What would it take for the mass market of retail power customers to go 'off grid' using micro-generation technologies?

1. 1
What would it take for the Mass Market to go off-grid?
By Roger Jeffrey
November 2017
The impact of distributed generation on mass market residential customers is a hotly debated topic and one that is getting a lot of media attention. Driven
by the continued evolution of battery storage, improvements in solar efficiency and newer micro grid technologies that allow customers to share electricity
with their neighbours underpinned by blockchain, the spectrum in opinions of when the majority of mass market customers will go ‘off grid’ ranges from a
few years to several decades. In this article, we investigate, “what would it take for the Mass Market to go off-grid?”
To shed light on the answer, the table below lists a few elements that need to be addressed along with what it would take to accelerate mass market
adoption. This list is not meant to be exhaustive but to identify key challenges that need to be overcome.
Key element Description What would it take to accelerate mass adoption?
Cost For many residential customers, the costs to
procure and maintain micro-grid solutions are
prohibitive.
Even though the longer term business case may
be strong, it is often difficult to find the upfront
capital required.
- Significant reduction in cost; in the near term, we are almost guaranteed to get
significant cost reductions combined with improved efficiency due to the
amount of investment and increased competition occurring in solar and battery
alone. However, whilst this will reduce the tipping point for many consumers,
the large majority of customers with limited discretionary spend, particularly
those receiving concessions and hardship allowances will still struggle. For
these customers, government incentives or regulatory interventions will be
required.
- “Micro-grid as a service” where customers pay a regular fee and lock into a
contract similar to a mobile plan. These services already exist although take up
has been low but the continued reduction in the overall cost as well as more
competition from traditional and non-traditional providers should drive a more
compelling value proposition.
- Increased uptake of Community micro-grid sites would significantly reduce the
cost by sharing infrastructure and solar as demonstrated by examples such as
Horizon Power in Western Australia.
- As is increasingly occurring, developers are becoming generators for new
estates/buildings which will accelerate community grid solutions.
Customer
inertia
There will always be reasons why customers are
too busy to make the switch. These excuses may
include competing priorities, energy costs are not
a priority, or fear that micro-generation may lead
to power outages – imagine a new parent or older
- A major ‘black swan’ event may drive customers to look for alternatives. For
example, the New York storms were the major catalyst for the Project Brooklyn
community grid. The recent blackouts in South Australia are also likely to
increase the take up of distributed generation

2. 2
Key element Description What would it take to accelerate mass adoption?
citizen worrying that they won’t have heating on a
cold night because their home micro-grid failed.
- Advancement of technologies such as Google Home or Amazon’s Alexia where a
simple voice command will authorise them to arrange the required services will
make it easy to change.
- The increased role of aggregators e.g. iSelect, Compare the Market who are
moving away from selling individual services e.g. energy price comparisons, to
‘life moments’ and subscriptions. It is not hard to imagine a world where
customers authorise these aggregators to reduce their total energy costs and in
the background, the management of DER providers is taken care of and
managed for you.
- Other potential accelerators may include government regulations to improve
the transparency of current tariffs and alternative cheaper options
- If prices continue to increase by 20% as has been the case in recent times,
even the most reticent customer is likely to consider off grid solutions.
- The operators of embedded networks within high density residential facilities
may force consumers to be the recipient of an off-grid solution.
Property
ownership
Many Australians don’t own their own homes but
rent. In this circumstance, what is the incentive
for landlords to go off grid when the benefits go to
the tenants?
- Over time, new house construction where micro-generation is mandatory will
make an impact but for existing homes, government regulations, incentivises
for landlords, or ‘shared solar’ schemes such as that proposed by AGL will be
required.
- Customers are used to a world where products become disposable. If the cost
of micro-generation is significantly reduced, it may become feasible to ‘plug
and play’ solutions. There are definitely regulatory and safety concerns that will
need to be managed but these are not insurmountable. For example, why
couldn’t solar panels be plugged into existing construction frameworks that
landlords were mandated to fix to the top of house roofs?
Technology
maturity
Micro-grids are still new and not yet scalable
particularly the ability to share electricity between
neighbours.
Current technological limits mean that the
physical size of e.g. batteries and solar panels
prohibit many households from deploying the
amount required to meet their needs.
- Moore’s Law and its impact on laptop computers and mobile phones is a history
lesson in how quickly technology may advance. Global standards will need to
be agreed and billions in research and development will be required, but the
size of the prize for successful providers is enormous which will drive this.
Limitations on materials required for batteries may slow progress in the short
term but mankind as proven its ability to overcome these hurdles so
substitutes will no doubt be quickly found. As exciting as this is, it will still take
many years for the technology to be efficient, scalable, and reliable enough to
fully meet customer’s demands.

