Pinterest Stumbleupon Whatsapp
Ads by Google

US investment banking giant Morgan Stanley has predicted that the major utility companies are going to have some tough years ahead. The reason? Tesla, and the increased affordability of rooftop solar.

The predictions were made in a series of three reports that have been published over the course of the past year. The first of which makes the case that in the foreseeable future, consumers may start to leave the grid in favor of generating their own electricity.

The first report attributed this to the maturation of consumer solar products, in addition to better and cheaper battery products that can capture and store excess generated energy.

The other two reports that were subsequently released affirm the previous predictions made in the first report, which was simply titled “Batteries and Distributed Gen. May Be a Negative for Utilities”.

Morgan Stanley expects the per-watt cost of solar installations to fall precipitously, from ~$2.00 per watt generated, to just ~$1.75 by 2018. This is partially due to the cost of installation dropping significantly, particularly driven by the experience and scale of large solar service providers, such as SolarCity.

They also expect Tesla’s upcoming GigaFactory project – which will revolutionize how high-capacity batteries are manufactured – will also have a profound impact on the costs associated with storing excess energy generated by solar.

Ads by Google

A major financial institution thinks that the next few years may see us all disconnecting from the grid en-masse. But how will this come about?

The Struggles Of Solar

Solar has a lot going for it. It allows the clean generation of electricity, using a source that is guaranteed to never run out in our lifetime – the sun.

Despite the promise of infinite, clean energy, there remains a number of issues What Is Solar Energy And Why Hasn't It Taken Off? What Is Solar Energy And Why Hasn't It Taken Off? What's the big deal with solar energy? If it's really as important and necessary as so many claim it to be, why hasn't it taken over the energy industry yet? Read More that have prevented solar energy from having the same level of ubiquity as fossil-fuel based energy sources.

Firstly, solar cells The Energy of The Future, Today: How Do Solar Panels & Heliostats Work? The Energy of The Future, Today: How Do Solar Panels & Heliostats Work? Renewable resources. It’s a problem that we face every day whether we realize it or not. With every pump of a gas handle, with every press of a car’s accelerator, with every plug of our... Read More only generate power during daylight hours. In the Winter months, this means that electricity isn’t being generated during peak time. This tends to be around 5:30, as people leave offices, return to their homes, and turn on lighting as daylight fades.

tesla-solar

Which brings us on to the next point. Retaining surplus energy is incredibly difficult and expensive. This leaves consumers with two options. They can either sell their surplus electricity back to the power grid, or invest in some battery storage.

There are a wealth of products on the market that accomplish this task, but they’re not cheap. They also need to be installed by a trained professional, which drives costs further northward.

As a result, solar power has never really replaced conventional methods of generating electricity. However, there are a number of upcoming breakthroughs that look set to change this.

Meet The GigaFactory

This February, Tesla made a big announcement: the Gigafactory. This large-scale battery fabrication plant is the combined efforts of Elon Musk’s electric car titan, and Japanese electronics giant Panasonic.

Costing $5 billion, the aim behind this ambitious project project is to allow Tesla to meet the soaring demand for its cars, whilst simultaneously reducing costs by producing one of the most expensive and complicated components in large scale.

In a subsequent press release, Tesla indicated that they will provide and manage the building housing the GigaFactory, while Panasonic will provide the manufacturing equipment used to create the high-capacity lithium-ion cells.

When construction finally concludes in 2020, the GigaFactory will be one of a small number of factories in the world that can pump out high-capacity batteries in very large quantities. Although there’s no word on Tesla making batteries for non-car applications, it seems likely the battery business will eventually cater to home solar panel users.

tesla-car

Morgan Stanley agrees, and sees this as a tool to allow consumers to eventually ditch the power company. In their report, they wrote:

“… given Tesla’s Gigafactory and the potential to reduce battery production costs to $125-$150 per kilowatt-hour of storage capacity, and perhaps lower, we see the potential for customers to decide to move off-grid.”

In short, Morgan Stanley thinks that Tesla has already fixed one of the problems holding solar energy back. But what about the other problem – making it a financially attractive and affordable option for consumers?

