- If the utility industry-led push to impose fixed bill charges on distributed energy resource (DER) owners, and especially rooftop solar owners, becomes widespread, it could drive customers to add home energy management and home energy storage options and go off-grid, according to a report by Morgan Stanley analysts.
- Present economics do not support so-called grid defection because grid electricity is less costly than energy storage and provides transactive energy services, including net metering, that increase the value proposition of DER.
- Morgan Stanley found that where utility bills increase 5% per year, solar hits 20% penetration, and the monthly fees add 50% to solar owners’ bills, the resulting $0.26 per kilowatt-hour cost of grid electricity and the falling costs of storage could drive customers away from the grid.
Utilities have led a national and growing effort to add a monthly fee on net-metered solar owners’ bills to cover grid infrastructure costs. Many solar advocates say such charges would overturn the incipient marketplace advantages of ever-cheaper solar.
The Morgan Stanley conclusion echoes a recent analysis from the Rocky Mountain Institute and CohnReznick, which found 20 million-plus residential customers could see an advantage in going off-grid by 2024.
Morgan Stanley assumed improvements in lithium-ion battery technology that would reduce the price to between $150 and $200 per kilowatt-hour, with each $25 per kilowatt-hour drop lowering the cost of electricity about 15%, or $.01 per kilowatt-hour.
How fast customers defect to off-grid status, Morgan Stanley predicted, depends on the aggressiveness of utilities on the fixed bill charge issue.