Going off-grid conjures up images of remote, rugged communities where people live hard lives. That image may soon change. Improving technology capabilities in solar power and batteries could make energy independence not just possible but attractive and affordable to consumers and businesses. The utility companies are already feeling the impacts and could face serious threats over coming decades.
What is changing?
Two reports have explored the possibilities of going off grid from different perspectives recently; one in Australia and one in the USA.
A CSIRO report examined very different energy supply scenarios out to 2030. Among them, was one that explored the possibility of 50% of Australians choosing to go off-grid. Their assumptions were not particularly radical – given the speed of current solar technology developments, where PV costs fell 80% in 5 years – and included battery costs halving by 2030 and that renewables would account for two thirds of energy production. It was seen as feasible, and while everyone would face significant changes, the fossil fuel industry would face the biggest changes.
The Morgan Stanley report looked at the economics and concluded that the utility companies were in for disruptive times, and could be under serious threat as an investment. They see an off-grid tipping point emerging. Again, technology developments such as the announcement of the Tesla ‘giga factory’ for battery manufacture plus the falling costs and increasing capabilities in batteries and renewables are critical. So too is the growth in solar power uptake.
Again, there were a range of options, variations on the degree of off-grid-ness. These included one where consumers with net zero homes – i.e. they put back more power than they took out of the grid, but still used the grid – which became a bit like a battery for them; the second, where people were connected for emergencies only, but relied on a combination of renewables, mainly solar, and batteries for all power; the third, where the cost of any connection to the grid became so high that going completely off-grid was the best option.
The spread of electric vehicles with powerful and cheaper batteries would create a mobile day-time power source. The batteries would provide some power back to the grid while not in use, helping smooth out demand. This could also contribute to a feed in tariff for consumers.
The upfront costs of capital investment in going off grid, even as battery prices fall, were seen as a major barrier. We may see the emergence of energy a service, where people rent batteries.
A host of storage technologies to support grid storage are under research and testing including air batteries, liquid metal batteries, flow batteries. One recent announcement was of a super capacitor which could turn whole structures into batteries. The material used for the super capacitor is sufficiently robust that it can also be a building material but would also store enough power for lighting and other low level supply.
California has also recently introduced a requirement that utilities will need to have the capacity to store up to 1325 MW of power from renewable by 2020, that is the equivalent of more power than a nuclear power station due for de-commissioning. Their approach may be followed by others where solar potential is good.
Technologies which make off-grid power affordable will also light up the developing world, where 1.4 billion people still live without access to clean or reliable power. Apart from the direct market opportunity of supplying that market, the economic and quality of life benefits would be enormous.
But utility companies in western markets could face significant disruption. RWE in Germany has recently reported a loss. They may no longer be the long term safe investment they used to be. But for those who can take advantage of the new capabilities, the market is there.
Other forms of distributed power are also emerging, and investments are growing. GE has just announced a new division to take advantage of this $100 billion opportunity. And other technologies will provide power – for example an aircraft engine mounted on a lorry has been used to provide 40 mobile power plants in Algeria. NRG has announced that it wants to pursue renewables as well as distributed power. A host of others are investing.
These developments are taking place against a backdrop of increasing oil development costs and falling returns, growing concern about fossil fuels and the environment and a generation coming of age, who have grown up with the need for more sustainable options. The time appears to be ripe for an energy tipping point.
To find more resources on Shaping Tomorrow about battery technologies and other energy developments which were used in this Trend Alert, open the report called Batteries alert: go to Watch, then reports then Batteries alert, or search on batteries, or click on the Batteries and Battery tag.
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