Making Solar Cells More Efficient

Another major issue with solar energy is that on a watt to dollar basis, it’s a relatively inefficient medium of creating electricity.

One of the issues that prevent solar energy from becoming a truly cost-effective medium of generating energy is that it comes with some impressive upfront costs. It’s not unheard of for these systems to reach into the tens of thousands of dollars.

As previously mentioned, Morgan Stanley thinks companies that specialize in solar installations – such as SolarCity – can drive down the cost of installation through sheer economies of scale, as well as procedural efficiencies.

tesla-solar-install

There are also efforts to improve the cost effectiveness of solar energy by improving how solar cells are manufactured, as well as changing the material used in favor of one that is cheaper, and significantly more efficient.

Researchers at the University of Sheffield in the United Kingdom have worked out how to produce solar cells using a new spray-on technique. This ensures that a minimum of material is wasted when creating the cells, as well as allowing production at a larger scale using novel new materials like perovskite Efficient. Cheap. Awesome. Here's Why New Spray-On Solar Cells Matter Efficient. Cheap. Awesome. Here's Why New Spray-On Solar Cells Matter The cost of solar energy is set to drop precipitously after a team of scientists working at the University of Sheffield in the United Kingdom announced development of solar cells using a spray-on process. Read More .

But why does the material used to create solar cells matter? Well, even the best silicon-based solar cells will only convert about 20% of sunlight into electricity. This compares unfavorably to hydroelectric power plants, which get about 95% efficiency, or coal, which gets around 50%.

Perovskite is a new material that looks set to make solar energy competitive with traditional energy sources. Although it is still very early in its development, it’s already surpassing traditional silicon cells, and is forecasted to eventually reach 50% efficiency. This could potentially see households getting 100% of their energy from a single source – the sun.

Your Solar Future Is Almost Here

Paying your utility bill is a necessary part of modern life. But what if it wasn’t? What if one day, you could phone your electricity provider and cancel your contract, choosing instead to go it alone.

Morgan Stanley thinks this is a possibility, and is predicting the massive disruption of traditional utilities companies, due largely to the advent of super-efficient solar energy, and new advances in battery technology and manufacturing.

But will you be going off the grid? Let us know! The comments section is below.

Photo Credit: Tesla brings the rainbows (Steve Jurvetson),

  1. John Harvey
    September 29, 2014 at 8:58 pm

    RE Chuck in Canada - You might start your research here: http://www.cansia.ca/government-regulatory-issues/consumer-incentives/provincial#bc
    Putting "solar incentives British Columbia" into Google will get you several very useful links as well. Also just calling a solar installation company and asking for a bid would likely get you a Google Earth based personalized bid in short order.

  2. John Harvey
    September 29, 2014 at 8:44 pm

    I have a 7,650 W (DC) solar system on my home in the U.S. (net metered, not feed in). We directly use about 1/2 of what the system produces over the course of a year, we send the other 1/2 to the utility for a net metering credit and we "buy" about the same amount back. We are on track this year (2nd in operation) to have a minimum bill (just the fixed customer charges which our state does not allow the net metering process to offset) every month this year. My bill dropped from about $165 to $175 a month down to $8.

    In terms of my after tax cost I am earning about 11% a year on my investment. However, without the initial tax credits (which reduced the up front cost of the system) the return would still be negative. In my area solar is not yet at parity (without the tax credits) but it is getting very close. Within about 8 years it is likely to be cost competitive for almost anyone to do net metering (even without the tax credits) as long as the net metering is done on a kWh for a kWh basis. In about 10 to 15 years it will likely be cost competitive to go off grid. Likely the first to do this will have only a moderate battery bank and an on-site generator (possibly fueled by their natural gas line). It will always be cheaper to be grid-tied (in terms of the actual resources used) instead of buying batteries - but, as utilities fight solar (and distributed generation in general) people will get tired of the arbitrary charges and go off grid. 20 years from now it is a very real possibility that almost every new home being built will simply role an impressive solar array and battery bank into their mortgage and never even bothering hooking up to the electric utility.

