The cost of living crisis means more people are considering going off-grid, and a new study shows that energy storage could enable two million family homes in Europe to do just that
Reports suggest that, with more and more people feeling the squeeze from an economic perspective, the idea of completely living off-grid – and specifically the reduction in costs that go with it – is becoming more appealing to a growing number of people. There is no doubt that the global economy is navigating choppy waters at present – recent projections from the International Monetary Fund (IMF) showed that world economic growth will slow from 3.5 per cent in 2022 to 3 per cent in 2023 and 2.9 percent next year, which, the IMF said, is “well below the historical average”. Economic snapshots of the biggest countries around the world offer a similarly uncertain outlook – according to the IMF, unemployment in the US will steadily increase well into 2024 (though on the plus side, the rate of the increase in unemployment has been revised down in recent months) while, investor and consumer confidence in China, for example, has plummeted since the start of this year.
At a micro-level, individual households are grappling with a cost-of-living crisis that has led to some predictions that a significant number of people in the UK, for example, may opt to live off-grid in large communities. It’s estimated that 150,000 people in the UK live off-grid and it is understood that the total is rising sharply. Speculation that, in future, groups of friends and families will pool resources to buy plots of land and live in “communes” may be wide of the mark, and probably an unrealistic option for many – however, there is a view that house repossessions and changes in circumstances due to increases in the cost of living could force many down this path. A large number have already opted for such a life – in the UK, for example, of the 150,000 people living already living off-grid, it is estimated that 15,000 reside in conventional homes, 45,000 live in sheds and other shelters, with thousands of others occupying an array of alternative accommodation, including vans, boats and horse carriages.
There is now speculation that innovations in the energy storage industry could facilitate more widespread off-grid living. For example, the Institution of Engineering and Technology has highlighted battery technology as one of the key innovations that could support an increase in the population moving off-grid. And now a new report from academics at the Germany-based Karlsruhe Institute of Technology (KIT) has further fuelled the off-grid movement after it proclaimed that two million European single-family homes “could abandon the grid” by 2050, partly as a result of the wider adoption of residential energy storage systems.
The KIT report evaluated the potential for self-sufficient energy supply for 41 million freestanding single-family buildings under current and future – that is, 2050 – conditions. The report concluded that buildings in regions with “low seasonality and high electricity procurement costs have a high potential for self-sufficiency”. It added that, under current techno-economic conditions, 53 per cent of the 41 million buildings are technically able to supply themselves independently “from external infrastructures by only using local rooftop solar irradiation”, and this proportion could increase to 75 per cent by 2050. The report added that by “paying a premium of up to 50 per cent” compared with grid-dependent systems with electrified heat supplies, building owners could make over two million buildings fully energy self-sufficient by 2050.
As the KIT report highlights, while self-sufficient off-grid energy supply was previously considered a niche concept, there is now a growing belief that it is becoming a potentially mainstream idea. The rising cost of energy procurement coupled with the decreasing cost of renewable energy technology means that there is a trend toward individual and independent energy supply systems across the residential sector. Increasingly important considerations in the design of these systems is what KIT describes as “non-monetary criteria” such as high shares of renewables, increased self-control through independence from rising energy carrier prices, or rejection of the use of nuclear and carbon-intensive fossil energy, potentially from regions with questionable governance and values.
This trend is likely to be further fuelled by global political and socioeconomic developments – for example, in the first five months after Russia’s invasion of Ukraine, European gas and electricity wholesale prices increased by 115 per cent and 237 per cent, respectively. As a result, energy self-sufficiency seems an increasingly attractive option from an economic standpoint. Indeed, the growing appeal of energy self-sufficiency is demonstrated by projections showing that the global residential energy storage systems (RESS) market is expected to register a compound annual growth rate of 24. 4% during the forecast period, registering a market value of $13.05 billion in 2027, up from $2.78 billion in 2020.
A significant drop in photovoltaic (PV) system prices in recent years has resulted in grid parity in many European countries, which refers to the point at which the cost of producing electricity from renewable sources is less than or equal to the cost of purchasing electricity from the grid. Meanwhile, it is expected that battery costs will decrease further in the coming years, leading to improved “economic performance” among stationary battery systems, as KIT puts it.
Consequently, KIT concludes that a successful, cost-optimal PV-based self-sufficient energy supply system for buildings in central Europe will consist of a combination of short-term battery storage and a long-term seasonal hydrogen storage system.
While the 2050 timeframe for two million European single-family homes abandoning the grid is some way off, it is important to remember that this is the projection at this point in time. The desire, and drive, for energy self-sufficiency is certain to increase significantly. Part of this will be the result of growing dissatisfaction with grid infrastructure and the organisations that operate it. Earlier this year, for example, the Electricity Storage Network – the UK industry group dedicated to electricity storage – highlighted how the National Grid ESO, the electricity system operator for Great Britain, is failing to make the best use of available energy storage in the balancing mechanism and is, instead, opting for more expensive higher carbon-emitting assets when seeking to balance supply and demand. It’s a situation that has caused anger among investors who say that failure to provide further clarity [in relation to storage ‘skipping’ in the balancing mechanism] is stopping BESS operators from making informed decisions about their commercial strategies, with the result that billions of pounds of investment is being put at risk.
Meanwhile, frustration with the grid, and more specifically grid interconnection, is also growing in the US. A total of 680GW of storage capacity was left marooned in US grid interconnection queues at the end of 2022 and it’s likely that only a fraction of that will actually get built – only 21 per cent of the projects (and 14 per cent of capacity) seeking connection from 2000 to 2017 in the US had been built as of the end of 2022. Grids are failing to successfully accommodate the required levels of energy storage and while that remains the case, the desire for energy self-sufficiency is only going to intensify.
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