has been disrupted. If the trend towards going off-grid continues, are we dangerously close to setting off a chain of events whereby existing assets become white elephants – stranded and worthless? Or is there another way? What do smart businesses do when they’ve been disrupted? They go back to the drawing board and find a way to disrupt the disruptors!

Have we reached a tipping point for utilities to start repurposing the grid and changing their business model? People are likely to continue installing solar cells, even as government subsidies reduce, until such time as the grid decarbonises. If the grid doesn’t use fossil fuels, then there is limited incentive for people to move to household level renewables. Founder of Global Sharing Week, Benita Matofska says: “Traditional businesses can either fly-the-flag for the status quo and go down with it, or they can be smart about it and enable a new way of thinking, living and doing sustainable business. Those who do will survive and thrive.”

Just one of the opportunities for energy utilities derives from the notion that household renewable assets needn’t always be consumer-owned. Companies like SolarCity are emerging, which provide solar panels that you can lease rather than buy. Should energy utilities focus on looking for ways to work with start-ups to facilitate the roll-out of solar and storage at scale?

off-gridAnd who said that the renewable energy generated by each household can’t be shared? Imagine subscribing to energy via a sharing platform and using an app to trade energy with other people and businesses. To make this future smart city scenario possible, we need to continue to invest in emerging technologies, to commercialise the ones that show promise, and to optimise the ones we already know work well. Tesla’s PowerWall is today’s high profile home battery storage product, but there’s no shortage of players lining up to compete, ultimately putting downward pressure on costs, which will drive further mass market appeal and adoption of these smart solutions.

And let’s not forget the power of community… we need only look at today’s smartest cities for inspiration . The successful citizen solar power plants initiative – a partnership of Vienna, Austria and Wien Energy – offered locals the opportunity to invest in the city’s solar plants to help achieve its renewable energy objectives.

The switch to renewable energy has already been flicked. Smart utilities that are willing to drive change toward a cleaner future will prosper – but it’s going to take the turning off of a lot of old paradigms to do so.

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14 replies »

  1. Good article. Sticking with old ways of doing things runs the risk of reaching their inevitable used by date, and apart from the environmental imperative (which is vey important), sticking to the convention is simply not a good business proposition.

    • Andrew thanks for the reply. I think those businesses operating in the energy market are past the point of sticking to the old way. the changes are on them already. I firmly believe it’s our duty to lead people through the transformation of energy whether individuals or corporations, whether suppliers or consumers of energy.

  2. Thanks for sharing your vision, Victor. Our local energy retailer here in Perth has been running customer surveys to gauge the interest in solar-battery storage systems and whether or not customers would be interested in having the equipment installed and maintained by the utility rather than paying the up-front capital costs ourselves. I’m looking forward to seeing how the market adapts.

    Also, this statement in your article really jumped out me “Today’s batteries last 10 years before needing to be replaced… and then discarded”.

    As far as I’m aware, the majority of batteries are recycled these days and recycling companies are able to make a profit doing it. I don’t believe they are simply discarded in most cases.

    References here:

    • Mark thanks for your comments. Great to see the retailers supporting consumers with real information about what is possible for those who want to participate. I’d also be interested to track the level of uptake.
      I’m hoping to get some work done into the total carbon impact of different energy generation and storage options, taking into account the carbon impact of manufacturing, operation and disposal/reuse. Anecdotally I hope this supports the idea that being connected and sharing is a better outcome, but it’s complicated to model. Of course you are right there are many recycling options for batteries, which I should have referenced in the article.
      cheers Victor

    • Mark thanks for your comments.
      You are quite right I should have referenced the recycling of batteries, which is prevalent.
      It’s great to see retailers responding to the opportunities in WA, and I’m also keen to see the level of uptake.
      I would like to get some modelling done to show the CO2 impact of different generation, storage, network and disposal options. It’s complex but anecdotally I believe it should be better to remain connected and share energy in order to minimise reserve capacity and maintain reliability, not to mention utilise the existing infrastructure.

    • Rebecca I was also excited to see the peer to peer trial in Perth. I more see it as complementary to battery solutions not competing, but doesn’t matter it is an exciting step on the journey.
      Thanks for commenting my article

  3. Hi Victor, good article. Some of the big players in Australia (AGL and Origin) already have various solar PV leasing/PP agreement options available to customers. I wonder what the uptake of these types of arrangements has been like over the past say 12 months?

    There was also an article published last month about AGL’s launch of the world’s largest solar virtual power plant battery demonstration in South Australia. This involves storing power at individuals’ households and feeding back into the grid when the power is needed (i.e. sharing). Pretty expensive though… at $A 20M for a plant which is “equivalent to a 5 MW solar peaking plant” = 4,000 AUD / kW.

    • Andrew thanks for your comments on the article. I am aware of the retailers leasing models, and the virtual model is great to see. my main excitement is because I hope it will re-encourage the value of sharing and the value of the network to consumers.
      I am confident the prices will tumble and have heard numbers approaching between $1-200/kWHr in the not too distant future.

    • tony thanks for the comments on the article. innovations take many different forms – everything from the products we produce to the ways in which we reach customers, and it’s great to see the solar industry so rapidly approaching the tipping point of not requiring subsidy due to technology innovation.

  4. Great article Victor. I like the idea of disrupting the disruptors, finding a way to use what you already have to suit new technology.

    • thanks for the comments Michael. I really like the idea of using what we already have. being environmentally responsible starts with reducing consumption and that means all sorts of things, including electricity infrastructure, and that is quite apart from the fact that our community futures are all about sharing and living in more shared urban spaces. It feels like a retrograde step to go individual on energy.

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