by Roger Jeffrey, utilities sector specialist and consulting partner at Deloitte

The impact of distributed generation on residential customers is currently a hotly debated topic. Driven by the continued evolution of battery storage, improvements in solar efficiency and newer microgrid technologies, the spectrum in opinions of when the majority of residential customers will go off-grid ranges from a few years to several decades.

So what would it take for the majority of residential customers to go off-grid? There are a number of elements that need to be addressed and key challenges identified that would have to be overcome to accelerate adoption. Some of these include:


For many residential customers, the cost to procure and maintain microgrid solutions are perceived to be prohibitive. Significant cost reductions combined with improved efficiency in solar and battery will definitely increase adoption, however, government incentives or regulatory interventions will still be required for many customers, particularly for lower socio-economic groups.

‘Microgrid as a service’, where customers pay a regular fee and lock into a contract similar to a mobile plan, already exists, although take up so far has been low. The continued reduction in the overall cost, as well as more competition from traditional and non-traditional providers, should improve adoption of this offering.

Community microgrid sites significantly reduce the cost by sharing infrastructure and solar. Increasingly, developers are becoming generators for new estates and buildings which accelerate community grid solutions. Project Brooklyn in New York is a great example of this already happening.

Customer Inertia

There will always be reasons why customers are too busy to make the switch. A major black swan event, like the blackouts in South Australia, may drive customers to look for alternatives.

Accelerators will include the advancement of technologies, where a simple voice command will authorise required services. Others may include the increased role of aggregators and government regulations to improve the transparency of current tariffs and alternative cheaper options. Simplicity to make the change is essential.

Property ownership

New house construction where micro-generation is mandatory will make an impact. For existing homes, government regulations, incentives for landlords, or shared solar schemes will be required.

It may eventually become feasible to develop ‘plug and play’ solutions. Regulatory and safety concerns will need to be managed, but these are not insurmountable. Why couldn’t solar panels be plugged into  existing construction frameworks which landlords were mandated to fix to the top of house roofs?


Microgrids are still new, but rapidly aturing. Current technological limits mean the physical size of batteries and solar panels prohibit many households from deploying the amount required to meet their needs, though we are familiar with how rapidly technology can advance.

It will happen faster than most people predict given the global investment occurring at present, particularly in China. Global standards will need to be agreed and billions in research and development spent, but the size of the prize for successful providers is enormous. Limitations on materials required for batteries may slow progress in the short-term, but substitutes no doubt will be quickly found.

Time shifting

Solar power is great, but how do you meet demand at night? Time shifting of power generation will be required to meet peak demands.

The advancement of battery storage and technologies that allow power usage to be deferred to peak power generation times will be critical drivers for this success, but they are still realistically three to four years away from widespread adoption. The ability to share excess electricity between neighbours, whilst a potential game changer, will be subject to a whole host of regulatory requirements.

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; support and maintenance plans will be important.

Regulatory environment

There are numerous regulations that need to be overcome before mass market adoption becomes mainstream. Changes to existing regulations to balance risk, safety and cost, with ease of deployment are required.

New regulations to deal with emerging trends such as blockchain, electric vehicle charging, peer-to-peer lending, renewables on roofs, and data ownership will need to be created.


Customers need to trust the products they are purchasing are durable and the providers will survive and honour any warranty issues.

They need confidence the performance of microgrid solutions won’t rapidly deteriorate over time requiring additional, ongoing and expensive upgrades. Solutions that show the performance of microgrid technologies and how to optimise them must be a standard.

Governments and suppliers would need to provide certainty to the market that customers would not retrospectively be subject to additional charges should they go off-grid, for example new charges to cover the diminishing number of customers who have to share the burden of those leaving the grid.

Stranded assets and 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. For utilities with long-term government leases, 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.

Human nature 

There will always be customers who don’t want to change no matter how good the deal. At the very least, legislation to mandate solutions, word of mouth and proven solutions will be required to win over the final resistors.

Whilst there will continue to be lots of discussion about the impact of batteries, solar and more complete micro-generation solutions, the reality is there are numerous obstacles that must be overcome before the majority of residential customers go off-grid. It will take many years, if not decades. In the meantime, the most likely scenarios leading the way will be early adopters, more remote locations and community grids whilst the general population take a wait and see approach and regularly check the cost, benefit, risk equation.

Charlotte Pordage is Editor of Utility magazine, a position she has held since November 2018. She joined the team as an Associate Editor in October 2017, after sharpening her writing and editing skills across a range of print and digital publications. Charlotte graduated from Royal Holloway, University of London, in 2011 with joint honours in English and Latin. When she's not putting together Australia's only dedicated utility magazine, she can usually be found riding her horse or curled up with a good book.

©2024 Utility Magazine. All rights reserved


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