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May 22, 2014

Why Owning Your Own Power Plant Might Not Be Crazy

Could a “personal power plant” be your next major home appliance?


It’s been three months since we released The Economics of Grid Defection exploring when off-grid solar-plus-battery systems could reach economic parity with retail electric service.  These systems could become competitive with retail electric service within the next decade for many commercial customers and for many residential customers in the decade thereafter. Since the release of our results, the industry has been abuzz with follow-on commentary considering the implications for utilities, consumers, and third-party service providers.

Of course, favorable economics do not equate to adoption. Just because customers could defect doesn’t mean they will. For the individual customers actually considering these investments many other factors come into play, such as performance risk, hassle/convenience factor, and simply the plain, easy inertia of continuing to get their power as they always have.

Even so, it’s not that far-fetched to imagine a day when large segments of customers choose to go mostly or even entirely off-grid with clean, quiet, distributed solar-plus-battery systems. In fact, could owning your own power plant become as convenient and practical—if not quite as ubiquitous—as the consumer appliances and electronics already so commonplace that we take them for granted in our daily lives—a refrigerator, a clothes dryer, or a computer?

The Evolution of Appliances

If we look at the lineage of our modern home appliances and personal electronics, the original predecessors of those we have today were often expensive, clunky, and unsafe. Yet engineers at companies such as General Electric, Maytag, and Whirlpool saw an opportunity and had a vision, which brought us light bulbs, refrigerators, washers, dryers, toasters, radios, electric stoves, and vacuum cleaners.

Decades later, similar vision and innovation brought us computers. The original computer processors were large, loud, and expensive. The computers of the 1960s and 70s were only practical for use by government agencies, large corporations, and universities, relegated to warehouses and specially designed office rooms. In that era, no one would have considered owning a computer for personal use, but the vision of Fred Moore, Steve Wozniak, and many other engineers at companies like IBM and Xerox brought us the power of personal computing that billions of people enjoy today.

The (Personal) Power Plants of the Future

When many people think of power plants they think of large industrial facilities with heavy machinery—hot, loud, and dirty. While this is an accurate description of many existing power plants, including those that I once operated, the personal power plants of the future will be much different.

Quiet, clean, and contained, your solar-plus-battery home energy system will be nearly indistinguishable from the refrigerator, chest freezer, or furnace in your basement—an essentially silent “box” that does something for you and your home, except this one will be connected to solar panels on your roof. In fact, as property developers and energy service companies become more familiar with these systems, they will most likely become integrated with the other systems in your home, leveraging the waste heat produced by your battery to help heat your home and provide other services.

Still, many will argue that personal power plants won’t offer the same game-changing value that personal computers or other appliances have brought us; that the cost savings, reliability, and environmental benefits of a zero-carbon personal power plant just won’t be that attractive to many homeowners.

Sandy, Irene, and Katrina suggest otherwise. If you don’t think many people value reliability, just look at the recent financials for Generac, the leading American manufacturer of residential back up generators. The company has seen year-over-year net residential sales increases of 31.7% in 2011, 43.7% in 2012, and 19.6% in 2013.

Are Consumers Ready for Personal Power Plants?

There are those who might argue that personal power plants will seem too complex and technically sophisticated for most Americans. Well once upon a time, many said the same thing about computers. Computers are highly sophisticated machines, and most of us don’t have the first clue how to assemble a computer or write code, nor do we want to. Yet PC manufacturers such as Apple, Dell, and HP build computers that are suited to our needs, and software developers like Microsoft have given us the interfaces that allow us to fully use the computing power of these machines. Further, stores like BestBuy and Costco make it easy to purchase these devices, they’ll provide us a warranty, and service support when necessary. In other words, the technological complexity operating behind the scenes and under the product shell hasn’t deterred consumers from tapping into the incredible value and services such appliances provide.

Others will argue that these technologies are too expensive to go mainstream. While these technologies aren’t economical for the majority of U.S. consumers today (Hawaii being the one notable exception), the prices for these systems are on the decline, and if we consider air conditioning as another historical example of what lies ahead, these systems could be in a surprisingly large number of homes before we know it. Before mass production of the window air conditioning unit was made possible in 1947, air conditioners were only seen in luxury hotels and movie theaters. At the beginning of the 1950s, very few homes had air conditioning. By the end of the same decade, most American homes had a least one air conditioning unit. And by the end of the 1960s, most new homes were built with central air conditioning. What began as an expensive, loud, and obtrusive device you affixed to your window had become affordable, quiet, and integrated into almost every home.

