1. Eric Hittinger, Rochester Institute of Technology 1 STORE OR SELL? THE EMISSIONS AND ECONOMIC EFFECTS OF TAKING ROOFTOP SOLAR OFF-GRID

2. “Grid Defection” is the idea that rising utility costs and falling solar/battery costs will drive consumers to off-grid self- generation 2 http://www.theverge.com/2015/2/13/8033691/why-teslas-battery-for-your-home-should-terrify-utilities http://www.rmi.org/electricity_grid_defection

3. Full disclosure: I’m skeptical that grid defection is as threatening as commonly portrayed Microgrids are not cheap in most places in the US, especially if they are just solar/battery Disconnecting from the grid immediately reduces my electricity reliability Rooftop solar is gaining in popularity, but it seems to makes sense to use the grid as a giant free battery (under net metering) or just use the grid as a source of fill-in electricity (without net metering) 3

4. The Research Plan I take rooftop solar (scaled to total consumption) as a given, and investigate the additional decision to go off-grid. I calculate three effects of this decision: 1.The private net costs of going off-grid 2.The lost value of the time-shifted electricity 3.The net change in system emissions from changed consumption patterns This is repeated for 1,020 locations in the US I model Lithium and Lead-acid batteries But PV/Powerwall microgrid is consistently cheaper than Lead-acid (average of 10% less) 4

5. Data Sources and Modeling Locational hourly solar data are from NREL’s Typical Meteorological Year (TMY3) dataset 1 Electricity load for a standard home generated by DoE Office of Energy Efficiency and Renewable Energy 2 Residential electricity rates from the Utility Rate Database on OpenEI 3 Emissions are calculated using Marginal Emissions Factors from Siler-Evans et al 4 Microgrid modeling and optimization uses the Energy Systems Model 5 5 1.http://rredc.nrel.gov/solar/old_data/nsrdb/1991-2005/tmy3/http://rredc.nrel.gov/solar/old_data/nsrdb/1991-2005/tmy3/ 2.http://en.openei.org/doe-opendata/dataset/commercial-and-residential-hourly-load-profiles-for-all- tmy3-locations-in-the-united-stateshttp://en.openei.org/doe-opendata/dataset/commercial-and-residential-hourly-load-profiles-for-all- tmy3-locations-in-the-united-states 3.http://en.openei.org/wiki/Utility_Rate_Databasehttp://en.openei.org/wiki/Utility_Rate_Database 4.Siler-Evans, K.; Azevedo, I.; Morgan, M. G. Marginal emissions factors for the US electricity system. Environmental science & technology 2012, 46 (9), 4742-4748. 5.Hittinger, E., Wiley, T., Kluza, J., and J. F. Whitacre. Evaluating the Value of Batteries in Microgrid Electricity Systems Using a Novel Energy System Model. Energy Conversion and Management, 2015. 89: 458-472

6. Some Assumptions ParameterBase-Case Value Solar PV Installed Cost $4/W Solar PV Lifetime 15 years Consumer discount rate 7% Powerwall Cost $350/kWh Powerwall cycle life 5,000 complete cycles Powerwall Power limit C/3 for 1 hour, C/5 continuous Powerwall Efficiency 92% 6 Image: http://www.teslamotors.com/powerwall

7. Load PV Output Round trip battery/inverter efficiency = 82% 13.7 kWh 10.8 kWh 13.3 kWh 12.2 kWh 15.0 kWh 12.9 kWh 15.9 kWh 11.6 kWh 10.3 kWh 7.1 kWh 7.2 kWh 6.4 kWh Between inefficiency and curtailment, approximately 25% of the PV energy is lost The first problem with grid defection: Some of the solar energy is lost to inefficiency and curtailment 7

8. The second problem with grid defection: there are tradeoffs between cost and reliability 8 By coincidence, a 75% reliability threshold results in approximately the same amount of installed PV as the grid-tied system (mean: 100.5%, range: 90% to 190%)

9. Assuming net metering and a willingness to lose 25% of electric load, the net change in levelized cost of electricity after grid defection is: 9 Net increase in LCOE after going off-grid ($/kWh) Mean = 23 cents/kWh (range of 14 to 111 cents/kWh)

10. If the consumer were only given the prevailing wholesale price for their net generation (rather than net metering), the economics of defection improve somewhat: 10 Net increase in LCOE after going off-grid ($/kWh) Mean = 20 cents/kWh (range of 6 to 43 cents/kWh)

11. A consumer may get nothing for their net generation, tempting them to go off-grid: 11 Net increase in LCOE after going off-grid ($/kWh) Mean = 17 cents/kWh (range of -3.5 to 72 cents/kWh)

12. But what about connection costs and “anti-solar” fees? 12

13. Given net metering, fees must be high to justify grid defection: 13 Breakeven grid- tied fees ($/year) Mean = $1,100/yr (range of $500 to $3,300 per year)

14. 14 Breakeven grid- tied fees ($/year) Mean = $490/yr (range of -$1,500 to $2,200 per year) The total cost looks much better if customers are not paid for excess power (but note that the off- grid system only meets 75% of your load):

15. What happens to the electricity system when you take a house with rooftop solar off the grid? 15 Net load Residential load

16. 16 Net increase in wholesale electricity costs from grid defection ($/year) Mean = $31/yr (range of -$56 to $270 per year) Taking residential solar off-grid usually slightly increases the total cost of electricity generation

17. Taking rooftop solar off-grid reduces CO 2 emissions, but only by a small amount 17 Difference in CO 2 emissions between on- and off-grid systems (kg/year) These emissions reductions (-230 to 900 kg CO 2 /yr) are small compared to the emissions savings from adding the rooftop solar in the first place (3,200 to 12,000 kg CO 2 /yr)

18. What doesn’t this work say? I don’t include any macroeconomic effects, like a change in generation fleet after mass grid defection Nor do I include any costs or benefits related to local distribution infrastructure And, while tempting, I can’t say much about other applications for home storage, such as backup power or grid-connected PV/load management 18

19. What does this work say? Unless a customer with residential solar is given nothing for their net generation and has reasonably high connection fees, there is not an economic reason to go off-grid Using storage to shift PV energy from day to night tends to slightly reduce system emissions and slightly increase system generation costs 19

20. Questions! 20 Net increase in LCOE after going off-grid ($/kWh)

21. Backup slides 21

22. 22 At $4/W and 7% discount rate, there are a few spots where home PV with net metering saves money Increase in LCOE from rooftop PV purchase ($/kWh)

23. 23 At $2/W and 7% discount rate, there are many spots where home PV with net metering saves money Increase in LCOE from rooftop PV purchase ($/kWh)

24. Things are a bit closer when customers are only paid wholesale rates for their surplus power: 24 Breakeven grid- tied fees ($/year) Mean = $750/yr (range of -$200 to $2,600 per year)

25. Increase in capital cost relative to net metering 25

26. The change in NOx emissions varies by location, but is small in magnitude 26 Difference in NO x emissions between on- and off-grid systems (kg/year) These emissions reductions (-3.3 to 1.3 kg NO x /yr) are small compared to the emissions savings from adding the rooftop solar (0.87 to 15.4 kg NO x /yr) in the first place

27. The change in SO 2 emissions varies by location, but is small in magnitude 27 Difference in SO 2 emissions between on- and off-grid systems (kg/year) These emissions reductions (-2.9 to 4.6 kg SO 2 /yr) are small compared to the emissions savings from adding the rooftop solar (0.14 to 38 kg SO 2 /yr) in the first place