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Emerging economic viability of grid defection in a northern climate using solar hybrid systems

Listed author(s):
  • Kantamneni, Abhilash
  • Winkler, Richelle
  • Gauchia, Lucia
  • Pearce, Joshua M.

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0301421516302427
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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 95 (2016)
Issue (Month): C ()
Pages: 378-389

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Handle: RePEc:eee:enepol:v:95:y:2016:i:c:p:378-389
DOI: 10.1016/j.enpol.2016.05.013
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  15. Darghouth, Naïm R. & Barbose, Galen & Wiser, Ryan H., 2014. "Customer-economics of residential photovoltaic systems (Part 1): The impact of high renewable energy penetrations on electricity bill savings with net metering," Energy Policy, Elsevier, vol. 67(C), pages 290-300.
  16. Dallas Burtraw & Josh Linn & Karen Palmer & Anthony Paul, 2014. "The Costs and Consequences of Clean Air Act Regulation of CO2 from Power Plants," American Economic Review, American Economic Association, vol. 104(5), pages 557-562, May.
  17. Enrica De Cian & Fabio Sferra & Massimo Tavoni, 2013. "The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments," Working Papers 2013.59, Fondazione Eni Enrico Mattei.
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