❝ Several of the big trends in clean electricity depend, in one way or another, on batteries. How fast batteries get better and cheaper will help determine how fast renewable energy grows, how fast fossil fuel power plants get shut down, and how fast the vehicle fleet electrifies.
The consulting firm McKinsey & Company recently released an analysis noting that batteries, like solar panels before them, are getting cheaper much faster than anyone expected — and the consequences for the power sector are going to be immense…
❝ As they get cheaper, batteries make sense for more commercial applications. As new markets for storage grow, demand for batteries increases. As demand increases, economies of scale kick in and batteries get cheaper. Rinse, repeat…
❝ The whole analysis is interesting, but I want to focus in on the way batteries will affect rooftop solar. Across the country, intense battles are being waged as utilities push back against the rapid spread of rooftop solar….Batteries, McKinsey reveals, are going to scramble those battles, making them effectively unwinnable for utilities. The existential crisis they hoped to avoid by slowing rooftop solar is going to slam into them twice as hard once batteries enter the picture…
❝ When a customer installs solar panels, it hurts the utility in two ways.
One, it reduces demand for utility power. Utilities generally don’t want lower demand. To justify building stuff, they need to be able to project higher demand.
Two, the more solar customers reduce their utility bills by generating their own power, the more utilities have to charge other, non-solar customers more, to cover their costs-plus-returns. This pisses the other customers off. And it incentivizes them to install solar themselves!
❝ …Because batteries allow customers to circumvent utilities’ two primary tools for slowing the spread of solar…timing will differ in different markets, but partial grid defection enabled by solar+storage will spread like a virus, starting in sunnier and more expensive areas and spreading from there. And it’s likely to happen within a decade.
❝ …For power utilities, unlike for so many other decrepit American institutions, simply clinging to the status quo is not an option. Rooftop solar can be staved off temporarily with fees and rate tweaks, but as batteries get cheaper, those strategies will stop working. More and customers are going to generate, store, and manage more and more of their own power.
The VOX article opines that the power utilities will have to come up with “other services to provide, other roles to play in the power system of the future”…and offers no suggestions. I can’t think of any either.