Once electricity prices reach $0.25/kWh, disconnecting from the grid with residential solar plus storage starts to become financially viable, with sunny places making a strong financial case. With the recent drop in battery prices, the case for leaving the grid has become even stronger.
If electricity prices in your area are above $0.25/kWh and your roof has enough space, it may be financially feasible to go off-grid with solar and storage. With the recent collapse of solar panel And battery prices, and the Inflation Reduction Actthe argument for leaving the electricity grid is stronger than ever.
In cities like Honolulu, San Diego and San Francisco, disconnecting from the grid has already become economical. For example, an off-grid solar plus storage system in Honolulu could result in more than $120,000 in avoided electricity costs over time, with an initial investment of approximately $34,000. This translates into significant annual savings for homeowners; savings that are only expected to improve.
A study “The threat of economic grid failure in the US with solar photovoltaic, battery and generator hybrid systems,” published in Solar Energy, conducted by Western University School of Business and the Department of Electricity and Computer Engineering, analyzed the economic threat of grid breakdown in the US The team’s study examined the financial feasibility of abandoning the grid in favor of solar photovoltaic, battery and generator hybrid systems. The threat of the disappearance of the US economic grid with hybrid solar photovoltaic systems, batteries and generatorspublished in the ScienceDirect journal Solar Energy.
The analysis includes 18 case studies in the US, assessing the profitability of grid outages in different solar irradiation zones using hybrid solar-diesel generator-battery systems. The group conducted a cash flow analysis for solar projects in each city. The results were divided into three cases: leaving the grid, deviating from the marginal grid and staying on the grid. The size of the solar projects ranged from 7.5 kW to 12.5 kW, based on sunlight availability and electricity demand. The battery capacities varied between 18 kWh and 27 kWh.
The charts above compare the financial scenarios for Honolulu (grid failure), Boston (marginal), Rutland (remain), and Seattle (remain). The Honolulu system shows a quick payback even without incentives, while Boston, like most in New England, relies on tax credits and local incentives to be economically viable. In contrast, both Rutland and Seattle, located in regions near Canada, would face higher costs by disconnecting from their local power grid compared to staying connected.
The figure at the top of this article highlights electricity prices, which are the main driver of the Boston project’s marginal financial viability. Massachusetts has some of the highest electricity prices in the country, while Rutland and Seattle benefit from lower costs thanks to abundant hydropower. Interestingly, Rutland and Boston both have similar solar energy resources, but the difference in electricity prices makes going off the grid in Boston more viable.
Electricity prices in the US vary widely, with San Diego posting the highest rate at $0.69/kWh, while Nebraska has the lowest rate at almost $0.06/kWh – 92% cheaper than San Diego.
The analysis also shows that strong net metering programs can reduce the financial incentives for disconnecting from the grid. Recently, for example, California significantly reduce the net payback time of the measurementsresulting in higher electricity prices during the evening hours. This shift has led to a significant increase in the use of energy storage in combination with residential solar projects. On the other hand Massachusetts has bucked the national trend by strengthening its net metering policy.
pv magazine USA contacted the authors for insight into recent cost trends, in particular the sharp decline in costs solar panel And battery prices – and their impact on the analysis.
Joshua M. Pearce, Ph.D. FCAE, responded;
Co-author Seyyed Ali Sadat points out that our analysis, conducted in mid-2023, was based on the NREL 2022 National Benchmarks (the latest cost benchmarks at the time). With battery prices now around $100/kWh, both initial and replacement costs are significantly reduced, making many of the marginal grid failures completely economical.
Dr. Pearce continued, explaining that their sensitivity analysis considered residential solar prices as low as $1.50/W, with energy storage costs ranging from $250 to $458/kWh. As prices approach the lower end of these estimates, the likelihood of grid outages increases significantly.
Recent retail price data from EnergySage shows that the the average price for fully installed solar is $2.69 per watt, while energy storage costs $1,133/kWh.
The article also notes that regions with electricity rates of $0.25/kWh or higher were early indicators of potential grid failure. With the continued decline in solar and energy storage costs, the lower grid outage threshold is moving toward the national average electricity price of $0.15/kWh.
Dr. Pearce summarized the study’s findings by stating: “The key takeaway from our paper – especially when combined with the recent decline in battery prices – is that running off the grid is economically viable in much of the US. Policymakers should ensure that tariff structures are developed that avoid encouraging abandonment of the grid.”
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