  3. Hassayampa Slim
    August 21, 2014 at 6:48 pm

    Until some kind of local storage, batteries, or whatever, is found and is practical and economical, solar is not cost effective to the average residential user. I know a few people who are "leasing" solar roof panels and pay a combined rent/utility bill equivalent to their previous utility bill alone. Unfortunately, they also think they are going to be able to have power during storms when the electric utility company goes black... Won't they be surprised.

  4. Cynthianna M
    August 17, 2014 at 8:02 pm

    Oh, yeah, as soon as we can get off the grid and use clean green energy from the sun and/or wind, we'll gladly tell the power company good-bye. Hopefully, the solar revolution will end the threat of fracking and the coal plant pollution, too.

  5. Chuck
    August 15, 2014 at 7:18 am

    Any Canadian comments? I am paying $430 per month for grid power in BC and I am considering solar PV. Currently trying to get real numbers to base my decision on. Luv all the pros & cons!

  6. Ajay K
    August 14, 2014 at 9:00 am

    If we get a stable and affordable source of energy .. we r ready to go :)

  7. Peter from Brisbin
    August 14, 2014 at 8:52 am

    the current Government in Australia is working towards making Solar as difficult and unattractive as possible. As the majority of generation in Australia are government owned or recently sold to private enterprises with a guarantee of a quantity of energy used, most of the generating plants spent a considerable amount of money on infrastructure. This spend was based on trends of usage from about 2000 to 2008. What has happened is that with a generous government subsidy for the purchase of PV's and a sell to grid twice the cost per Kw the take up of Solar exceeded all projections. In Australia we now have what is euphemistically refereed to as Gold Plating where all current generating facilities have excessive generating capacity until at least 2020.

    There has also been a take-up of energy efficient processes to reduce energy usage in the home. We received financial support for better insulation of our homes (it does get very hot in most of Australia), the sale of CFTubes was also helped by laws stopping the sale of incandescent bulbs. And now we are one of the biggest users of LED's lighting. Most of our traffic lights, and a considerable amount of our street lighting, particularly in Sydney, are also LED. The marking of energy efficient White Goods with a star rating has made a lot of households buy better fridges, washing and driers. Even our airconditioners are energy rated.

    My 5Kw solar array cost $7000 Australian and i get 50 cents per Kw I sell back to the grid. My house has been designed to use trees to shelter the house in the afternoon from the western sun which does cut down my Solar generating potential but i still see about 12Kw per day in summer but only 6Kw in winter. My last energy bill was $35.00 yes that is thirty five dollars. My neighbors bill was $618 for the quarter. My sister-in-law's bill was $900+ for the quarter. At this rate I will have paid for the panels in another 12 months.

  8. Michael Sutton
    August 14, 2014 at 7:28 am

    I'm in Lancashire, UK. I had solar PV panels installed 3 yrs ago. Cost was £13000, but I have received back over £5000 from the feed in tariff and free electricity during the day. Even with this I would not consider disconnecting from the grid. You cannot store electricity from the summer to use in the winter it can only ever be an additional source of energy. Same applies to wind and hydro on any domestic scale.

  9. Murali
    August 14, 2014 at 7:25 am

    Add to this the development of low energy lighting solutions using LEDs and the shift to solar energy seems promising. Now research has to focus on low energy solutions for cooling/heating...

  10. Steve
    August 14, 2014 at 7:08 am

    Just wanted to comment on birds - in 'Sustainable Energy - without the hot air' by David JC MacKay (http://www.withouthotair.com/Contents.html) - suggested reading for everyone commenting here, he says the following:

    "Do windmills kill “huge numbers” of birds? Wind farms recently got ad-
    verse publicity from Norway, where the wind turbines on Smola, a set of
    islands off the north-west coast, killed 9 white-tailed eagles in 10 months.
    I share the concern of BirdLife International for the welfare of rare birds.
    But I think, as always, it’s important to do the numbers. It’s been esti-
    mated that 30 000 birds per year are killed by wind turbines in Denmark,
    where windmills generate 9%E of the electricity. Horror! Ban windmills!
    We also learn, moreover, that traffic kills one million birds per year in Den-
    mark. Thirty-times-greater horror! Thirty-times-greater incentive to ban
    cars! And in Britain, 55 million birds per year are killed by cats (figure 10.6).
    Going on emotions alone, I would like to live in a country with virtually
    no cars, virtually no windmills, and with plenty of cats and birds (with the
    cats that prey on birds perhaps being preyed upon by Norwegian white-
    tailed eagles, to even things up). But what I really hope is that decisions
    about cars and windmills are made by careful rational thought, not by
    emotions alone. Maybe we do need the windmills!"