To wit, personal power plants might be ready for consumer primetime, just like a wave of other examples where consumers switched from a centralized and/or outsourced service to providing it for themselves with appliances:

  • The switch from ice block delivery service to refrigerators and freezers
  • The rise of the swanky home theater system while large movie theaters have seen flat or even slowly declining ticket sales
  • The shift from delivery of firewood or district heating systems to the in-home furnace
  • The similar shift later in the 20th century to common in-home air conditioning units
  • The television’s “promotion” from a one-per-household appliance around which the whole family gathered to a point today where Americans on average have as many TVs as people per household, with a third of homes boasting four or more TVs

Power plants—once the expensive domain of an exclusive few (the ~3,000 U.S. utilities plus other generators) that built big, central versions—might one day in the foreseeable future give way to a personal power plant for the masses.

Power to the People?

When put in perspective, a silent solar-plus-battery system—a personal power plant—that ensures our home has power, saves us money relative to buying electricity from a central utility, and lowers our carbon footprint, doesn’t seem all that bad, in fact, it seems pretty good. Or at least it will seem pretty good sometime soon. Such systems aren’t economic for most customers—yet. But that day will emerge over the coming decades.

So what does this mean for utilities, consumers, and third-party service providers?

  • The way we buy power will change. Where almost every consumer once made a phone call to the utility company to establish electric service, now some consumers will go to their local hardware or home improvement store and pick out a system that is right for them, to be installed later that day.
  • Property developers and energy service companies (ESCOs) need to start dating, or at least get a lot smarter about one another’s line of business. As we showed in our analysis, the greatest value exists when solar-plus-battery systems are integrated with complementary investments in efficiency. As we see the emergence of the “internet of things” the greatest competitive advantage will accrue to those companies that can provide bundled offerings that combine personal power plants with super-efficient appliances and home energy management systems to provide consumers with the greatest overall value with lower total overhead and transactional costs.
  • There is urgent need for regulatory reform. Currently, many utilities are not allowed to participate in distributed assets that displace or defer the need for traditional grid investments. Where this is the case, this regulatory limitation needs to be eliminated, allowing the utility to engage in opening the distributed power system market for the benefit of all. 

Not everyone will want a personal power plant, and not every home will be suited to have one. There is still a great deal of technology innovation and industry evolution that will be necessary to make personal power plants a reality. Towards this end, RMI continues to work with both insurgents and incumbents to understand the implications these disruptive opportunities will have on the electricity industry. The detailed investigation of these systems and the likely opportunities for new business models, technology innovation, and regulatory reform will be the focus our forthcoming second report on solar-plus-battery systems. In the meantime, it’s worthwhile for everyone to consider that owning your own power plant might not be nearly as crazy as it seems at first glance.

Images courtesy of Shutterstock.

Join the Discussion

Showing 1-10 of 12 comments

May 23, 2014

I'm working with a mechanical and chemical engineer that has invented a new engine process that works with very high efficiency using relatively low temperature steam, which would be generated by solar thermal panels and produce twice or more the efficiency of solar PV. A 10 kW engine would provide enough power for the average American home (2500 Square Feet) and since steam generated from solar heat during the day can be stored in a pressurized insulated steam storage tank, electricity would be readily available at night as well. We are aiming to offer such systems in the next 12-24 months and believe the system will pay for itself out of electricity bill savings in under 24-36 months. With a working prototype proving that we can capture almost all of the energy in the steam (including the evaporation enthalpy) this patented new engine process may hold the key for vastly increasing the efficiency of solar power, and thus reducing it's cost. The age of personal power plants may be sooner than you suiggest.

May 23, 2014

As an off-grid family (4 years) I always find these discussions somewhat amusing. 100% of the environmentalists that I know are on-grid and have zero understanding of what it costs to be off-grid. They don't even consider it as a possibility. Take away their smart phone and they could not find their way out of their high-energy use home. Talk is cheap and I wonder how long the author has been off grid. I consider myself a conservationist and am getting close to 100% self sufficiency (about 90% now) and will be there within 2 years.

May 23, 2014

Great article. Thanks for that. It's very easy to loose sight of the longer terms trends. As a wise person once said, we usually overestimate the short term impact of new technology, and underestimate its longer term impacts. I installed a 5.6 kW solar PV home system 3 years ago. We decided to go grid-connected instead of off-grid, for a number of reasons, but mainly to avoid batteries and to take advantage of Ontario's Feed In Tariff (FIT) system. Batteries seem to be the weak link in the off-grid systems I have seen around here (e.g., must be kept warm in our cold climate, need venting, avoid over discharging). Plus if you are off-grid, you either need a very large system to get through the dark winter months or use a fossil fuel powered generator in Nov - Jan, hence negating your environmental benefits. The problem with many off-grid systems that are large enough to get through the dark winter months is that they produce a surplus of electricity in the summer that you end up throwing away. There is something about a grid connected system that seems to emphasize our mutual connectedness and dependency. I like that.

