energy economics Solar WarS: by BILL ELLARD, Energy Economist This is the final of a three-part series where I discuss the current and upcoming battles of the “solar wars.” The three battles are net-metering, tariff reform, and grid defection. This is the grid defection discussion. The solar wars have two main combatants -the monopoly electric utilities, and the solar (PV) industry involved with con-sumers who wish to own or buy solar electricity directly. Utilities are not against solar, as this new technology gives them another method to generate electricity. What utilities dislike is their customers producing their own electricity by any means -such as solar, wind, and other on-site generators. This is called load defection. Some commercial cus-tomers are finding out that it may be cheaper to leave the grid entirely, as discussed in this 2016 article about Las Vegas casinos separating from NV Energy. (http://bit.ly/2tABsRj) This is called grid defection and will result in lower revenues for the utilities. This lowered revenue will lead to increased electric rates, incen-tivizing other customers to load or grid defect. Grid Defection Grid defection is already occurring for commercial custom-ers, but for residential customers, we will not see this happen-ing soon. Meeting the need for continuous and backup power generation is just not economically feasible for residential size electrical loads. For utilities, grid defection has always been an issue in the industrial sector. Large entities such as steel mills and cement plants have traditionally used coal or natural gas for on-site gen-erated power (http://bit.ly/2sCw0QG) for their operations. Also, these large firms have employees such as electricians to maintain a microgrid if needed. Since these large customers can create and manage their own electricity, utilities have negotiated directly with them on really low electric rates to keep them as customers. In some states, residential customers can pay 80% more per kilowatt-hour for their electricity. (http://bit.ly/2tAmPh7) We will now explore the three main trends that will encourage further grid defection: solar Power Purchase Agreements (PPAs), utility demand charges, and battery pricing. Solar Power Purchase Agreements (PPAs) As seen in the below graphic from 2015, the average solar PPA price fell 70% in just 5 years to below 5 cents per kilowatt-hour. More recently, solar prices have fallen even more dramatically to a new record low of 2.42 per kilowatt-hour (http://for.tn/2rsktA0). From Lawrence Berkeley National Laboratory (Berkeley Lab) 2015 (http://bit.ly/1hiuxFx) 10 SUMMER 2017 SOLAR TODAY Copyright © 2014 American Solar Energy Society. All rights reserved.