    He also points out that domestic energy use is nothing compared to industry...

  11. pmshah
    August 14, 2014 at 4:20 am

    @dragonmouth

    For the reason that you quote about environment point of view, you should search for "Pearl River Project" in China. They use vertical wind turbines which are absolutely safe for the birds and do not tke up such huge areas surrounding it.

    Here in India Sulzer installs, runs and maintains windmills at your cost and net return is 10% , tax free. This is over and above all the tax breaks on your initial investment.

    I read an article some 30 years ago in Elektor Electronics's English edition about how you could set up your solar panels driven by very low powered motors to always face the sun head on to get maximum power from the panels regardless of time of the day.

  12. Mzzz
    August 14, 2014 at 3:19 am

    What will keep utilities from undercutting home solar by using the same technology to build solar farms with economies of scale unavailable to residential installations? If it's good for homeowners it must be a fantastic investment for utilities.

    • dragonmouth
      August 14, 2014 at 1:29 pm

      At current efficiency, to supply as much electricty as is generated by an average-sized fossil fuel plant, would take square miles of PV cells. Check out the following:
      http://www.solarinsure.com/largest-solar-power-plants
      http://www.popsci.com/article/technology/worlds-largest-solar-farm

      Notice that while the Ivanpah Solar Farm generates 392 megawatts of electricity, enough to power 140,000 homes, it covers 3500 acres. It is located in the Mojave Desert. I live within 10 miles of a nuclear powerplant that generates 2500 megawatts and covers only about 50 acres.

      BTW - the long term environmental impact of large solar farms has not been determined yet. Solar power proponents emphasize the thousands of tons of carbon dioxide that is NOT released into the atmosphere but they never mention the total environmental cost of producing the PV panels and building vast solar farms.

  13. Zero
    August 14, 2014 at 12:24 am

    Battery is still a black area.

  14. Robert Marshall
    August 13, 2014 at 11:28 pm

    The economic arguments against alternatives to fossil fuels are based entirely on the ridiculously low costs of the fossil fuels and their continued availability. Once you normalize the value of the energy source, things look very different.
    Put 1 gallon of gas into your car - about $4.00 here in the US. Drive your car until it runs out. You went anywhere from 10 to 40 miles, depending. Now, push your car back home. How long did it take, and what was the value of your labor? Gasoline is worth anywhere from $2,000 - $8,000, when valued in equivalent human labor capital. You could probably have pulled your car home with a single horse, and the labor costs of that horse would be a lot less than the human labor equivalent, right?
    Now, fast forward to some (unknown) time in the future, when petroleum is not nearly as plentiful, nor cheap, as now. At that point in time, you won't be able to afford to drive that car. And while reasonable people can differ about whether that time is 10 years or 100 years away, it will arrive as surely as the sun rises every morning because cheap fossil fuels will run out, we just don't know when, and we must use the cheap fossils we have left to develop sustainable alternatives, whatever they may be.
    If you plot the world population from 1850 on, and also plot the production and use of fossil fuels, and if you plot the worlds technological innovation, every one of those curves is identical in shape - a rising exponential curve - and are also all correlated in time. Why? Because cheap fossil fuels have been the sole driver in the advance in societies, the growth in the carrying capacity of the earth, and the (average) quality of life.
    Here's the kicker. An exponential curve grows to infinity. Unfortunately, there is not an infinite amount of cheap, fossil fuel to continue the game. There will be a discontinuity - mathspeak for a tipping point when all the rules of the game will change. I would rather be living in a cabin in the back woods with some solar cells, batteries, a wind turbine, and be warm, than be in a cold apartment whining about how inefficient solar is and how it can't keep me warm or make my lawn look ugly.