May 23, 2014

Mr. Kirkham, You are absolutely right. We have a desperate need for people with real-world experience. Please, PLEASE find a way to share your knowledge and wisdom with us.

May 23, 2014

I enjoyed this article, which I though really delved into the issue of home power plants. As an inventor of a new style of wind turbine, I've recently been quite vocal about the feasibility of having home power plants. Besides using solar, I've come up with what I think is an excellent way of turning VAWT's into fly-wheel based 24/7 power plants in good wind zones. My newly patented wind turbine can go on building-tops anywhere there is a good wind zone, because there are no whirling blades. No moving parts are seen. This new machine can be adapted to be used as scalable 24/7 power plants, using multiple self-stored prompts. Please take a few minutes to look at my ideas for home and community power plants, using wind. www.hallmarkemporium.com. Follow the "discovery" link and you will find a full discussion of using wind-driven disk-wheels for safe home power plants. The idea is unique and represents disruptive technology, I believe. You may also see this new invention at GoogleX's www.solveforx.com site. I plan to re-read this excellent and timely article again, a rare article I think, about potential home power plants of the future.

May 23, 2014

Hi Paul,
I currently use PV for my power needs. I had to use a generator only one day this past winter. One commenter indicated that using a PV system with enough output wastes power in the summer and while that may be true there is no magic method that I have heard of that will allow 100% efficiency especially here at the Canadian border. My system is large enough to cover my power needs during the winter. I am doubling both my PV array and battery array this year so that I can add additional power consuming devices, freezers and water pump among the new items. I am also adding a wind generator next year, however, as my wind zone is rated zero it will only be useful to provide power during very windy conditions such as during a storm when all is dark. My alternative power will be a gasifier using wood chips for to power a converted gasoline generator. I find it interesting that wood heat and wood burning is considered so evil by most environmentalists. It is renewable and since clean burning wood (at high enough temperatures) produces less CO2 than the same wood being allowed to decompose I don't see the issue.
One issue with being off-grid and a primary reason so many use grid tie is that off-grid receives zero tax benefits. That means the full cost of alternative energy is on the consumer. Based on that the cost is several times higher over time no matter what the "models" say. You need to really want to be off-grid and self-sufficient as there is no monetary justification.

May 23, 2014

We have a problem here in Hawaii. Hawaiian Electric owes the PUC.( Power Uber Customers) The PUC has stated that a home owner that wants to unplug from the utility needs to get permission from HECO first.

May 26, 2014

Thanks for the article and a hopeful vision for the future of distributed family-scale solar. Absolutely, distributed capacity is a key to the sustainability puzzle. I look forward to the day we reach this economic parity of off-grid capacity to grid-tied power. However, reducing needless consumption is just as important as increasing capacity, and ultimately more sustainable.

Utilizing our greatest shared power generator, the Sun, directly for home heating through intelligent design is the most efficient use of solar energy. Given two basic facts: 1. black bodies absorb heat from solar radiation, and 2. hot air rises, we can directly utilize that energy directly for home heating through simple, reliable solar roofs. Combined with simple venting designs into thermal masses (solar panel direct-DC to fans venting to water and rock inside the home domain), we can stabilize a home temperature through direct solar radiation without converting to and from electric power.

Check out http://www.solvivagreenlight.com/ for an excellent example and compendium of resources and techniques dating back over 30 years. My wife and I are excited to use that example as inspiration for our first home design.

And a quick comment to Ken Kirkham - first of all, kudos on your efforts and success with off-grid living, and thanks for sharing the details. I want to address your comment about relatively clean-burning wood furnaces yielding a potentially better environmental outcome than natural in-situ decomposition. I'm just making educated guesses here without hard data, but I see two issues: 1. burning the wood releases more harmful gases than just CO2, and 2. burning the wood removes that biomass from the ecosystem it grew in, rendering it ultimately less fertile over time. This is one of the big problems with burning fields for agricultural clearing; it's not just the gas emissions that is an environmental blow, the lost fertility to the soil is a major loss to that ecosystem.

Hope that gives some food for thought, and again keep up the good work Ken, and thanks for the article Lela.

May 27, 2014

Like your article - we've just released the Volo One Heat Engine for Electrical Generation - www.seftonmotors.com , a personal power plant for residential users. Self reliance in energy generation appears to be growing throughout the US and world.
Thanks again,
Tim Sefton

May 29, 2014

Hello Mr. Toledano,
Who makes these wet steam engines you mentioned?
HP Tahoe

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