Could “Every House is an Island” be on the Horizon?

A few weeks ago, I attended Solar Power International (SPI) in Las Vegas, which claims to be the largest solar trade show in North America. It was the first solar power event I’ve attended. Even though solar power has been around for decades, it’s only in the last few years that it’s become important to grid operators. In fact, I think it could be the most talked about topic in the industry. Or, maybe it just feels that way to me because I was in the midst of the world’s most inspired solar evangelists. Whatever the reason, my days at SPI affirmed my belief that solar power is the big disrupter for grid operators and that while it can bring about opportunities for those who embrace it, it is and will continue to be a challenge for most of them.

I’ve heard numerous experts say that the grid will be the orchestrator of the future transactive energy model, helping facilitate a greener energy supply, as well as connect producers and consumers of all sizes. I believe this is true and as you’ll read in several of this issue’s articles, some of our authors believe the same.

At SPI, I had a conversation with an expert who believes the grid could be the orchestrator, but he also sees a future without the grid if current owners and operators don’t embrace the renewable (especially solar) transition that is occurring today. I, therefore, wanted to share with you a few of his predictions, providing you with a little food for thought.

Morten Lund is a partner with the large law firm Stoel and Rives LLC., which specializes in several industries, including energy and environment. Lund’s specialty is renewable energy and he believes traditional utilities are in big trouble.

Lund started the conversation by saying: “The utility model in the U.S. is doomed-they (traditional utilities) are the walking dead.” He said solar is half the reason and storage is the other half. He also said that distributed photovoltaic (PV) solar and battery storage will challenge grid operators.

“People can be independent of the grid. They can own PV and storage and don’t need an operator,” he said. “It can be like owning a dishwasher or a water heater.”

Lund believes utilities that succeeded in changing net metering rules made a huge mistake. Utilities that shut down net metering provided more incentive than ever for customers to couple storage with PV and supply all their own energy needs, he said. These customers can decouple from the grid completely, or they might choose to stay connected and use the grid as their backup power supply, at least until they are confident in their energy supply technology and no longer need backup power. Either way, Lund said, the utility loses.

Lund gave an example of a project in rural Indiana where a school district installed solar and storage and is now paying only grid charges to the rural cooperative that serves it. This school district previously bought 15 percent of the co-op’s load. In addition, three other schools on the co-op’s system are now exploring doing the same, which would eliminate more than half of its load. To make matters worse, this co-op, like most utilities, has a requirement to serve.

“This does not support a sustainable business model,” said Lund.

Lund cited several more reasons why he believes the trend toward solar and storage will grow and why utilities must change their business model. He isn’t, however, predicting the “every house is an island” scenario to occur soon, if at all. “That will be a long way off,” he said.

Whether you agree or disagree with Lund’s predictions, I think they are worth pondering.

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