    • dragonmouth
      August 14, 2014 at 12:50 pm

      "Once you normalize the value of the energy source, things look very different."
      "Normalize" - euphemism for finagling the numbers until they support your point of view.

  15. Steve J
    August 13, 2014 at 10:32 pm

    We need better tax incentives. I've had property off-grid for over a decade. Today, tax incentives only apply if you're on-grid. And it's a shame. My local power company wants $50k upfront to connect me from 1/2 mile away. And that doesn't include clearing the right-of-way, the transformer on the pole, and the last 100 ft. underground to the house. For that same price, I could put in a whole-house hybrid system and never have an electric bill (except for maintenance). Either way, rural electrification in the US has gone the way of the dinosaur. Bring all your own resources or stay dark.

  16. Michael Dowling
    August 13, 2014 at 10:23 pm

    I would think natural gas/biogas powered Bloom style fuel cells are an option as well.I recall reading that Bloom is working on a home system.We have to get off the grid before the next Carrington Event happens.

  17. Saikat B
    August 13, 2014 at 5:04 pm

    Graphene could be the key to better efficiency in the near future. Hope it does.

    Does leasing solar panels really make sense?

  18. Tina
    August 13, 2014 at 4:17 pm

    sign me up... have been working on this for years...

  19. Bben
    August 13, 2014 at 11:45 am

    I am all for solar - however, at the current costs there is just no way. Even with the subsidies the payback is longer than my life expectancy. Then one thing I never see in those articles rhapsodizing over solar is maintenance. Batteries just don't last forever (yet), currently just 3 to 7 years depending on who you ask. The panels will need periodic cleaning, and who will fix it if it breaks. I do have the skills to install and maintain my own, and have looked into doing it on a smaller scale. But many people don't and will have to pay to have any maintenance done. Then, the giant power companies are already starting to fight back. They don't want to lose their monopoly and are going to use the courts and legislation to limit private solar in any way they can.

  20. dragonmouth
    August 12, 2014 at 6:23 pm

    I have looked into solar to supply my electricty and hot water needs. While the parts and installation costs were almost prohibitive, the major factor against solar was it (in)efficiency. To supply just my electric needs, I would need solar panels at least twice the area of my house roof. I refuse to give up my lawn to the additional panels that would be necessary. I want my home to look like a home, not an industrial park.

    • Klaas Martens
      August 19, 2014 at 3:26 am

      It takes less than 500 sq ft of panels to supply 7 kW of solar generating capacity. Thats more than enough to produce the average electric needs of a home. Unless you use an enormous amount of electricity or live in a home the size of a dog house, you are miscalculating.

  21. Tim Wheals
    August 12, 2014 at 6:17 pm

    Its absolutely the way to go. We've just done it and are hunting around for extra options for storing the energy we use instead of putting it back in the grid for virtually nothing. Already there are systems that put surplus power into immersion heaters (free hot water - which we invested in for just £100!), from there its not a big step to also dump excess power to storage heaters... Current systems in England probably give payback in about 5yrs nowdays.
    Next step - electric car and of course batteries "in house".
    Even modest home solar systems generate about 20KWh a day now - yet most households use less than half that per day on average!

  22. Pedro Antonio J
    August 12, 2014 at 5:27 pm

    I was thinking to install a power generation mini-plant at home but it is really very expensive. More than 15 years for payback. At least in my country.

  23. Rhett Butler
    August 12, 2014 at 5:25 pm

    If the cars use electricity instead of gas...it will pump up the demand for electrical power. All of that may not be available from solar for some time.

    • dragonmouth
      August 12, 2014 at 6:10 pm

      The current world-wide demand for electricity is in 2-3 Terawatt range. The total of world-wide installed solar generates less than 200 gigawatts.

  24. Nick C
    August 12, 2014 at 4:53 pm

    Which is why i think in 10 to 20 years, Solar & wind power will be the wave of the Future

    • dragonmouth
      August 12, 2014 at 6:05 pm

      That's what they said 10-20 years ago. It still hasn't happened and is not about to, either. For solar to be viable alternative to fossil fuel, the efficiency of the panels needs to improve by two orders of magnitude. Until it does, solar is just a boutique method of power generation.