3. 3
Key element Description What would it take to accelerate mass adoption?
Time shifting Long term analysis typically shows that wind is
most prevalent in the early mornings whilst solar
dominates during the day. Council regulations
typically prevent individual households having
their own wind turbines anyway.
The challenge for most is that their peak power
usage is at night which will only increase once
electric vehicles become mainstream. Time
shifting of power generation will be required to
meet peak demands.
- The advancement of battery storage will be the critical driver for this success.
Demand Management technologies that allow power usage to be deferred to
peak power generation times e.g. running washing machines and pool pumps
during the day instead of the night, are also critical
- Other potential game changers are the ability to share excess electricity from
your neighbours but these are subject to a whole host of regulatory
requirements.
- Another accelerator may be access substitute energy sources e.g. hydrogen.
Operational
support
Customers are used to incumbents automatically
fixing outages that occur but what happens when
a massive storm hits that impacts a number of
houses, or the batteries fail? Who will provide the
operational support to restore power?
- Customers need confidence that if things go wrong, power will be restored
quickly. To achieve this, support and maintenance plans will be important.
- In the situation of the mass market going off-grid, a large scale recruitment
and training drive would be needed to ensure there were sufficiently trained
resources as no-one wants another ‘pink batts’ fiasco.
Regulatory
environment
There are numerous regulations that need to be
overcome before mass market adoption becomes
mainstream.
- Naturally, when dealing with potentially life threatening risks such as
electrocution, regulations are important. However, changes to existing
regulations to balance risk, safety, cost, with ease of deployment are required.
For example, if all batteries have to be buried as some current regulations
demand, the adoption of mass market solutions will be severely curtailed.
- Not only will existing regulations need to be modified but new ones will be
required to deal with emerging trends such as blockchain, electric vehicle
charging, peer to peer lending, renewables on roofs, and data ownership.
Trust Customer trust is hard earned and easily lost. For
mass market adoption to occur, customers need
to trust that the products they are purchasing are
durable and the providers will survive and honour
any warranty issues.
Customers must trust that the performance of
micro-grid solutions don’t rapidly deteriorate over
time so requiring additional, ongoing and
expensive upgrades.
Customers also need to trust that if they do go off
grid, that additional costs won’t decrease their
- Word of mouth is a powerful tool so this will take time to ‘spread the word’. To
accelerate adoption, customers need to be given confidence that solutions are
backed up large firms and/or have warranties backed by larger firms such as is
the case in the motor insurance industry. Alternatively, a government backed
warranty scheme like a rental bond, would provide confidence.
- This is important as there will be sceptics that overseas products implemented
by smaller family businesses may lack the required quality to survive longer
term.
- Solutions that show the performance of micro-grid technologies and how to
optimise them must be a standard.

4. 4
Key element Description What would it take to accelerate mass adoption?
benefits e.g. proposals to still charge customers a
network fee (to cover the cost of existing
networks or standard assets) even if they are not
connected.
- Governments (state and federal) would need to provide certainty to the market
that customers would not retrospectively be subject to additional charges
should they go off grid.
Stranded
Assets &
potential loss
of revenue
Governments and private enterprise have
invested billions of dollars in building and
maintaining networks. The financial implications of
stranded assets, and the loss of revenue for
incumbents and the government would be
substantial.
- Incumbents would need to quickly adapt to a world of mass market adoption
by introducing new business models that may include selling and/or
maintaining solutions and warranties. Alternative revenue sources will also be
vital.
- In the case of utilities that have long term leases with the government, the
response would depend on the contract and any potential guarantees of supply.
- The impact on government revenue would need to be modelled to balance
increased revenue from providers of off grid solutions, with the loss of revenue
from incumbents. The size of the differential would guide the resultant
government response.
Human nature The final consideration is an intriguing one. As is
evidenced by recent micro-grid community trials
where consumers were offered free electricity to
participate in the trial…yet refused, the unknown
factor is human nature. There will always be
customers who don’t want to change no matter
how good the deal.
Customers also want to be seen to be green so
whilst going off grid might seem like a good idea,
unless it is visible i.e. batteries aren’t hidden or
stored at the end of the street, the incentive to
change is lessened.
- It is beyond the remit of this article to work out how to fix human nature so
this last one would require either legislation to mandate solutions, or over time,
word of mouth and proven solutions to win over the final resistors!
Summary
Whilst there will continue to be lots of discussion about the impact of batteries, solar, and more complete micro-generation solutions, in reality, there are
numerous obstacles that must be overcome before the majority of the mass market goes off-grid. This will take many years, if not decades. In the
meantime, the most likely scenario is that early adopters, and more remote locations will lead the way whilst the general population will take a ‘wait and
see’ approach and regularly check the cost / benefit / risk equation.
Note: This article reflects the individual view of the author only.