      As far as wind power goes, even the environmentalists who at one time were vigorously pushing it, are now against it because wind turbines are dangerous to birds, especially when concentrated in wind farms.

    • ReadandShare
      August 12, 2014 at 6:10 pm

      Actually, more like 40+ years ago!

      Back in the early 70's, I was pretty excited as a schoolboy about a future of "free and plentiful" energy.

    • Nick C
      August 12, 2014 at 6:17 pm

      Which I think give time, it should mature by 2030 to 2050

    • Tony Karakashian
      August 12, 2014 at 7:54 pm

      While I agree that 10-20 years ago, they were saying "any day now", the reality is it really is "any day now" now. Most states, and the Fed, provide significant tax breaks and subsidies for home owners to go solar. In NYS, the cost of sufficient solar power for my house runs around $30k installed, but my out-of-pocket will be closer to $9k once done. At that point, I'm off the grid and selling back. And, it's only going to get cheaper very soon. The pace of costs going down will ramp up, though, as more and more folks move to it.

      As to the "orders of magnitude", you're absolutely talking 10-20 years ago. We are at "high enough" efficiency now for general use. Granted, higher efficiencies means smaller collectors which means more options for placement, but that's more an aesthetic issue than anything. I live in cloudy Upstate, NY, which gets what used to be considered 2 hours of usable sunlight on average per day. Clouds don't block UV, and so solar's still a very viable option. The newer technologies, such as organic solar that can be essentially "sprayed on" to any surface turning it into a collector, are still a few years out, but even those you're not waiting 10-20 years. 5-10, max.

      Now, granted, I happen to be friends with a nanomaterials scientist who is working to increase solar efficiency, but you don't need an "inside scoop" to see solar's completely viable now, for anyone's home...and, quite a few businesses. Do the research, contact a contractor or two in your area and sit down with them. They know what kind of perks you can get to make the move. That meeting will absolutely change your mind.

    • Col. Panek
      August 13, 2014 at 6:22 pm

      "... the efficiency of the panels needs to improve by two orders of magnitude."

      That word does not mean what you think it means, mathematically.

      Solar PV is growing fast (notice I didn't say "exponentially") in places like Australia and Hawaii. Efficiency is not part of the equation; installed costs are what make PV viable. A lot of that is burdensome, clueless regulation, and lack of competition. Germany's installed cost is half what it is in the USA. Once we stop the subsidies and get feed-in tariffs instead, it will take off big time here (I'm in upstate NY).

      Windmills are making money and going up all over. The days of dino juice are numbered.

      Solar DHW and space heating is the low hanging fruit. I've been heating water for 26 years.

    • Kiahuna
      August 13, 2014 at 9:51 pm

      Solar energy is woefully inefficient and would not exist if not for governmental tax subsidies. Even here in Hawaii it has been rendered ineffective by our monopoly electric company that is putting up roadblocks to allowing more solar into the grid. The only way to truly harness solar power is the ability to store it effectively, and cost effective means either don't exist yet or NIMBYs wont embrace them (like pumped storage with 70-80% efficiency)

    • Thomas C
      August 14, 2014 at 3:49 am

      Reduce, reduce, reduce, it is the only way alternative power can work. I was way ahead of the average household in switching to Florescent and I was glad I did because it paid for itself in just 2 months. I started switching to LED 3 months ago, I changed out the most used lights in my house, just 3 bulbs and shaved $20 of the first months electric bill. I replaced my refrigerator with a new smaller version and now my bill, with 5 people in the house is below $100 a month. The point is that we can do this, we just have to reduce how much power we use and you do not have to do it all at once, you can stretch it out over a year or two if need be. Once you get you power consumption rate down then you can look at changing to solar, wind or hydro if you have a water way.

    • dragonmouth
      August 14, 2014 at 1:32 pm

      @Col. Panek:
      "That word does not mean what you think it means, mathematically."
      You mean that "two orders of magnitude" means 100 times?

Leave a Reply

Your email address will not be published. Required fields are marked *